Tuesday, July 17, 2007 Tax notes: Transportation, cellphone allowances
IN A Bureau of Internal Revenue (BIR) ruling DA-233-2007 dated April 17, 2007, the BIR ruled that the following allowances given to call center employees, whether at supervisory levels or rank and file, shall not be taxable as compensation or fringe benefits of the employees:
1. Fixed monthly transportation allowance of P1,500 for rank and file employees and P3,000 for supervisory employees pre-computed on a daily basis. These are incurred by the employees in pursuit of the business of the company. The allowance is provided to promote the efficiency, well-being, and safety of the employees. It is also necessary to enable them to come to work safely and on time. There shall be no requirement for substantiation because these are pre-computed on a daily basis;
2. Mobile phone allowance of P1,200 for supervisors, managers and directors who are expected to be on call 24 hours a day.
The accessibility of these employees is necessary to the business and redounds to the convenience and benefit of the company. There is no need to substantiate this allowance.
However, since tax rulings are specific to the taxpayer that requested it, it may be prudent to secure a similar ruling from the BIR should the company decide to adopt the abovementioned ruling. (Source: Punongbayan & Araullo)
