REVENUE MEMORANDUM CIRCULAR NO. 46-2013 issued on June 26, 2013 clarifies the taxability of benefits under Collective Negotiations Agreement (CNA) granted to government employees’ organizations duly approved/accredited by the Civil Service Commission.

     Incentives arising from CNA qualify as “other benefits” under Section 32(B)(7)(e) of the Tax Code of 1997. It is exempt from Income Tax and Withholding Tax provided that, the CNA benefits, when added to the 13th month pay and other benefits, shall not exceed the threshold of P30,000 [CNA + (13th month pay + other benefits) ≤ P30,000)]. Any excess in the threshold shall be taxable to the employee, whether rank and file or supervisory.