May

Tax-exempt COLA increased by P30

Good news for NCR workers!

Under the Department of Labor & Employment (DOLE)- NCR’s Wage Order No. 17, minimum wage is increase by P30 cost of living allowance (COLA) as follows:

First tranche – P20 per day upon the effectivity of Wage Order No. 17; and
Second tranche – P10 per day effective on November 1, 2012.

The new minimum wage rate under the Wage order No. 16 that took effect last 26 May 2011 of P426 for National Capital Region integrating the previous COLA of P22 will remain in force. Integrating the new COLA under the new Wage Order, the new minimum wage for non-agriculture sectors will now become P446.00 (P426+20) upon effectivity of the new Wage Order No. 17, and P456.00 (P446+P10) on November 1, 2012 or equivalent to P13,680.00 a month (P456.00 x 30 days).

In effect, the minimum wage earners will now earn P600 more (P20 x 30 days) upon the effectivity of the new Wage Order, and P900 more (P30 x 30 days) starting November 1, 2012. Coverage of the Minimum Wage Law remains the same in all other aspects (e.g. exemption from the coverage of the Barangay Micro Business Enterprise – BMBE).

For other sectors such as agriculture, private hospitals with bed capacity of 100 or less, retail/service establishments employing not more than 10 workers and manufacturing establishments employing less than 10 workers, minimum wage will be P409 per day upon the effectivity of the new Wage Order, and P419 per day effective November 1, 2012.

Comment:

With the increase of the BIR of the tax-exempt uniform allowance by P1,000 (from P4,000 to P5,000) effective 1 January 2012 under Revenue Regulations No. 18-12, employees could enjoy at least P1,900 tax-exempt compensation every month including the above COLA increase.

Tags: cola, cost of living allowance, minimum wage, tax-exempt compensation, withholding tax on compensation

9 Responses to “Tax-exempt COLA increased by P30”

RdeDios says:

May 21, 2012 at 4:25 pm

Actually as per the Wage Order No. 17, organizations registered as BMBEs are exempted from payment of the minimum wage provided they pay their employees not less than P 259.36 per day. This is the first time that a Wage Order actually provided a minimum “wage” for workers of BMBEs.

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TaxAcctgCenter says:

May 22, 2012 at 8:30 am

Thanks for the additional input. At least the Order did to give the boundaries to the reasonableness of the salaries for BMBE employees because BMBE exemption from minimum wage law is just a consideration for being a BMBE but not a clearance to provide unreasonable wages.

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GPP & Co., CPAs says:

May 23, 2012 at 2:24 am

The increase in tax exempt uniform allowance and COLA are great developments as far as compensation in the Philippines is concerned. Although the increase isn’t that much, little by little, the impact to workers is still material. Thanks for the update!

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Ermelinda says:

May 30, 2012 at 3:30 pm

congratulations, you have very good writing skills, appreciated your work.

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TaxAcctgCenter says:

May 31, 2012 at 9:49 am

Thanks Ermelinda. More power to you.

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Jade Rubio says:

July 26, 2012 at 7:27 am

Sir is the COLA in NCR added as new minimum wage non taxable?

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TaxAcctgCenter says:

July 26, 2012 at 3:56 pm

Yes, it formed part of the minimum wage and as such, non-taxable. Thanks.

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Ellaine says:

November 17, 2012 at 1:46 pm

Is it really 456X30 days? or is it for 26 days only? should be P11,894 only. please enlighten me. thank you.

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TaxAcctgCenter says:

November 17, 2012 at 3:38 pm

Hi Ellaine, you apply it on a daily basis so using 30 or 26 would depend of the number of days worked in a month.Thanks.

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