BIR Ruling [DA-320-99]

May 21, 1999 BIR RULING [DA-320-99] Yazaki-Torres Manufacturing, Inc. 1043 Zobel Roxas cor. Bautista Streets Singalong, Manila Attention: Mr. Nila T. Rafer Finance Director Gentlemen : This refers to your letter dated October 27, 1998 requesting for a ruling as to whether or not the subsistence allowance in the amount of P80.00 per day granted to your employees is subject to income tax/fringe benefit tax and consequently to withholding tax. It is represented that your main office and place of production is located at Calamba, Laguna; that, however, for easy communication and dealings with various government and private offices in Manila, you maintain a Manila Liaison Office; that most of your employees assigned in your Manila Liaison Office come from Laguna and Batangas; and that to compensate for the additional expense in their daily subsistence, you are granting a daily subsistence allowance in the amount of P80.00 In reply, please be informed that facilities and privileges (such as entertainment, medical services, or so called "courtesy" discounts on purchases), 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. (Sec. 2.78.1(3) of revenue Regulations No. 2-98) aDSIHc Such being the case, since the subsistence allowance in the amount of P80.00/day or P2,400.00/month is of relatively small value and is offered to promote the health, goodwill, contentment and efficiency of your said employees, the same is not considered compensation income/wages. Accordingly, it is not subject to the withholding tax prescribed in Section 79 in relation to Section 24, both of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98. (BIR Ruling No. DA-163-98 dated April 22, 1998) Moreover, the subsistence allowance of P80.00 per day is not subject to the fringe benefits tax since the same is considered as de minimis benefits under Revenue Regulations No. 3-98. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal & Enforcement Group)