Subject: Strategic Tax Management

Topic: Employee Tax Planning

Country: Philippines

Ms. Cathy, an employee of Red Orange Corporation normally is in the 25% bracket with P 720,000 of cash salary and no-tax free perquisites/benefits. If her tax bracket goes up to 30% (due to outside investment income), it maybe worthwhile for her to negotiate with her employer to substitute some of her taxable salary for tax free benefits. If you were the tax consultant, how much and what benefits will you offer to Ms. Cathy to compensate the change in her taxable salary? Income Tax Tables under TRAIN Law (Part 1 - Applicable from Year 2018 to 2022) Source: BIR and www.PinoyMoneyTalk.com ANNUAL INCOME TAX RATE P250,000 and below None (0%) Above P250,000 to P400,000 20% of excess over P250,000 Above P400,000 to P800,000 P30,000 + 25% of excess over P400,000 Above P800,000 to P2,000,000 P130,000 + 30% of excess over P800,000 Above P2,000,000 to P8,000,000 P490,000 + 32% of excess over P2,000,000 Above P8,000,000 P2.41 million + 35% of excess over P8 million