Exemption of Uniforms Given to the Employees from Withholding Tax

August 24, 1989 BIR RULING NO. 179-89 28 055-89 179-89 Gentlemen : This refers to your letter dated July 17, 1989 requesting a ruling to the effect that uniforms given to the employees of your client, Coca-Cola Bottlers Philippines, Inc. (CCBPI) are not considered compensation income subject to withholding tax. It is represented that CCBPI grants uniforms to its employees every year; that the annual cost of these uniforms is as follows: A Monthly Paid Employees Annual Cost 1. Finance Staff Male P965.84 Female 2,700.00 2. Security Guards 1,477.12 3. Salesmen 1,154.72 4. Helper/Driver 877.52 5. Quality Control Staff 1,099.00 6. Foremen 954.76 7. Checkers 1,051.84 B. Daily Paid Employees 1. Production Staff 909.70 2. Mechanics 969.32 3. Forklift Operators 877.52 that CCBPI requires its employees to wear uniforms for easy identification and security; and that these uniforms are not ordinarily used for general wear. In reply thereto, I have the honor to inform you that 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, provides that facilities or privileges (such as entertainment, medical services, or so called courtesy discounts or 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, since the uniforms given by CCBPI to its employees are prescribed for easy identification and security reasons, the same are, therefore, not considered income/wages, hence not subject to withholding tax prescribed under Section 21(a) in relation to Section 72 of the Tax Code as amended by Executive Order No. 37 and as implemented by Revenue Regulations No. 6-82 as amended by Revenue Regulations No. 12-86. Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner