BIR Ruling [DA-237-99]

April 15, 1999 BIR RULING [DA-237-99] Office for Southern Cultural Communities, Region VII 303 Susan Building cor. Legaspi/Jakosalem Streets Cebu City Attention: Mr . Zosimo C . Campos Regional Director Gentlemen : This refers to your letters dated February 2, 1998 and March 10, 1998 requesting, in effect, for ruling on whether or not the Representation and Transportation Allowance (RATA) which is regularly received by your employees holding the position of Division Chief and above is subject to income tax. LibLex It is your contention that representation and travelling allowance (RATA), through regularly received is not given in the nature of a compensation income, hence, may not be included in the computation of the gross income of the employee receiving the same. In reply, please be informed that under Revenue Memorandum Circular No. 60-91 clarifying BIR Ruling No. 62-91 dated November 6, 1991, it was ruled that 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 are not compensation subject to withholding tax pursuant to then Section 72 of the Tax Code, as amended [now Section 79 of the Tax Code of 1997], provided substantiation requirements have been complied with. However, although the amount of RATA is not subject to withholding, the excess of RATA, if not returned to the employer, constitutes taxable income which should be declared in the recipient's income tax return for the year in which the RATA was received by him. (BIR Ruling Nos. 26-92 dated January 17, 1992; 235-92 dated August 27, 1992) prcd Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)