BIR Ruling [DA-060-96]

February 2, 1996 BIR RULING [DA-060-96] Phil. Heart Center East Avenue, Quezon City Attention: Ms . Angeles C . Mancilla Chief Accounting Division Gentlemen : This refers to your letter dated June 7, 1995 requesting in effect for our legal opinion whether the hazard pay of 30% given to the employees of Phil. Heart Center with salary grade 19 and below, and 9.8% for employees with salary grade 20 and above, forms part of the compensation income of the latter and therefore taxable. In reply, please be informed that hazard pay is embraced within the term compensation, which means all remunerations for services performed by an employee for his employer unless specifically excepted under Section 27, 28, (b) and 71 of the Tax Code, as amended. Compensation income includes all income payments received as a result of an employer-employee relationship such as salaries, wages, honoraria, bonus, taxable pensions, allowances. fringe benefits, fees, and other income of similar nature. (BIR Ruling No. 266-93, dated June 18, 1993) In view thereof, this Office is of the opinion as it hereby holds that the 30% and 9.8% hazard pay given to the employees of Philippine Heart Center is considered compensation income subject to withholding tax because it does not fall within the meaning of the term "facilities or privileges" as defined under Section 2 (a) of Revenue Regulations No. 6-82, as amended by Revenue Regulations No. 12-86. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Asst. (Legal Service)