Liability of Saudia Arabian Airlines Corp. to the 15% Branch Profit Remittance Tax

April 1, 1986 BIR RULING NO. 029-86 28-b 000-00 029-86 Gentlemen : This refers to your letter dated February 8, 1984 requesting opinion as to whether hospitalization benefits granted by your client, Manila Jockey Club, Inc. (MJCI) to all of its employees are considered compensation income subject to withholding tax. It is represented that MJCI has been paying the hospitalization expenses incurred by its employees as a means of promoting their health, goodwill, contentment and efficiency; and that hospitalization expenses are paid by MJCI directly to the hospitals. In reply, I have the honor to inform you that Section 2(a) of Revenue Regulations No. 6-82 implementing Section 28 of the Tax Code as amended by Batas Pambansa Blg. 135 provides that facilities or 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 . In view thereof, since the hospitalization benefits are granted by your client with the end in view of promoting its employee's health, goodwill, contentment and efficiency, said benefits are not considered compensation income/wages, hence, not subject to withholding tax prescribed under Section 21(a) in relation to Section 91 of the Tax Code as amended by B.P. 135 and as implemented by Revenue Regulations No. 6-82. cdta Very truly yours, (SGD.) BIENVENIDO A. TAN, JR. Commissioner