Benefits Granted to Officers and Employees of PPA are Exempted from Withholding Tax

April 23, 1990 BIR RULING NO. 065-90 28 529-88 065-90 Gentlemen : This refers to your letter dated November 6, 1989 requesting a ruling as to whether or not the following benefits granted to officers and employees of Philippine Ports Authority (PPA) are not considered compensation income subject to withholding tax: cdtech Allowance Amount Meal Allowance P66.00/month Children's Allowance P30.00/child monthly (maximum of 4 dependent children per employee) Rice Allowance P350.00/month Medical Allowance 500.00/quarter Uniform Allowance 500.00/per year In reply, please be informed that pursuant to Section 2(a) of Revenue Regulations No. 6-82, as amended by Revenue Regulations No. 12-86 implementing Section 28 of the Tax Code, as amended by Executive Order No. 37, "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." Such being the case, the meal allowance worth P66.00 a month need not be included as compensation subject to withholding since they are given for the convenience of the employer (Sec. 2, Revenue Regulations No. 6-82 as amended by Revenue Regulations No. 12-86; BIR Ruling No. 023-85). Likewise, the rice allowance worth P350.00 a month need not be included as compensation subject to withholding. (BIR Ruling Nos. 217-87, 348-87, and 529-88). However, the children's monthly allowance worth P30.00 per child (maximum of 4 dependent children per employee), the medical allowance of P500.00 every quarter or P1,500.00 per annum , and the uniform allowance worth P500.00 per annum given to the officers and employees of Philippine Ports Authority are considered compensation income/wages subject to withholding tax (BIR Ruling Nos. 023-85 and 529-88). cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner