BIR Ruling [DA-447-99]

August 4, 1999 BIR RULING [DA-447-99] Miyasaka Polymer (Philippines), Inc. 20 Ampere Street, Light Industry & Science Park of the Philippines (LISPP) Bo. Diezmo, Cabuyao, Laguna Attention: Mr . Noboro Nagashima Managing Director Gentleman : This refers to your letter dated February 25, 1999 requesting for a ruling that the P10.00 per day transportation allowance given to your employees should be considered as a de minimis benefit such that the same shall be exempt from income tax. LexLib It is represented that Miyasaka Polymer (Philippines), Inc. is a domestic corporation registered with the Philippine Economic Zone of Science Park of the Phils., Bo. Diezmo, Cabuyao, Laguna; that in January, 1998, Miyasaka unilaterally granted each employee a transportation allowance of Ten Pesos (P10.00) per working day to cover part of their transportation expenses in going to their work premises and back to their respective residences; and that this meager amount is given by Miyasaka in order to promote goodwill and contentment to its employees. In reply, please be informed that pursuant to Section 2.78.1 (A)(3) of Revenue Regulations No. 2-98, 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. Such being the case, the transportation allowance of Ten Pesos (P10.00) per day given to your employees, which is indeed of "of relatively small value", need not be included as part of compensation subject to withholding tax since they are given merely to promote the health, goodwill, contentment and efficiency of your employees. (BIR Ruling No. 553-93 dated December 29, 1993) Moreover, the transportation allowance of P10.00 per day given to supervisory and managerial employees are likewise not subject to FBT since it falls within the purview of the term " de minimis " benefits. " De minimis " benefits are facilities or privileges furnished or offered by an employer to his employees that are of relatively small value and are offered or furnished by the employer as a means of promoting the health, goodwill, contentment, or efficiency of his employees. Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)