BIR Ruling No.

076-99 dated June 16, 1999

Revenue Regulations No. 3-98 - Fringe Benefit Tax May 21, 1998 January 1, 1998 REVENUE REGULATIONS
NO. 03-98 SUBJECT : Implementing Section 33 of the National Internal Revenue Code, as Amended by
Republic Act No. 8424 Relative to the Special Treatment of Fringe Benefits

FRINGE BENEFITS TAX; Car Plans to Managers and Executives - A company is granting ear plan to the
managers and sales executive; that the company buys the car and retains the title for five years; that sixty percent
(60%) of the cost is recorded as asset and depreciated for rive (5) years in the books of accounts; that forty percent
(40%) of the cost is recorded as receivable from the employee and collected within five (5) years interest-free; and
that at the end of the five (5) year period, when sixty percent (60%) of the cost of the ear is fully depreciated and the
forty percent (40%) share of the employee is fully paid, title is transferred to the employee.

The fringe benefit in this particular case is to be computed as follows:

Acquisition cost x 60% x 50%

= Annual FBT on motor vehicle
5 Years

Additionally, the company is further liable to fringe benefits tax under Section 2.33(B)(5)(a) on interest free loan to the
employee computed at the benchmark interest rate of twelve percent per annum. Thus, the annual fringe benefit tax
on interest-free loan for the 40% of the acquisition cost of the car should likewise be computed, as follows:

40% of the acquisition cost x 12% p,.a. x 5 years

= Annual FBT on interest
5 Years

.BIR Ruling No. 189-99 dated November 29, 1999 INCOME TAX; Fringe Benefits - Section 2.33(A)(9)(b) provides
that the cost of educational assistance extended by an employer to the dependents of an employee shall be treated
as taxable fringe benefits of the employee unless the assistance was provided through a competitive scheme under
the scholarship program of the company. Since the educational benefit is granted through a competitive scheme, i.e.
qualifying exam, such educational assistance shall not be subject to the fringe benefit tax prescribed under Section
33 of the Tax Code of 1997.

However, the exemption of any fringe benefit from the fringe benefit tax imposed under Section 33 of the Tax Code of
1997 and implemented by Revenue Regulations No. 3-98, shall not be interpreted to mean exemption from any other
income tax imposed under the Code or under any other existing law. Thus, if the fringe benefit is exempted from the
fringe benefit tax, the same may, however, still form part of the employees' gross compensation income which is
subject to income tax, hence, likewise subject to withholding tax on compensation income.

Such being the case, the amount of the tuition waiver benefit granted to the children of full time faculty members who
were in the active service before May 1987 shall be considered as part of compensation income of said faculty
members which shall be subject to withholding tax prescribed under Section 79 of the Tax Code of 1997

BIR Ruling No. 208-99 dated December 28, 1999 INCOME TAX; Fringe Benefits Tax - The term "fringe benefit" is
defined under Section 33(B) of the Tax Code of 1997 as any good, service or other benefit furnished or granted in
cash or in kind by an employer to an individual employee (except rank and file employees). It includes, among others,
housing benefit granted to the managerial and supervisory employees of the company. The Directors of TAP who are
at same time receiving fixed salaries as TAP officers, are considered as employees holding positions other than rank
and file positions i.e. managerial and/or supervisory positions.

Accordingly, the housing assistance granted by TAP to the expatriates who are directors and at the same time
holding managerial and supervisory positions, is considered as fringe benefit subject to the Fringe Benefit Tax under
Section 33 (B) of the Tax Code of 1997 and implemented by Revenue Regulations No. 3-98. The source of the fringe
benefit granted to the employees does not affect the taxability of the said fringe benefit. Thus, the housing allowance
of the director/officer of TAP which is paid out of its Retained Earnings, is still considered as a fringe benefit subject to
the fringe benefit tax imposed under Section 33 of the Tax Code of 1997 as implemented by Revenue Regulations
No. 3-98.

Section 33 of the Tax Code of 1997 on fringe benefit applies to managerial and supervisory employees. Thus, where
the officer/director of TAP is considered as an employee regardless of whether a fixed monthly income is given or
their remuneration is determined by the Board of Directors based on the Retained Earnings of the corporation, the
housing assistance granted to the said officers/directors are still subject to the Fringe Benefit Tax. On the other hand,
where a director is being paid on a retainer basis, no employer-employee relationships exist between the company
and the director. Thus, the housing assistance granted to him shall not be considered as fringe benefit subject to the
Fringe Benefit Tax but is considered as part of his gross income which is subject to the applicable tax rates under
Section 24(A)(1)(c)of the Tax Code of 1997. (

