How much is taxed on bonuses

how much is taxed on bonuses

 Tax on Bonuses and 13 th Month's Pay

Purpose

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.

Prerequisites

  • You must configure your 13 th month pay and bonus wage types or copy the model wage types set up in Customizing.

    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).

    Process Flow

  • The system reads the wage type data stored in the cumulated results table (CRT), and compares the total wage type amount to the tax-free amount set up in the constant Non-Taxable 13th Month and Bonuses .
  • Any amount in excess of the tax-free amount is added to the employee's taxable gross income.
  • The resulting amount is taxed based on the employee's tax status in the Taxation Philippines infotype (0411) and on the employee's gross earnings for the period in the Basic Pay infotype (0008).

    Source: help.sap.com

    Category: Taxes

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