One-Time Relocation Assistance Not Exceeding P12,000.00 Given to Employees form Part of Gross Compensation Subject to Withholding Tax

May 15, 1997 BIR RULING NO. 059-97 RR 2-95 000-00 059-97 Nissan Motor Philippines, Inc. Enrico Realty Building Sheridan St., cor. United St., Mandaluyong City Attention: Atty . Ione Fay S . Canto Manager-Legal & Administration Dept . Gentlemen : This refers to your letter dated March 22, 1996 requesting in effect, for a ruling as to whether or not the one-time relocation assistance given to your employees form part of their gross compensation subject to withholding tax. cdt It is represented that Nissan Motor Philippines, Inc. is transferring its entire business operation from Quezon City to Sta. Rosa, Laguna; that many of your employees will be dislocated considering that their places of residence are in northern part of Metro-Manila and neighboring towns, like Quezon City, Marikina, Valenzuela, Pasig and Cainta; that because of this dislocation, Nissan Motor Philippines, Inc. has decided to grant this one-time relocation assistance for those who are transferring their residences near Sta. Rosa Plant; that this assistance is not applicable to all and will not form part of their salary and neither it is a bonus; that those who are not transferring their residences will not receive any assistance except free bus-ride to and from Magallanes-Commercial Centre in Makati and Sta. Rosa, Laguna; and that the company will be paying the following amounts as relocation assistance: AMOUNT OF RELOCATION (PESOS) Single Married Rank and File 20,000 40,000 Foremen & Supervisors 35,000 50,000 Managers 40,000 70,000 In reply, please be informed that pursuant to Section 3(b) of Revenue Regulations No. 2-95 implementing Republic Act No. 7833, pertinent portion of which reads: "Section 3. Benefits Exempted from Income Tax . For purposes of determining taxable compensation income, the following benefits shall be excluded from the gross compensation income. "(a) . . . "(b) Other benefits such as christmas bonus given by private offices to their officials and employees, productivity incentive bonus, loyalty award, gifts in cash or in kind and other benefits of similar nature actually received by officials and employees of both government and private offices in an amount not exceeding twelve thousand pesos (P12,000.00) for one (1) calendar year. Based on the foregoing, it is our opinion that the one-time relocation assistance given to your employees may be considered "other benefits" within the contemplation of Revenue Regulations No. 2-95, subject to the limitation that the same shall not exceed P12,000.00. Such being the case, the relocation assistance in excess of P12,000.00 shall form part of their gross compensation income which are subject to withholding tax. Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue