As we bid farewell to year 2013, let us all welcome and be ready for the challenges year 2014 will bring. One of these is the increase in the mandatory SSS and PhilHealth contributions of both the employee and the employer.
Indeed, starting January 2014, higher rates will be imposed on the SSS and PhilHealth contributions of members for both the employer and employee.
PhilHealth
PhilHealth Circular No. 011, s.2012 dated Feb. 28, 2012 prescribed that effective Jan. 1, 2013, PhilHealth contributions shall be at three percent (1.5 percent for both the employer and employee) of the employee’s basic monthly salary ranging from P7,000 to P50,000. On Nov. 22, 2012, PhilHealth issued Circular No. 057, s.2012 to partially defer said increase. The latter circular also lowered the rate increase from three percent to 2.5 percent (1.25 percent for each employer and employee) of the employee’s basic monthly salary, ranging from P7,000 to P35,000.
In the recent PhilHealth Circular No. 027, s.2013 dated Sept. 30, 2013, the contribution rate remains at 2.5 percent. However, effective January 2014, the salary bracket floor is adjusted to P8,000 while the salary bracket ceiling remains at P35,000. Starting January 2014, the contributions will run from P200 to P875 (P100 and P437.50 respectively, for each employee and employer).
SSS
SSS issued SSS Circular No. 2013-010, dated Oct. 2, 2013, to increase the SSS contributions effective January 2014. The new SSS premium rate is 11 percent, and the employer and employee shall pay 7.37 percent and 3.63 percent, respectively. This means that starting January 2014, the minimum and maximum SSS contributions will be P110 (P73.70 for the employer and P36.30) and P1,760 (P1,178.70 for the employer and P581.30 for the employee), respectively. Please note however that the employee contribution (EC) premium shouldered by the employer remains at P10 for employees with monthly salary credit (MSC) of P14,500 and below, and P30 for employees with MSC of P15,000 to P16,000.
Pag-IBIG
Pag-IBIG contribution remains at P100 for each employee and employer. Please note however that Pag-IBIG is planning to double the contribution of members.
In summary, the total maximum mandatory contributions to SSS, PhilHealth, and Pag-IBIG effective January 2014 will be P1,118.80 for the employee, and P1,746.20 for the employer.
What would be the effect of the increase in contributions as far as tax is concerned? SSS, PhilHealth, and Pag-IBIG contributions are classified as exclusions from gross income; hence, exempt from income tax.
The Bureau of Internal Revenue (BIR) in Revenue Memorandum Circular (RMC) No. 027-11 dated July 1, 2011 has clarified that only regular contributions mandated by law are excludable from the gross income of the taxpayer. This means that the excess over the mandatory/compulsory contributions is not exempt from tax.
Under the law, the employer is responsible for the remittance of the contributions to the SSS, Pag-IBIG, and PhilHealth.
Depending on the 10th digit of the employer registration number, the new payment deadlines for the SSS contributions are as follows:
1 or 2 – 10th day of the month following the applicable month
3 or 4 – 15th day of the month following the applicable month
5 or 6 – 20th day of the month following the applicable month
7 or 8 – 25th day of the month following the applicable month
9 or 0 – last day of the month following the applicable month
For Pag-IBIG contributions, depending on the first letter of the employer’s name, the deadlines are as follows:
A to D – 10th to 14th day of the month
E to L – 15th to 19th day of the month
M to Q – 20th to 24th day of the month
R to Z, or numeral – 25th to the end of the month
For PhilHealth contributions, the same shall be remitted by the employer on or before 10th of the month following the applicable month.
Timely remittance of the contributions must be observed because penalties are imposed for failure to meet the deadline. The employer shall be liable to a penalty of three percent of the amount of unpaid SSS and Pag-IBIG contributions per month from the date the contribution falls due until paid. Likewise, an employer who fails to remit PhilHealth contributions on time shall be automatically charged two percent monthly interest from the day immediately after the deadline up to the actual date of remittance. Apart from fines and civil liabilities, criminal liabilities may also be imposed for late remittance or non-remittance of the said contributions.
Janeth A. Parcon is a supervisor from the tax group of Manabat Sanagustin & Co. (MS&Co.), the Philippine member firm of KPMG International.
This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity. -(The Philippine Star)
The view and opinions expressed herein are those of the author and do not necessarily represent the views and opinions of KPMG International or MS&Co. For comments or inquiries, please email manila@kpmg.com or rgmanabat@kpmg.com.
For more information on KPMG in the Philippines, you may visit www.kpmg.com.ph.
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