Withholding Tax on the Taxable Compensation Income of AFP Personnel

March 13, 1990 BIR RULING NO. 027-90 26-000 1982 027-90 Gentlemen : This refers to your letter dated February 22, 1990 requesting a ruling that for purposes of withholding tax only the basic salary/pay of PAF Junior Officers shall be declared as taxable compensation income on the individual certificate of income tax withheld on compensation (BIR Form W-2). In reply, please be informed that pursuant to par. 2, Section 2 of Revenue Regulations No. 12-86 reading "2. Gross Compensation Income (a) In general . For purposes of withholding tax, the term "compensation" means all remuneration for services performed by an employee for his employer unless specifically excepted under Section 229 (now 28) and 90 (now 80) of the Tax Code. The name by which the remuneration for services is designated is immaterial thus, salaries, wages, emoluments and honoraria, bonuses, allowances (such as transportation, representation, entertainment and the like), fringe benefits (monetary and non-monetary), fees, including director's fees, taxable pension and retirement pay, and other income of a similar nature constitute compensation income." xxx xxx xxx "If a person receives as remuneration for services rendered a salary and in addition thereto living quarters and meals, the value to such person of the quarters and meals so furnished shall be added to the remuneration otherwise paid for the purpose of determining the amount of compensation subject to withholding. If, however, living quarters or meals are furnished to an employee for the convenience of the employer, the value thereof need not be included as compensation subject to withholding. xxx xxx xxx all remunerations for services are generally included in the taxable compensation income of AFP personnel subject to withholding tax. It includes fringe benefits (monetary or non-monetary e.g., longevity pay, hazard pay, and all kinds of allowances, except allowances for quarters, clothing and subsistence which are held to be exempt from income tax pursuant to Revenue Memorandum Circular No. 15-87. casia Very truly yours, (SGD.) JOSE U. ONG Commissioner