BIR Ruling [DA-424-99]

July 22, 1999 BIR RULING [DA-424-99] RR 2-98 RR 3-98 DA 26-99 DA 11-97 Xavier School, Inc . San Juan, Metro Manila Attention: Fr. R. Eugene Moran, S.J. Director-Treasurer Gentlemen : This refers to your letter dated January 12, 1998 requesting confirmation of your opinion that the P25/day meal allowance; P25/day transportation allowance; and one (1) sack of rice to be given as additional allowances to your teachers and staff are exempt 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 P25/day meal allowance, P25/day transportation allowance and the one (1) sack of rice worth P350/mo. to be given as additional allowances to your teachers and staff 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) AaIDCS 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)