BIR Ruling [DA-220-97]

June 9, 1997 BIR RULING [DA-220-97] Ms. Rosalie Pacis-Paje J.P. Rizal, Makati City M a d a m : This refers to your letter dated April 10, 1997 requesting in behalf of the devolved employees of the Makati City Government, for clarification on the taxability of your Representation and Transportation Allowance (RATA) which was granted in November 1996 covering the period of 1993 and 1995. In reply, please be informed that pursuant to Revenue Memorandum Circular No. 60-91 dated July 9, 1991, RATA is in fact a reimbursement for the expenses incurred in the performance of one's duties rather than as an additional compensation and therefore is not compensation subject to withholding tax, pursuant to Section 752 of the Tax Code, as amended, provided that substantiation requirements have been complied with. However, although the amount of RATA is not subject to withholding tax, the excess of RATA, if not returned to the employer, constitutes taxable income which should be declared in the recipients income tax return for the year in which the RATA is received by him. Any amount of tax withheld from RATA received by qualified officials and employees shall not be refunded but shall be credited against their income tax due for 1996 when the annualized withholding tax is determined in accordance with Section 22(b) of Revenue Regulations No. 6-82, as amended. (BIR Ruling Nos. 26-92 dated January 17, 1992; 235-92 dated August 27, 1992) cdtech Very truly yours, ESTHER R. IBAEZ OIC-Head Revenue Executive Assistant (Legal Service)