How much is taxed on bonuses
Tax on Bonuses and 13 th Month's Pay
The payroll program calculates tax on bonuses and 13 th month payments automatically in the background based on your system configurations in Customizing.
This process describes how tax on bonuses and 13 th month payments is calculated during payroll.
To configure the wage types, choose SAP Reference IMG ® Payroll ® Payroll: Philippines ® Taxation ® Define Tax Wage Types ®
Define Bonus and 13th Month Payment Wage Types.
- You must enter the tax-free component of 13 th month and bonus payments in the payroll accounting constant Non-Taxable 13th Month and Bonuses (PH13B).
To configure the constant, choose SAP Reference IMG ® Payroll ® Payroll: Philippines ® Taxation ® Define Tax Constants ®
The Bureau of Internal Revenue (BIR) regulates the tax-free component of bonus and 13 th month payments. You must check the tax-free component and, if necessary, modify the tax-free amount set up in the constant Non-Taxable 13th Month and Bonuses to meet BIR requirements.
- You must assign your 13 th month pay and bonus wage types to the relevant employees in the Additional Payments infotype (0015).