BIR Ruling [DA-110-97]

March 19, 1997 BIR RULING [DA-110-97] National Academy of Science and Technology Mezzanine Floor TAPI Building, DOST Compound Bicutan, Taguig Metro Manila Attention: Ms. Luningning E. Samarita Executive Director Gentlemen : This refers to your letter dated May 24, 1996 seeking an opinion as to whether a stipend which the National Academy of Science and Technology (NAST) intends to give to its research fellowship grantees is subject to tax. It is represented that the research fellowship is a program of the National Academy of Science and Technology aimed to encourage retired scientist to continue doing research; that the grantee, upon approval of the research project proposal, is given a stipend ranging from P5,000 to P10,000 per month; and that the project is good for one year. In reply, please be informed that pursuant to Section 2 of Revenue Regulations No. 6-82, as amended by Revenue Regulations No. 12-86, the term "compensation" means all remuneration for services performed by an employee for his employer unless specifically excepted under Section 28 and 71 of the Tax Code, as amended. The name by which the remuneration for services is designated is immaterial. Thus, salaries, wages, emoluments and honoraria, bonuses, allowances, fringe benefits, fees, including director's fees, taxable pensions and retirement pay and other income of similar nature constitute compensation income. (BIR Ruling No. 177-93 dated May 3, 1993) Such being the case, stipend paid periodically as regular allowance under the term of a fellowship is considered compensation subject to income tax under Section 21 (a) of the Tax Code, and consequently to the withholding tax on wages prescribed by Section 72, Chapter 10, Title II of the same Code, as amended and as implemented by Revenue Regulations No. 6-82, as amended. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: (SGD.) ALICIA L. TOMACRUZ Head Revenue Executive Assistant (Legal Service)