BIR Ruling [DA-044-00]

January 20, 2000 BIR RULING [DA-044-00] De La Salle University Professional Schools, Inc. 2401 Taft Avenue, Malate, Manila Attention: Mr . William M . Gamotia Controller Gentlemen : This refers to your letters dated July 21 and November 4, 1999, in effect requesting for exemption from payment of withholding tax on the rice subsidy and & laundry allowance being extended to your employees. It is represented that DE LA SALLE UNIVERSITY Professional Schools, Inc. is a non-stock, non-profit educational institution duly registered with the Securities and Exchange Commission; and that as part of your program to promote the health, goodwill and contentment of your employees, you embarked to provide them rice subsidy of P350.00 per month and laundry allowance of P150.00 per month in the total amount of P500.00 which is given in cash. In reply, please be informed that facilities or privileges (such as entertainment, medical services, or so called "courtesy" discounts on purchase), furnished or offered by an employer to his employees generally, are not considered as compensation subject to withholding 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. (Sec. 2.78.1.(3) of Revenue Regulations No. 2-98) prcd Such being the case, since the rice subsidy and laundry allowance in the amount of P500.00 per month is of relatively small value and is offered to promote the health, goodwill, contentment and efficiency of your employees, the same is not considered compensation income/wages. Accordingly, it is not subject to the withholding tax prescribed in Section 79, in relation to Section 24, both of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98. (BIR Ruling No. DA-320-99 dated May 21, 1999) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group