BIR Ruling [DA-127-00]

March 1, 2000 BIR RULING [DA-127-00] Integrated Device Technology (Phils.), Inc. Carmelray Industrial Park, Canlubang Calamba, Laguna Attention: Ms . Anabelle C . Aguinaldo General Accounting Section Head Gentlemen : This refers to your letter dated February 25, 1998 requesting in effect whether or not the one sack of rice given as ration to each employee every month or one-half () sack every month is exempt from income tax, and consequently from withholding tax for all rank and file employees and not subject to fringe benefit tax for all supervisors and managers. In reply, please be informed that under Section 32(B)(7)(e)(iv) of the Tax Code of 1997, " other benefits " include all benefits other than the 13th month pay, such as, the annual Christmas bonus given in cash or in kind and other similar benefits and refer to those benefits received by an official or employee for one (1) calendar year, the total amount of which including the 13th month pay does not exceed P30,000.00. cdll Accordingly, the one sack of rice given as ration to your rank and file employees every other month [or one-half () sack every month], may be considered as falling within the contemplation of " other benefits " provided for under Section 32(B)(7)(e)(iv) of the Tax Code of 1997, and therefore, need not form part of the employees' taxable compensation income subject to withholding tax on wages under Section 79 in relation to Section 24(a) both of the Tax Code of 1997, provided, however, that such " other benefits ," inclusive of the above benefit, shall not, in the aggregate, exceed P30,000.00 when added to the 13th month pay. (BIR Ruling No. 24-95 dated February 14, 1995) On the other hand, fringe benefits means any goods, service or other benefit furnished or granted by an employer in cash or in kind, in addition to basic salaries, to an employee except rank and file employee . However, " De Minimis " benefits are not subject to the fringe benefits tax pursuant to Section 33 of the Tax Code of 1997 as amended by Revenue Regulations No. 2-98 and Revenue Regulations No. 3-98. Such being the case, rise subsidy in the amount of P350.00 per month given to your supervisors and managers are not considered compensation income/wages. Accordingly, it is not subject to the withholding tax prescribed by Section 79 in relation to Section 24(A) nor is it subject to the fringe benefit tax prescribed by Section 33 both of the Tax Code of 1997 since said benefit are relatively of small value and offered by the employer to promote the health and efficiency of its employees. (BIR Ruling No. DA-163-98 dated April 22, 1998) Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)