Whether Commutable Representation and Transportation Allowances Given to Officials are Subject to the Withholding Tax

February 8, 1991 BIR RULING NO. 015-91 21 (a) 013-90 015-91 Gentlemen : In reply to your letter dated September 10, 1990 requesting opinion on whether commutable representation and transportation allowances given to officials of that Office are subject to the withholding tax, please be informed that taxable compensation, business and other income received during each taxable year from all sources by every individual, whether a citizen of the Philippines or alien residing in the Philippines shall be subject to income tax at the rates prescribed under Section 21(a) in relation to Section 28 of the Tax Code, as amended. For purposes of the withholding tax the term "compensation income" means all remunerations for services performed by an employee for his employer unless specifically excepted under Sections 27, 28(b) and 71 of the Tax Code, as amended. Compensation income includes all income payments received as a result of an employer-employee relationship, such as salaries, wages, honoraria, bonus, taxable pensions, allowances , fringe benefits, fees and other income of similar nature (Rev. Regulations No. 6-82 as amended by Rev. Regulations No. 12-86). In view thereof, and being part of the remuneration or compensation paid to government and non-government officials and employees, the aforementioned representation and transportation allowances given to your officials are subject to income tax under Section 21(a) of the Tax Code; and, consequently, to the withholding tax on wages prescribed by Section 72, Chapter X, Title II of the same Code as amended, and implemented by Revenue Regulations No. 6-82, as amended. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner