Rice Subsidy Allowance Given to Employees Shall Not Form Part of Their Yearly Taxable Compensation Income

November 13, 1991 BIR RULING NO. 242-91 28 28-91 242-91 Gentlemen : This refers to your letter dated August 14, 1991 requesting for a ruling on whether or not the 50-kilo sack of rice subsidy allowance, which will be given monthly by your company to your regular employees, is subject to income tax. cd It is represented that the management of Southgate Limited wishes to provide a one 50-kilo sack of rice to its regular employees on a monthly basis; and, that this subsidy is on top of the fixed monthly salary, allowance, fringe benefits like the SSS, Medicare, accident and hospitalization insurance, bonuses and others. In reply, please be informed that pursuant to Section 2(a) of Revenue Regulations 6-82 as amended by Revenue Regulations No. 12-86, implementing Section 28 of the Tax Code, as amended by Executive Order No. 37, the rice subsidy which will be given by your company to your regular employees is not compensation income subject to withholding tax, the same being a privilege of relatively small value offered or furnished by the employer for the purpose of promoting the health, goodwill, contentment, or efficiency of its employees. Accordingly, the said rice subsidy allowance shall not form part of the yearly taxable compensation income of your regular employees. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner