BIR Ruling [DA-265-97]

August 5, 1997 BIR RULING [DA-265-97] G.Z. Unique Party Sales, Inc. 523 M. Almeda Street Pateros, Metro Manila Attention: Mr. Ronaldo P. De Guzman Accountant Gentlemen : This refers to your letter dated January 2, 1997 requesting for a ruling to the effect that the meal allowance of P35.00 given per day per employee is exempt from withholding tax. In reply, please be informed that pursuant to Section 28 (b) (8) of the Tax Code, as amended by R.A. No. 7833, the 13th month pay and other benefits in the aggregate amount not exceeding P30,000.00 received by officials and employees of the national government, local government units and agencies, including government-owned and controlled corporations and entities paid or accrued beginning January 1, 1994 are exempt from income tax and consequently from the withholding tax on wages. The term "13th month pay" shall refer to the mandatory one month basic salary of an official or employee of the national government, local government units, agencies and instrumentalities, including government-owned and controlled corporations and of private offices received after the 12th month pay, while the term "other benefits" shall refer to all benefits other than the 13th month pay, such as, the annual Christmas bonus given by private offices, 14th month pay, mid-year productivity incentive bonus, gifts in cash or in kind and other similar benefits received by an official or employee for one calendar year in an amount not exceeding Twelve Thousand Pesos (P12,000.00) as maximum limit. Accordingly, the amount of P35.00/day for meal allowance granted to each of your employees may be considered as falling within the contemplation of "other benefits" provided for under Section 28 (b) (8) (F) of the Tax Code, as amended, and, therefore, need not form part of your employee's taxable compensation income subject to the withholding tax on wages under Revenue Regulations No. 6-82, as recently amended by Revenue Regulations No. 4-93, implementing Republic Act No. 7497, amending Section 72 of the Tax Code, as amended, provided, however, that such "other benefits" inclusive of the P35.00/day meal allowance, shall not in the aggregate exceed P12,000.00; and that the total amount of tax exempt benefits, when added to the 13th month pay shall not exceed P30,000.00 (BIR Ruling No. 024-95 dated February 14, 1995). SIHCDA Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner (Legal Service)