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Bir Ruling (Da 005 04)

This document is a ruling from the Bureau of Internal Revenue regarding the taxability of an employer's 50% share in a car program for sales personnel. The ruling states that only 20% of the monthly car rental is taxable as fringe benefit tax since the employee's 30% share has already been taxed as compensation.

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Jake Peralta
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90 views4 pages

Bir Ruling (Da 005 04)

This document is a ruling from the Bureau of Internal Revenue regarding the taxability of an employer's 50% share in a car program for sales personnel. The ruling states that only 20% of the monthly car rental is taxable as fringe benefit tax since the employee's 30% share has already been taxed as compensation.

Uploaded by

Jake Peralta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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January 6, 2004

BIR RULING [DA-005-04]

Section 33; RR 3-93; 009-2000

Cargill Philippines, Inc.


Bo. Dampol 1st Pulilan
Bulacan

Attention: Ms. Maria Fe Mendoza


Director for Administration

Gentlemen :

This refers to your letter dated August 27, 2003 requesting for a clarification
for the taxability of the employer's 50% share in a car program for your sales
personnel.

It is represented that you are a company engaged in the manufacture and


distribution of animal feeds; that the company either leases or makes outright
purchases of vehicles for its salesmen's use; that you have a car program for your
sales people: that the company shares 70% of the lease cost and the employee,
30%; that official use shall take precedence over personal use; and that the
vehicle is in the name of the company but at the end of the lease term, ownership is
transferred to the employee.

In reply, please be informed that Section 2.33(B)(3)(f) of Revenue Regulations


No. 3-98 implementing Section 33 of the Tax Code of 1997, reads:

"f) If the employer leases and maintains a fleet of motor vehicles for
the use of the business of the employer, the value of the benefit shall be the
amount of rental payments for motor vehicles not normally used for sales,
freight, delivery services and other non-personal use. The monetary value of
the fringe benefit shall be fifty percent (50%) of the value of the benefit."

Such being the case, and since you require your sales personnel to share at least
Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia First Release 2019
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Copyright 2019 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine Taxation Encyclopedia First Release 2019
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30% of the monthly rental and deducted from their payroll subject to the withholding
tax on compensation, this Office is of the opinion as it hereby holds that only 20% of
the monthly car rental is taxable as fringe benefit tax inasmuch as the 30% share of
the employee has already been taxed as compensation.

This ruling is being issued on the basis of the foregoing facts as represented.
However, if upon investigation, it will be disclosed that the facts are different, then
this ruling shall be considered as null and void.

Very truly yours,

Commissioner of Internal

Revenue By:

(SGD.) JOSE MARIO C.


BUÑAG
Deputy Commissioner
Legal and Inspection Group
Bureau of Internal Revenue

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