Meal Subsidy Granted to Employees is Not Subject to Withholding Tax

December 6, 1991 BIR RULING NO. 263-91 28 225-90 263-91 Gentlemen : This refers to your letter dated October 29, 1991 requesting a ruling as to whether or not meal subsidy granted by your company to your employees is income subject to withholding tax. cdtech It appears that you are a wholly-owned subsidiary of Becton Dickinson Investments, U.S.A.; that you are engaged in the sale of a broad line of health care products used by hospitals, doctors, laboratories, pharmaceutical companies, medical schools and the general public and that the company gives a daily meal subsidy of P30.00 per employees irrespective of rank in the form of cash instead of meal coupon because your office building does not maintain a canteen of its own and canteens proximate to your office can no longer accommodate all your personnel; and that the employees order food from various restaurants to be delivered to the Office so that they will no longer leave the same and will be available at anytime. In reply, please be informed that pursuant to 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, "facilities of privilege (such as entertainment, medical services, or so called courtesy discounts on 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, the meal subsidy of P30.00 per day you give your employees, need not be included as part of compensation income subject to withholding tax since they are given not only to promote the health, goodwill, contentment and efficiency of the employees but also for the convenience of the employer (Sec. 2, Revenue Regulations No. 6-82 as amended by Revenue Regulations No. 12-86). cdta Very truly yours, (SGD.) VICTOR A. DEOFERIO, JR. Deputy Commissioner (Officer-in-Charge)