Update: This info is good for November and December 2019 only.
The Philippine National Police (PNP) is implementing a tax adjustment scheme for the taxable portion of the 2019 bonuses that include the Midyear bonus (MYB), Year end Bonus (YEB) and PEI cash gift.
According to a memorandum by PNP Finance Service (PNPFS) dated October 29, 2019, there will be adjustments on the withholding tax on compensation of PNP personnel for November and December 2019 due to the distribution of the Year end bonus for CY 2019.
Under the T.R.A.I.N. law, the 13th Month Pay and other bonuses amounting to Php 90,000.00 are tax exempt. However, any amount in excess of that Php 90,000.00 will be subjected to withholding tax.
In other words, when you add all the bonuses you received and about to receive for the year 2019, and its total is below Php 90,000.00, you are no longer subjected to a tax adjustment.
However, if the total is more than Php 90,000.00, the excess of which will be subjected to a 25% withholding tax.
As the PNPFS memo further explains, Year end tax adjustments are being implemented every year to ensure correct deduction on withholding taxes of all PNP personnel in accordance with the “Tax Due Equals Tax Withheld” directive of BIR.
How to compute
To be better understand this tax adjustment scheme, please refer to the photo below as provided:
In the photo above, the MYB plus YEB plus Cash Gift of a PNP personnel with a rank of Police Lieutenant (PLT) has a total of Php 104,056.00 less Php 90,000.00 equals Php 14,056.00.
This Php 14,056.00 will be subjected to a 25% withholding tax which is Php 3,514.00.
Because this tax adjustment scheme will be implemented in 2 months (Nov. and Dec.), The FS divided it by 2, resulting to a Php 1,757.00 additional deduction from your November and December monthly salary, respectively.
So don’t be surprised if for example, you are a PLT that is receiving a total of Php 40,000.00 (combined 15th and 30th salary) and you noticed a significant amount missing, it’s just a tax adjustment being implemented by PNP.
For the full calculations, please see below photo: