BIR Ruling [DA-367-A-00]

October 23, 2000 BIR RULING [DA-367-A-00] RATA (RMC No. 60-91) DA 220-97 National Food Authority 101 E. Rodriguez Sr. Avenue Quezon City Attention: Atty . Efren Sabong Director, DLA Gentlemen : This refers to your letter dated January 25, 2000 requesting for a ruling as to whether the FIVE HUNDRED PESOS (P500.00) allowance per court appearance or a maximum of THREE THOUSAND PESOS (3,000.00) for six (6) appearances a month granted to government lawyers in attending court hearings is subject to a withholding tax. In reply, please be informed that the allowance of P500.00 received by government lawyers per court appearance or a maximum of P3,000.00 for six (6) appearances in a month as Special Counsel pursuant to the General Appropriations Act of 1998 partakes the nature of a representation and transportation allowances or RATA which pursuant to Revenue Memorandum Circular No. 60-91 dated July 9, 1991, is in fact a reimbursement of the expenses incurred in the performance of one's duties and therefore is not compensation subject to withholding tax pursuant to Section 79 of the Tax Code of 1997, provided, that substantiation requirements to 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 recipient's 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 the taxable year or when the annualized withholding tax is determined in accordance with Revenue Regulations No. 2-98. (BIR Ruling No. DA-220-97 dated June 9, 1997) Very truly yours, Commissioner of Internal Revenue By: (SGD.) LILIAN B. HEFTI Deputy Commissioner Legal & Inspection Group