Tuesday, April 17, 2007 Tax notes: Expenses not subject to withholding tax
IN Revenue Memorandum Circular (RMC) 13-2007, the Bureau of Internal Revenue (BIR) confirmed that the Representation and Transportation Allowance (RATA) or allowances given to public officers and employees essentially constitute reimbursement for expenses incurred in the performance of government personnel’s official duties.
These are expenses made by such government officials/employees in their personal capacity even if reimbursed by the government agency.
As such, these expenses are not considered government money payments and are, therefore, not subject to the withholding of five percent final value-added tax (VAT). (Source: Punongbayan & Araullo)
