Non-retroactive Application of BIR Ruling No. 21 (a)-000-00-062-91 Re Non-taxability of RATA

November 6, 1991 BIR RULING NO. 229-91 21 000-00 229-91 Gentlemen : This refers to your letter dated September 6, 1991 requesting that BIR Ruling No. 21 (a)-000-00-062-91 dated April 15, 1991 on non-taxability of Representation and Transportation Allowance (RATA) granted to public officials and those of equivalent rank as may be determined by the Department of Budget and Management pursuant to Section 34 of the General Appropriations Act, be made applicable to taxable year 1986 when Revenue Regulations No. 12-86 implementing Section 21 (a) of the Tax Code, as amended by Executive Order No. 37, was issued. In reply thereto, please be informed that since the aforementioned ruling was issued after the Secretary of Budget and Management confirmed in a letter dated March 8, 1991 that "RATA is in fact a reimbursement for the expenses incurred in the performance of one's duties rather than as an additional compensation and therefore is not compensation subject to withholding . . .", the aforesaid ruling, therefore, cannot be given retroactive application beginning taxable year 1986. Accordingly, this Office issued Revenue Memorandum Circular No. 60-91 dated July 9, 1991 providing that the aforecited ruling shall be applicable beginning taxable year 1991. Any amount of tax withheld from RATA received by qualified officials and employees from January, 1991 shall not be refunded, but shall be credited against their income tax due when the annualized withholding tax is determined as of the year end 1991. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner