BIR Ruling [DA-101-96]

March 5, 1996 BIR RULING [DA-101-96] Baga & Associates Law Offices 7th Floor, Singapore Airlines Building 138 H.V. dela Costa Street Salcedo Village Makati City Attention: Messrs . Noe B . Baga and Juanito C . Castaeda, Jr . Gentlemen : This refers to your letter dated January 8, 1996 requesting in effect, for a ruling on the tax treatment of the monthly rice subsidy of Five Hundred Pesos (P500.00) granted by your client. Nissho Iwai Corporation, to each its employees. 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 Section 2(a) of Revenue Regulations No. 6-82 as amended by Revenue Regulations No. 12-86 implementing Section 28 of the Tax Code as amended by Executive Order No. 37. Such being the case, since the rice subsidy given by your client, Nissho Iwai Corporation, to its employees has for its purpose, the promotion of its employees' health, goodwill contentment and efficiency, and since the same is of relatively small value, said benefit is not considered compensation income/wages. Accordingly, it is not subject to the withholding tax prescribed by Section 72 in relation to Section 21 (a) of the Tax Code, as implemented by Revenue Regulations No. 6-82, as amended. (BIR Ruling No. 029-93, January 15, 1993) cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)