WORKERS' 13th month pay and other bonuses will remain tax-exempt under the Department of Finance’s (DOF) revised tax reform package.

The DOF, which presented it before the Senate ways and means committee on Wednesday, has reconsidered its earlier proposal to remove tax exemptions on bonuses, while exempting from income tax those who are earning P250,000 and below each year.

Sen. Sonny Angara, chairman of the committee, was quoted in news reports as saying that the DOF’s decision signifies a government “that is listening to the people” but at the same time noted that the Senate will work hand-in-hand with the executive department to strike a balance, so the government could fund its ambitious infrastructure projects.

The DOF earlier agreed to retain the VAT exemption of senior citizens and persons with disabilities.

Sought for comment, Bureau of Internal Revenue (BIR) 13 Legal Chief lawyer Neri Yu said the decision would create a greater shortfall in the BIR’s collection efforts.

BIR 13, for instance, registered a shortfall of P9.7 billion from its collection target in 2016.

Nationwide, BIR is tasked to collect P1.83 trillion this year.

Under Republic Act 10653, the 13th month pay and other benefits, including productivity incentives and Christmas bonuses lower than P82,000 are exempted from taxes. Before, only bonuses amounting to P30,000 and below were tax-exempt.

The DOF proposal also covers microenterprises and provides for a single tax of eight percent of their gross sales annually, instead of the current 30 percent they need to file quarterly.

“This would be good for our microenterprises as it would mean more internal resources available to fund growth and expansion of the business,” said Department of Trade and Industry Provincial Director Maria Elena Arbon.

Micro enterprises are defined under the law as those having total assets not more than P3 million. About 99.6 percent of enterprises are MSMEs, and 90 percent of that are micro.