BIR Ruling [UN-171-94]

June 2, 1994 BIR RULING [UN-171-94] Toyota Autoparts Philippines, Inc. Barangay Pulong Sta. Cruz Sta. Rosa, Laguna Attention: Mr . Ed Francisco Finance & Accounting Manager Gentlemen : This refers to your letter dated April 20, 1994 requesting for a ruling on whether the 50-kilo sack of rice subsidy allowance, which will be given monthly by your company to your employees, is subject to income tax. It is represented that the management of Toyota Autoparts Philippines, Inc. with the recommendations of its Labor Management Council is considering of extending a rice subsidy to all of its employees in cash or in kind as part of the amendment of the company's benefit. It is understood that this subsidy is on top of the fixed monthly salary, allowance, fringe benefits like the SSS, Medicare, accident and hospitalization insurance, bonuses and others. 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, the rice subsidy which will be given by your company to your regular employees is not compensation income subject to withholding tax, the same being a privilege of relatively small value offered or furnished by the employer for the purpose of promoting the health, goodwill, contentment, or efficiency of its employees. However, the amount of "relatively small value" shall not exceed P700.00 a month, otherwise, it is subject to income tax (BIR Ruling No. 139-94 dated April 12, 1994). cdtech Very truly yours, ALICIA P. CLEMENO Acting Assistant Commissioner (Legal Service)