BIR Ruling [DA-159-03]

May 14, 2003 BIR RULING [DA-159-03] 33 190-89; 13-90; 149-92; 93-98 Nonwoven Fabric Philippines Inc. Nonwoven Building 8404 Dr. A. Santos Ave. Paraaque City Attention: Ms. Victoria H. Asuncion Office Manager Gentlemen : This refers to your letter dated September 26, 2002, stating that your company has no shuttle service or service car at present to accommodate the transportation service of your two (2) managers and that instead your company is paying your managers a monthly pay of P3,500.00 each which represents the following: 1. Use of the personal car. 2. Gasoline and toll fees incurred in pursuit of the company errands for official business use and from residence to office and vice versa. 3. Repairs and maintenance of the personal car. In view of the foregoing, you now pose the following queries: Q: Is the amount of P3,500.00 considered as "de minimis" benefit? A: Transportation allowance which is fixed in amount (P3,500.00) and regularly received by your managers as part of their monthly compensation income shall not be treated as taxable fringe benefits but the same shall be considered as taxable compensation income subject to the tax imposed under Section 24 of the Tax Code of 1997 pursuant to Section 2.33(B)(2)(d) of Revenue Regulations No. 3-98, as amended by 8-2000, as further amended by 10-2000 ( BIR Ruling No. 13-90 dated February 1, 1990 and BIR Ruling No. 149-92 dated May 19, 1992 ). Q: Do you need to support the check voucher with receipts? A: Section 34(A)(1)(iv)(b) of the Tax Code of 1997 provides, viz. : "(b) No deduction from gross income shall be allowed under Subsection (A) hereof unless the taxpayer shall substantiate with sufficient evidence, such as official receipts or other adequate records: (I) the amount of the expense being deducted, and (ii) the direct connection or relation of the expense being deducted to the development, management, operation and/or conduct of the trade, business or profession of the taxpayer." Accordingly, for purposes of considering the benefit as valid deductible expense on the part of your Company, official receipts or other adequate records must be submitted ( BIR Ruling No. 190-89 dated August 31, 1989 ). This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered as null and void. cEISAD Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group