1. What is the BIR Daily Rate Calculation?

The Bureau of Internal Revenue (BIR) in the Philippines uses this standard formula to convert monthly salaries to daily rates for tax and compensation purposes. This calculation is particularly important for contractual employees and those with variable work schedules.

2. How Does the Calculator Work?

The calculator uses the BIR standard formula:

Where:

• Monthly Rate — The employee's monthly salary in Philippine Pesos
• 12 — Number of months in a year
• 365 — Number of days in a year (not accounting for leap years)

Explanation: The formula annualizes the monthly salary by multiplying by 12, then divides by 365 days to get the equivalent daily rate.

3. Importance of Daily Rate Calculation

Details: This calculation is essential for determining proper tax withholding, computing overtime pay, holiday pay, and other benefits for employees who are paid monthly but need daily rate equivalents.

4. Using the Calculator

Tips: Enter the monthly salary in PHP. The value must be positive. The result will show the equivalent daily rate according to BIR standards.

5. Frequently Asked Questions (FAQ)

Q1: Why does BIR use 365 days instead of working days?
A: The 365-day divisor is used to compute the absolute daily rate, not just working days, as benefits and taxes apply to all calendar days.

Q2: Is this different from the "factor" method (monthly rate/22)?
A: Yes, the 22-day factor is for estimating working days, while this 365-day method is the official BIR calculation for tax purposes.

Q3: Does this apply to all employees in the Philippines?
A: This is the standard BIR calculation, but specific companies may use different methods for internal payroll computations.

Q4: How is this used for tax computation?
A: The daily rate helps determine which tax bracket applies when computing withholding taxes for partial month payments.

Q5: Should bonuses be included in the monthly rate?
A: For pure daily rate calculation, use base salary only. Bonuses have separate tax computations.