BIR Ruling [DA-122-96]

March 26, 1996 BIR RULING [DA-122-96] Mitsuwa Philippines, Inc. 20/F Metrobank Plaza Bldg. Sen. Gil Puyat Ave. 1200 Makati City Attention: Mr. Teruo Takasaka President Gentlemen : This refers to your letter dated October 10, 1995 requesting for a ruling exempting from income tax the following incentives provided by that company to its Supervisors and Managers: Supervisors Asst. Managers Managers Meal Subsidy P500.00/mo. P500.00/mo. P1,000.00/mo. Rice Allowance P500.00/mo. P1,000.00/mo. P1,000.00/mo. TOTAL P1,000.00/mo. P1,500.00/mo. P2,000.00/mo. =========== =========== =========== 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. CIScaA Such being the case, since the monthly meal and rice allowances are given by your company, Mitsuwa Philippines, Inc., to its Supervisors, Asst. Managers and Managers for the purpose of promoting the health, goodwill, contentment and efficiency of the said employees, and 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. 29-93, January 15, 1993). Very truly yours, (SGD.) ALICIA P. CLEMENO Assistant Commissioner (Legal Service)