FRINGE BENEFITS TAXES
SAMPLE PROBLEMS
1. XYX Corp. assigned Mr. Passo one of its employee in the head office in Manila to manage
their branch office in Dagupan. The company provided for the residential house of the
manager paying a monthly rental of 34,000.
a. How much is the monthly FBT?
SOLUTION:
Monthly rental 34,000
Multiply by monetary value rate 50%
Monetary value 17,000
Divide by grossed-up rate 65%
Grossed-up monetary value 26,153.85
Multiply by FBT rate 35%
Monthly FBT 9,153.85
b. Supposed Mr. Passo is an expatriate from US headquarters who was deployed to the
Philippines for 3 months, how much is the monthly FBT?
SOLUTION:
Monthly rental 34,000
Multiply by monetary value rate 50%
Monetary value 17,000
Divide by grossed-up rate 75%
Grossed-up monetary value 22,666,67
Multiply by FBT rate 25%
Monthly FBT 5,666,67
2. Xtra Corp furnished and granted the use of its condominium unit to its Executive Vice-
President. The fair market value of the property is P4,800,000 while the acquisition cost is
P3,000,000.
a. How much is the monthly FBT?
SOLUTION:
FMV 4,800,000.00
Multiply by monetary value rate (5% x 50%) 2.5%
Monetary value 120,000.00
Divide by grossed-up rate 65%
Grossed-up monetary value 184,615.38
Multiply by FBT rate 35%
Annual FBT 64,615.38
Divide by 12
Monthly FBT 5,384.62
b. Supposed the value of the condominium in the Real property declaration form is
5,200,000 while the zonal value is 4,600,000, how much is the monthly FBT?
SOLUTION:
Value per real property declaration 5,200,000
Multiply by monetary value rate (5% x 50%) 2.5%
Monetary value 130,000.00
Divide by grossed-up rate 65%
Grossed-up monetary value 200,000.00
Multiply by FBT rate 35%
Annual FBT 70,000.00
Divide by 12
Monthly FBT 5,833.33
3. Laagan Company hired a new manager for its operations department. Once of the benefits
granted to the newly hired manager is car assistance wherein the Company will provide cash
assistance to the employee for the purchase of the car. The employee received P1,200,000
cash assistance from the company. The total cost of the car is P3,100,000. How much is the
FBT?
SOLUTION:
Monetary value 1,200,000.00
Divide by grossed-up rate 65%
Grossed-up monetary value 1,846,153.85
Multiply by FBT rate 35%
FBT 646,153.85
Note: No need to compute for the monthly FBT since the cash assistance was given one time.
4. Pautang Company is engaged in lending funds to the public. One of its employees, Mr.
Mayabang, the IT security manager, borrowed money amounting to P5,000,000 from the
company to purchase a piece of land in his hometown in Zamboanga City. Being an employee
of the company, the Company offered a lower interest rate of 4% per annum. The company
offers a 7% interest rate in all its loans services. How much is the monthly FBT?
SOLUTION:
Loan amount 5,000,000.00
Multiply by interest rate benefit (7% - 4%) 3%
Monetary value 150,000.00
Divide by grossed-up rate 65%
Grossed-up monetary value 230,769.23
Multiply by FBT rate 35%
Annual FBT 80,769.23
Divide by 12
Monthly FBT 6,730.77
Note: In the absence of interest rate, the prevailing market rate of 12% is used.
5. Supposed in the preceding example, the prevailing market interest rate is 12%. However,
Pautang Company offers an interest rate of 10% to the public. Mr. Mayabang borrowed
P5,000,000 for a lower rate of 8%. How much is the monthly FBT?
SOLUTION:
Loan amount 5,000,000.00
Multiply by interest rate benefit (10% - 8%) 2%
Monetary value 100,000.00
Divide by grossed-up rate 65%
Grossed-up monetary value 153,846.15
Multiply by FBT rate 35%
Annual FBT 53,846.15
Divide by 12
Monthly FBT 4,487.18
Note: Even if the prevailing market interest rate is 15%, the benefit received by Mr. Mayabang
is only 2%, not 7% (15% - 8%) since Pautang Company offers interest rate of 10%.
