BIR Ruling No. 261-11

July 27, 2011 BIR RULING NO. 261-11 Sec. 16 of RA 10071 Alexander P. Ramos President Office of the Prosecutor's League of Manila, Inc. Third Floor, Manila City Hall Gentlemen : This refers to your letter dated 21 March 2011 requesting for a legal opinion on whether or not the allowances given by the City of Manila should be exempt from income taxation under Section 16 of Republic Act No. (RA) 10071 otherwise known as "An Act Strengthening and Rationalizing the National Prosecution Service" . It is represented that the City of Manila has been giving the Prosecutors assigned in Manila an allowance equivalent to twenty five percent (25%) of their salary by virtue of an ordinance enacted by the City Council of Manila. In reply, please be informed that Section 16 of RA 10071 provides, to wit: "xxx xxx xxx Subject to Section 20 hereof, the salaries and allowances of regional, provincial and city prosecutors and their assistants, and the members of the prosecution staff, including the prosecution attorneys, shall be paid entirely out of national funds and included in the annual appropriations of the DOJ: Provided, however, That this provision is without prejudice to the grant of allowances to the above-mentioned prosecutors by their respective local governments in amounts not exceeding fifty percent (50%) of their basic salaries; Provided, further, That the whole of the allowances or portion thereof, whether granted by the national or local government shall be exempt from the income tax. xxx xxx xxx" Under the above-mentioned provision, prosecutors can be given allowances by their local governments in amounts not exceeding 50% of their basic salaries and the same shall be exempt from income tax. Accordingly, this Office is of the opinion that allowances granted by the City of Manila to its prosecutors amounting to 25% of their basic salaries are exempt from income tax. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. aATCDI Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue