BIR Ruling [UN-166-95]

April 18, 1995 BIR RULING [UN-166-95] Boehringer Ingelheim 5th & 7th Floors Don Jacinto Bldg. Dela Rosa cor. Salcedo Street Legaspi Village, Makati, Metro Manila Attention: Dr . Carlos Sagasta Managing Director Ms . Priscilla Barbosa Finance Director Gentlemen : This refers to your letter dated February 9, 1995 stating that you are providing your 239 employees (starting the year 1995) with rice subsidy of 9 cavans per year per employee at P700.00 per cavan for nine months or P6,300.00 per year per employee. cdtech In connection therewith, you now request for a ruling that the said subsidy is not part of compensation income and therefore, exempt from the withholding tax on wages. In reply, please be informed that facilities or privileges (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 , of efficiency of his employees 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. Such being the case, the said rice subsidy of 9 cavans per year per employee at P700.00 per cavan for nine months or P6,300.00 per year per employee is not considered compensation income/wages, hence, it is not subject to the withholding tax prescribed by Section 72 in relation to Section 21(a) of the Tax Code as implemented by Revenue Regulations No. 6-82 as amended, since the same is of relatively small value and offered by the employer to promote goodwill, contentment, and efficiency of its employees. (BIR Rulings No. 278-92 dated October 7, 1992) Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service) By: ALICIA L. TOMACRUZ Head Revenue Executive Assistant Legal Service