BIR Ruling [DA-418-99]

July 20, 1999 BIR RULING [DA-418-99] RR 2-98 Sec. 79 TC DA 11-97 DA 26-99 Department of Finance Manila Attention: Dr. Monina Stevens-Fajardo, M.D. Chief, Medical and Dental Clinic Gentlemen : This refers to your letter dated September 16, 1997 requesting that the subsistence and laundry allowance in the amount of P1,025.00/month received by the employees of the Medical and Dental Clinic of the Department of Finance be exempted from income tax, and consequently from withholding tax. 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 pursuant to Revenue Regulations No. 2-98. Such being the case, the amount of P1,025.00/month subsistence and laundry allowance offered by the Department of Finance to your health workers are not considered compensation income/wages. Accordingly, the same are not subject to the withholding tax prescribed by Section 79 in relation to Section 24(A), both of the Tax Code of 1997, since the said allowances are of relatively small value and offered by the employer to promote the health and efficiency of its employees. (BIR Ruling No. DA-11-97 dated January 9, 1997; DA-26-99 dated January 18, 1999) AcICHD 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 and Enforcement Group)