BIR Ruling [DA-168-96]

May 10, 1996 BIR RULING [DA-168-96] Ms. Rosalinda T. Lacaba No. 450 A. Mabini Street, Kalookan City M a d a m : This refers to your letter dated July 28, 1995 requesting for a ruling on whether or not the following benefits granted to the employees of the City Government of Kalookan are not considered compensation income subject to withholding tax. Allowance Amount Rice Subsidy P800.00/month Augmentation Allowance 500.00/month In reply, please be informed that 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, ass amended by Executive Order No. 37 "facilities or privileges" furnished or offered by an employer to his employees generally, are not considered as compensation subject to withholding 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. Such being the case, the rice subsidy of P800.00/month and augmentation allowance of P500.00/month need not be included as compensation subject to withholding tax since they are given to promote the health, goodwill, contentment and efficiency of the Government employees of Kalookan and they are of "relatively small value." (BIR Ruling No. 101-93 dated March 12, 1993) Very truly yours, (SGD.) ALICIA P. CLEMENO Assistant Commissioner (Legal Service)