50% of the Housing Allowance Paid to an Employee is Not Subject to Tax

December 23, 1991 BIR RULING NO. 269-91 50 000-00 269-91 Gentlemen : This refers to your letter dated August 14, 1991 requesting confirmation of your opinion that 50% of the monthly housing allowance paid to your general manager, Gary Quemedo, should not be taxed as this merely represent your company's share for the depreciation cost of his house. cd It is represented that Mr. Quemedo uses his house in Tahanan Village, Paraaque, to entertain foreign buyers in behalf of your company to increase your volume of business; that Mr. Quemedo's gross pay paid monthly includes his housing allowance which is being subjected to withholding tax. In reply thereto, please be informed that under Revenue Audit Memorandum Order No. 1-87, if an employee receives allowances or reimbursement for housing and such employee, because of his position in the employer-company also uses said house for the benefit of the latter, like entertaining and putting up by house guests and guests of the employer-company, then fifty percent (50%) of such allowance shall be added to the compensation paid to such employee and shall be subject to the withholding tax on wages. The 50% will be considered as business expense of the company. Accordingly, your opinion that the 50% of the housing allowance of Mr. Quemedo should not be taxed as this merely is the share of your company for the depreciation cost of his house is hereby confirmed. This ruling is being issued based on the facts as represented. If upon investigation, it is found that the facts are different, this ruling shall be considered automatically revoked as of the date of its issuance. cdta Very truly yours, (SGD.) JOSE U. ONG Commissioner