BIR Ruling [DA-026-99]

January 18, 1999 BIR RULING [DA-026-99] Immaculate Conception Academy 10 Grant St., Greenhills San Juan, Metro Manila Quezon City Attention: Sr . Teresita Canivel, MIC Finance Officer Gentlemen : This refers to your letter dated February 24, 1998 requesting for confirmation of your opinion that the following allowances, to wit: "1. P25/day meal allowance; "2. P20/day transportation allowance; and "3. One (1) sack of rice to be given to your employees (consisting of teachers and staff), over and above P12,000.00 "other benefits" limit granted under R.A. 7833 shall not be considered compensation subject to withholding tax. It is represented that you are a non-stock, non-profit educational institution; and that the foregoing allowances are to be given to your teachers and staff in order to maintain the moral and satisfaction of your employees, and to promote health and efficiency. In reply, please be informed that facilities or privileges (such as entertainment, medical services, or so called courtesy discounts on purchases) furnished or offered by an employer to his employees, generally, are not considered as compensation subject to withholding tax if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees pursuant to Revenue Regulations 2-98, as amended by Revenue Regulations 3-98 implementing Sec. 32(B)(7)(e)(iv) of the Tax Code of 1997. Such being the case, the amounts of P25/day meal allowance, P20/day transportation allowance and P350 worth of one (1) sack of rice offered by you to your teachers and staff are not considered compensation income/wages. Accordingly, the same are not subject to the withholding tax prescribed by Section 79 in relation to Sec. 24(A), both of the same Tax Code of 1997, since the said allowances are relatively of small value and offered by the employer to promote the health and efficiency of its employees. (DA 11-97 dated January 9, 1997) casia Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)