BIR Ruling No. 627-12

November 22, 2012 BIR RULING NO. 627-12 RA 9504; RR 10-2008; 000-00 Manila Toll Expressway Systems, Inc. Km 44, SLEX (North Bound) Sitio Latian Silangan, Brgy. Mapagong Calamba City, Laguna Attention: Isaac S. David President Gentlemen : This refers to your letter dated July 22, 2010 requesting for a clarification to the effect that the minimum wage received by your Toll Tellers using the NCR rate is subject to Withholding Tax. ACcHIa It is represented that Manila Toll Expressway Systems, Inc. is a domestic corporation organized and existing under the laws of the Republic of the Philippines and engaged in the operation and maintenance of the South Luzon Expressway from Alabang viaduct to Calamba Toll Plaza. It has Toll Plazas located in Muntinlupa (the Alabang Toll Plaza and Filinvest Toll Plaza) which are within the National Capital Region (NCR) and the rest of Toll Plazas are located in the different localities of the Province of Laguna which are within the Region IV-A. It is further represented that the Toll Tellers are assigned on the rotation basis in the different Toll Plazas located in NCR and Region IV receiving the NCR rate as minimum wage without distinction. In reply, please be informed that as provided for under Revenue Regulations No. 10-2008, "Statutory Minimum Wage" (SMW) shall refer to the rate fixed by the Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of Labor and Employment (DOLE). The RTWPB of each region shall determine the wage rates in the different regions based on established criteria and shall be the basis of exemption from income tax for this purpose. Section 1 (B) (13) of the aforesaid Revenue Regulations provides, viz. : "SEC. 1. Section 2.78.1 of RR 2-98, as amended, is hereby further amended to read as follows: xxx xxx xxx (B) Exemptions from Withholding Tax on Compensation. The following income payments are exempted from the requirements of withholding tax on compensation; xxx xxx xxx (13) Compensation income of MWEs who work in the private sector and being paid the Statutory Minimum Wage (SMW), as fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/National Wages and Productivity Commission (NWPC), applicable to the place where he/she is assigned. The aforesaid income shall likewise be exempted from income tax. xxx xxx xxx Moreover, Section 11, Rule II of the Rules Implementing Wage Order No. IVA-14, provides, viz. : SAHIDc Section 11. Application to Mobile, Branch and Transferred Employees. Mobile and Branch Employees The minimum wage rates of mobile workers, who by nature of their work have to travel, shall be those applicable in the domicile or head office of the employer. The minimum wage rates of workers working in branches or agencies of establishments within or outside the Region shall be those applicable in the place where they are stationed or based. Transfer of Personnel The transfer of personnel to area outside the Region or from a high rate city/municipality to a lower rate city/municipality shall not be valid ground for the reduction of the wage rates being enjoyed by the workers prior to such transfer. Workers transferred to other Regions or from a lower rate municipality to a higher rate municipality shall be entitled to the minimum wage rates applicable therein. The basis for the computation of statutory minimum wage for compensation income of employees in the private sector with compensation income of not more than the statutory minimum wage shall be that amount fixed by the RTWBP/NWPC of the place where such employee is assigned. On the basis of the foregoing, please be informed that only those Toll Tellers assigned in the Alabang Toll Plaza and Filinvest Toll Plaza, which are within the NCR, receiving the NCR minimum wage rate are not subject to withholding tax, while those stationed in Toll Plazas other than the Alabang Toll Plaza and Filinvest Toll Plaza receiving the NCR minimum wage rate are subject to Withholding 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. TIEHDC Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue