BIR Ruling [UN-004-95]

January 3, 1995 BIR RULING [UN-004-95] National Steel Corporation 377 Sen. Gil J. Puyat Avenue Makati, Metro Manila Attention: Mr . Roger G . Chan Senior Manager Corporate Services Gentlemen : This refers to your letter dated June 1, 1992, requesting for a ruling as to whether or not the transportation subsidy of P300.00 per month (P10/day) which National Steel Corporation gives to its rank and file employees as part of the Collective Bargaining Agreement (CBA) package of benefits is subject to income tax and consequently to withholding tax. 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, "facilities or privileges" furnished or offered by an employer to his employees are not considered as compensation subject to withholding tax 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. In view thereof, the aforesaid monthly transportation allowance of P300.00 or P10.00 each day given in cash during the end of each month which is included in the payroll of the employees as "Other" subsidy, which is indeed of "relatively small value" need not be included as compensation subject to withholding tax since it is given merely to promote the health, goodwill, contentment and efficiency of the employees. (BIR Ruling No. 553-93 dated December 26, 1993) cdi Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)