Revenue Memorandum Circular No 105-2025

Clarifying the Taxability of Health Emergency Allowance Granted Under Republic Act No. 11712, Otherwise Known as the “Public Health Emergency Benefits and Allowances for Health Care Workers Act”

Revenue Memorandum Circular (RMC) No. 105-2025 | Issued: November 12, 2025

The Bureau of Internal Revenue (BIR) issued this circular to clarify the tax treatment of the Health Emergency Allowance (HEA) granted under Republic Act (RA) No. 11712, also known as the “Public Health Emergency Benefits and Allowances for Health Care Workers Act.”

HEA Coverage and Rates

The HEA provides monthly allowances to all eligible healthcare and non-healthcare workers during the COVID-19 pandemic or other public health emergencies of national scale that may be declared in the future:

• Php 3,000 for low-risk areas
• Php 6,000 for medium-risk areas
• Php 9,000 for high-risk areas

To receive the full allowance, workers must render at least 96 hours of actual service per month; otherwise, the benefit shall be prorated accordingly.

Tax Treatment Clarification

As clarified by RMC No. 105-2025, the HEA shall be considered part of “other benefits” under Section 32(B)(7)(e) of the National Internal Revenue Code (Tax Code). Consequently, the HEA is exempt from income tax provided that the employee’s total “other benefits” do not exceed the Php 90,000 annual threshold.

This classification aligns with the general tax treatment of supplemental benefits received by employees, ensuring consistency in the application of tax exemptions across various government-mandated allowances.

Treatment for Independent Contractors

However, individuals engaged through contracts of service (COS) or job orders (JO) are considered self-employed or independent contractors under Philippine tax law. As such, the HEA they receive is subject to income tax and other applicable taxes based on their respective tax obligations as self-employed individuals. These workers must report the HEA as part of their gross income and comply with the corresponding tax filing and payment requirements.

Employer Compliance Requirements

The circular mandates that all employers must include all recipients of HEA in their annual Alphabetical List of Employees/Payees (BIR Form 1604-CF and related attachments). This reporting requirement ensures proper documentation and transparency in the disbursement of government-funded allowances, enabling the BIR to monitor compliance and verify the correct tax treatment of these benefits.

Practical Implications for Healthcare Institutions

Healthcare institutions—whether public or private—must carefully track and document HEA disbursements to ensure proper tax treatment. For regular employees, employers should aggregate the HEA with other benefits such as 13th month pay, productivity incentives, and similar allowances to determine whether the total exceeds the Php 90,000 threshold. Any excess beyond this threshold becomes taxable compensation income subject to withholding tax.

Private hospitals and healthcare facilities receiving government funds for HEA distribution must maintain accurate records demonstrating that benefits were disbursed to qualified recipients, proper tax treatment was applied based on each worker’s employment classification, and required BIR reportorial submissions were completed on time.

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