(NAR) VOL. 2 NO. 1/JANUARY-MARCH 1991
Sec. 7. (1) Benefits and Incentives – Subject to the provisions of Section 6 hereof, a business enterprise which adopts a productivity incentives program, duly and mutually agreed upon by parties to the labor-management committee, shall be granted a special deduction from gross income equivalent to fifty percent (50%) of the total productivity bonuses given to employees under the program over and above the total allowable ordinary and necessary business deductions for said bonuses under the National Internal Revenue Code, as amended.
“(2) Grants for manpower training and special studies given to rank-and-file employees pursuant to a program prepared by the labor-management committee for the development of skills identified as necessary by the appropriate government agencies shall also entitle the business enterprise to a special deduction from gross income equivalent to fifty percent (50%) of the total grants over and above the allowable ordinary and necessary business deductions for said grants under the National Internal Revenue Code, as amended.
“(5) The special deductions from gross income provided for herein shall be allowed starting the next taxable year after the effectivity of this Act.
“Sec. 8. Notification – A business enterprise which adopts a productivity incentives program shall submit copies of the same to the National Wages and Productivity Commission and to the Bureau of Internal Revenue for their information and record.”
Features of the Law
a. the payment of bonuses is in fact compensation;
b. it must be for personal services actually rendered; and
c. the bonuses when added to salaries are reasonable when measured by the amount and quality of the services performed with relation to the business of the particular employee. (See Kuenzle & Streiff, Inc. vs. Collector, 106 Phil. 355).
In addition to the deductibility of bonuses under the foregoing circumstances, 50% of the total productivity bonuses given to the employees of the business enterprise availing of the productivity incentives program shall be deductible from the gross income of the business enterprise.
Adopted: 13 Dec. 1990
(SGD.) VICTOR A. DEOFERIO, JR. |
Deputy Commissioner |