RMC No. 107-2024 — Clarification on the taxability of the medical allowance granted to qualified government civilian personnel under Executive Order No. 64, series of 2024

Bringing in Revenues For Nation-building REVENUE MEMORANDUM CIRCULAR No. 1 0 7 - 2 0 2 4 BUREAU OF INTERNAL REVENUE Republic of the Philippines National Office Building Department of Finance Quezon City -SEP 1 6 2024

SUBJECT: Clarification on the Taxability of the Medical Allowance Granted to Qualified

Government Civilian Personnel under Executive Order No. 64, series of 2024.

TO: All Internal Revenue Officers, Employees, and Others concerned

I BACKGROUND

not exceeding seven thousand pesos (PhP7,000.00) per annum shall be granted to each be categorized under Standard Allowances and Benefits component of the Total qualified government civilian personnel as a subsidy for the availment of health maintenance Compensation Framework embodied in Joint Resolution No. 4, series of 2019 and Republic Act No. I1466, otherwise known as the "Salary Standardization Law of 2019." organization (HMO)-type benefits beginning FY 2025. The medical allowance benefit shai Under Executive Order (EO) No. 64, series of 2024,' medical allowance in an amount

The above medical allowance benefit applies to all civilian government personnel in the Executive, Legislative and Judicial Branches, Constitutional Commissions and other basis. Excluded from the grant of the medical allowance benefit are the government officials and employees who are already receiving HMO-based health care services by virtue of Constitutional Offices, government-owned or -controlled corporations not covered by Republic Act No. 10149, and local government units, regardiess of appointment status, whether regular, contractual or casual, appointive or elective, and on full-time or part-time

offices vested with fiscal autonomy. special laws and officials and employees in the legislative and judicial branches and other

H TAXABILITY OF MEDICAL ALLOWANCE

compensation subject to income tax and, consequently, to withholding tax. that de minimis benefits furnished or offered by an employer to his employees for the promotion of their health, goodwill, contentment, or efficiency are not considered as Section 2.78.1(A)(3) of Revenue Regulations (RR) No. 2-98, as amended, provides

medical/executive check-up, maternity assistance, and routine consultations, not exceeding PhP10,000.00 per annum. assistance, e.g. medical allowance to cover medical and healthcare needs, annual Among the de minimis benefits under RR No. 2-98, as amended, is the actual medical

series of 2024, falls under the de minimis benefit contemplated under Section 2.78.1(A)(3) of RR No. 2-98, as amended. To prevent any ambiguity, the medical allowance benefit granted under EO No. 64,

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EO No. 64, series of 2024, is exempt from income tax, and, consequently, to withholding tax pursuant to Section 2.78.1(A)(3) of RR No. 2-98, as amended. However, medical allowance benefits for medical assistance) shall be included as part of "other benefits" which is subject benefits given in excess of PhP10,000.00 (the maximum amount allowed as de minimis to the PhP90,000.00 ceiling.2 Any amount in excess of the PhP90,000.00 threshold shall be subject to income tax, and, consequently, to the withholding tax on compensation. Such being the case, the actual premium paid to HMO providers in compliance with

H. REPEALING CLAUSE

or revoked accordingly. All revenue circulars inconsistent herewith are hereby considered amended, modified

All internal revenue officers, employees and others concerned are hereby enjoined to strictly implement the provision of this Circular.

This Circular takes effect immediately.

1 I, JR

K-1 hissioner of Internal Revenue

@) Bureay ge Internal revenue RECORDS MANAGEMENT DIVISION

BY . Admin unit.. TIMF: o's

2 Revenue Regulations No. 11-2018, January 31, 2018; Revenue Memorandum Circular No. 50-2018, May 11, 2018.