BIR: Phone Allowances Tax Exempt

22 May 2012

MANILA, Philippines --- The Bureau of Internal Revenue (BIR) has ruled that mobile phone and transportation allowances for some workers are exempt from income and fringe benefit taxes.

The BIR legal division said such allowances are not taxable if they are work-related. If not work-related, these are considered part of compensation income and subject to withholding tax.

BIR Ruling DA-233-07 said there are enterprises that are operated on a 24-hour basis like call centers that require employees to be available always for assignment and consultation.

The ruling was issued based on the query made by eTelecare Global Solution, a call center in Eastwood, Quezon City.

In another ruling, DA-350-04, the BIR said that as a general rule transportation allowance forms part of the compensation income of an employee.

It is, however, exempted from taxation if it is given to an employee to pay for expenses to enhance the business, the ruling said. It cited the transportation allowances for customer or sale representatives which are computed on a daily basis.

The BIR said transportation allowance becomes taxable when it is a fixed amount and regularly received by the employees, forming part of their monthly compensation.