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Cost of Living Allowance (COLA) of MWEs exempt from income tax

Cost of Living Allowance (COLA) of Minimum Wage Earners exempt from income tax

The P22.00 per day Cost of Living Allowance (COLA) recently granted to all private sector minimum wage eagers (MWEs) in the National Capital Region is exempt from income tax.

Wage Order No. NCR-16 issued by the Regional Tripartite Wages and Productivity Board-NCR provides that the COLA forms part of the new wage rates. Hence, it will be covered by the income tax exemption of MWEs under Republic Act 9504, as implemented by RR 10-08.  The exemption of MWE's applies to the minimum wage, holiday pay, overtime pay, night shift differential pay and hazard pay.  
Please see attached copy of RMC 23-2011 for your reference and guidance.