BIR Ruling [UN-326-95]

September 7, 1995 BIR RULING [UN-326-95] National Tobacco Administration Panay Ave., cor. Scout Reyes St., Quezon City Attention: Ms . Clarita B . Castro Gentlemen : This refers to your letter dated June 15, 1995 requesting for a ruling on whether or not the monthly benefits given to your Medical and Dental Clinics employees consisting of subsistence allowance of P900.00 and laundry allowance of P125.00 are considered compensation income subject to withholding tax. It appears that with the implementation of R.A. No. 7305, otherwise known as the "Magna Carta of Public Health Workers" and in accordance with DOH MC No. 19-4, & DOH AO No. 31-E, S. 1994, these allowances were granted to them. 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 or promoting the health, goodwill, contentment, or efficiency of his employees. In view thereof, your opinion that the aforesaid allowances being given to your employees, i.e., subsistence allowance of P900.00 and laundry allowance of P125.00, which are indeed of "relatively small value", need not be included as compensation subject to withholding tax, since they are given merely to promote the health, goodwill, contentment and efficiency of the employees, is hereby confirmed. (BIR Ruling No. 553-93, dated December 29, 1993) cdtech Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)