Monthly Meal Subsidy of P220 to P250 Given to Employees Need Not be Included as Compensation Subject to Withholding Tax

September 19, 1991 BIR RULING NO. 197-91 28 095-91 197-91 Gentlemen : This refers to your letter dated August 15, 1991 requesting for a ruling to the effect that the cash equivalent of the monthly meal subsidy which you intend to give to your employees, in lieu of your current practice of issuing cafeteria chits, is exempt from withholding tax. It is represented that the Philippine American Life Insurance Company (Philamlife) currently furnishes its employees their meal subsidies in the form of "cafeteria chits" at the range of P220.00 to P250.00, inclusive, per employee, depending on one's rank; that considering Philamlife's administrative concerns and its planned closure of its cafeteria in order to give way to its building renovation project, the management deems it imperative to furnish its employees with the cash equivalent of the latter's meal subsidy in lieu of the said "cafeteria chits"; that the meal subsidy is being furnished, along with the other company benefits, as a means of promoting the health, goodwill and contentment of the employees; and finally, that the conversion of said chits to cash will best serve the interest of the employees. In reply, please be informed that pursuant to Section 2 (a) of Revenue Regulations No. 6-82 as amended by Rev. Reg. No. 12-86 implementing Section 28 of the Tax Code, as amended by Executive Order No. 37, "facilities or privileges 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 as a means of promoting the health, goodwill, contentment, or efficiency of his employees." Such being the case, the monthly meal subsidy ranging from P220.00 to P250.00 to be given to your employees need not be included as compensation subject to withholding tax, since the same is of relatively small value and offered by your company to promote goodwill, contentment, and efficiency of your employees. (Rev. Reg. 6-82 as amended by Rev. Reg. 12-86) Very truly yours, (SGD.) EUFRACIO D. SANTOS Deputy Commissioner (Officer-in-Charge)