May 15, 1997
BIR RULING NO. 059-97
RR 2-95 000-00 059-97
Nissan Motor Philippines, Inc.
Enrico Realty Building
Sheridan St., cor. United St.,
Mandaluyong City
Attention: Atty. Ione Fay S. Canto
Manager-Legal & Administration Dept.
Gentlemen :
This refers to your letter dated March 22, 1996 requesting in effect, for a ruling
as to whether or not the one-time relocation assistance given to your employees form
part of their gross compensation subject to withholding tax. cdt
It is represented that Nissan Motor Philippines, Inc. is transferring its entire
business operation from Quezon City to Sta. Rosa, Laguna; that many of your
employees will be dislocated considering that their places of residence are in northern
part of Metro-Manila and neighboring towns, like Quezon City, Marikina,
Valenzuela, Pasig and Cainta; that because of this dislocation, Nissan Motor
Philippines, Inc. has decided to grant this one-time relocation assistance for those who
are transferring their residences near Sta. Rosa Plant; that this assistance is not
applicable to all and will not form part of their salary and neither it is a bonus; that
those who are not transferring their residences will not receive any assistance except
free bus-ride to and from Magallanes-Commercial Centre in Makati and Sta. Rosa,
Laguna; and that the company will be paying the following amounts as relocation
assistance:
AMOUNT OF RELOCATION (PESOS)
Single Married
Rank and File 20,000 40,000
Foremen & Supervisors 35,000 50,000
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Managers 40,000 70,000
In reply, please be informed that pursuant to Section 3(b) of Revenue
Regulations No. 2-95 implementing Republic Act No. 7833, pertinent portion of
which reads:
"Section 3. Benefits Exempted from Income Tax. — For purposes of
determining taxable compensation income, the following benefits shall be
excluded from the gross compensation income.
"(a) . . .
"(b) Other benefits such as christmas bonus given by private offices to
their officials and employees, productivity incentive bonus, loyalty award, gifts
in cash or in kind and other benefits of similar nature actually received by
officials and employees of both government and private offices in an amount
not exceeding twelve thousand pesos (P12,000.00) for one (1) calendar year.
Based on the foregoing, it is our opinion that the one-time relocation assistance
given to your employees may be considered "other benefits" within the contemplation
of Revenue Regulations No. 2-95, subject to the limitation that the same shall not
exceed P12,000.00. Such being the case, the relocation assistance in excess of
P12,000.00 shall form part of their gross compensation income which are subject to
withholding tax. cdtai
Very truly yours,
LIWAYWAY VINZONS-CHATO
Commissioner of Internal Revenue
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