BIR Ruling [DA-290-97]

August 28, 1997 BIR RULING [DA-290-97] Toyota Autoparts Philippines, Inc. Toyota Sta. Rosa (Laguna) Complex Special Export Processing Zone Barangay Pulong Sta. Cruz Sta. Rosa, Laguna 4026 Attention: Mr. Kenichi Yoshida Treasurer/Comptroller Gentlemen : This refers to your letter dated February 19, 1997 stating that as a matter of benefit policy, your company has been extending meal subsidy to your employees in the amount of P25.00 per day in the form of meal tickets/coupons; that the same is relatively of small value and offered or furnished as means of promoting health, goodwill, contentment or efficiency of employees and that you are considering the conversion of said meal tickets/coupons to cash. Based on the foregoing, you now request for exemption of said amount from the payment of income tax and the consequent withholding tax. In reply, please be informed that pursuant to Section 28 (b) 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. ATCEIc Accordingly, the amount of P25.00/day for meal subsidy 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, which amended Section 72 of the Tax Code, as amended, provided, however, that such "other benefits" inclusive of the P25.00/day meal subsidy, 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. 089-95 dated June 14, 1995). Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC-Asst. Commissioner Legal Service