*BIR Ruling 114-97*

REVENUE REGULATIONS NO. 02-98

SUBJECT : Implementing Republic Act No. 8424, "An Act Amending The National Internal Revenue Code, as
Amended" Relative to the Withholding on Income Subject to the Expanded Withholding Tax and Final Withholding
Tax, Withholding of Income Tax on Compensation, Withholding of Creditable Value-Added Tax and Other
Percentage Taxes

SECTION 2.78.1. Withholding of Income Tax on Compensation Income. —

(A) Compensation Income Defined. — In general, the term "compensation" means all remuneration for services
performed by an employee for his employer under an employer-employee relationship, unless specifically excluded
by the Code.
The name by which the remuneration for services is designated is immaterial. Thus, salaries, wages, emoluments
and honoraria, allowances, commissions (e.g. transportation, representation, entertainment and the like); fees
including director's fees, if the director is, at the same time, an employee of the employer/corporation; taxable
bonuses and fringe benefits except those which are subject to the fringe benefits tax under Sec. 33 of the Code;
taxable pensions and retirement pay; and other income of a similar nature constitute compensation income.
The basis upon which the remuneration is paid is immaterial in determining whether the remuneration constitutes
compensation. Thus, it may be paid on the basis of piece-work, or a percentage of profits; and may be paid hourly,
daily, weekly, monthly or annually.
Remuneration for services constitutes compensation even if the relationship of employer and employee does not
exist any longer at the time when payment is made between the person in whose employ the services had been
performed and the individual who performed them.

(4) Tips and gratuities. — Tips or gratuities paid directly to an employee by a customer of the employer which
are not accounted for by the employee to the employer are considered as taxable income but not subject to
withholding.

REVENUE REGULATIONS NO. 6-2008 issued on May 2, 2008 consolidates the

regulations prescribing the rules on the taxation of sale, barter, exchange or other disposition
of shares of stock of domestic corporation that are listed and traded through the Local Stock
Exchange (LSE), or disposition of shares through Initial Public Offering (IPO) or disposition
of shares not traded through the LSE.
The following sellers or transferors of stock are liable to the tax provided in these
Regulations:
a. Individual taxpayer, whether citizen or alien;
b. Corporate taxpayer, whether domestic or foreign; and
c. Other taxpayers not falling under (a) and (b) above, such as estate, trust, trust
funds and pension funds, among others.
The following are exempted to the taxes imposed in the Regulations:
a. Dealers in securities;
b. Investors in shares of stock in a mutual fund company, as defined in Section 22
(BB) of the Tax Code, as amended and Section 2(s) of these Regulations, in
connection with the gains realized by said investor upon redemption of said shares
of stock in a mutual fund company; and
c. All other persons, whether natural or juridical, who are specifically exempt from
national internal revenue taxes under existing investment incentives and other
special laws.
There shall be levied, assessed and collected on every sale, barter, exchange or other
disposition of shares of stock listed and traded through the LSE a stock transaction tax at the
rate of one-half of one percent (1/2 of 1%) based on the gross selling price or gross value in
money of the shares of stock sold, bartered, exchanged or otherwise disposed, which shall be
assumed and paid by the seller or transferor through the remittance of the stock transaction
tax by the seller or transferor’s broker.
There shall be levied, asse ssed and collected on every sale, barter, exchange or other
disposition through IPO of shares of stock in closely held corporations a tax at the rates
provided hereunder, which shall be imposed in accordance with the proportion of shares of
stock sold, bartered, exchanged or otherwise disposed to the total outstanding shares of stock
after the listing in the LSE.

*RR 07 2003*

REVENUE REGULATIONS NO. 18-2001 issued November 14, 2001 prescribes the guidelines on the monitoring
of the basis of property transferred and shares received, pursuant to a tax-free exchange under Section 40(C)(2) of
the Tax Code, as well as the penalties for failure to comply with the said guidelines and the policies governing the
imposition of fees for the monitoring thereof. The substituted basis of the stock or securities received by the
transferor on a taxfree exchange shall be as follows: 1) the original basis of the property, stock or securities to be
transferred; 2) less: a) money received, if any, and b) the fair market value of the property received, if any; 3) plus:
a) the amount treated as dividend of the shareholder, if any, and b) the amount of any gain that was recognized on
the exchange, if any. However, the property received as 'boot' shall have as basis its fair market value. The term
"boot" refers to the money received and other property received in excess of the stock or securities received by the
transferor on a tax-free exchange. If the transferee of property assumes a liability of the transferor or acquires from
the latter property subject to a liability, such assumption or acquisition (in the amount of the liability) shall, for
purposes of computing the substituted basis, be treated as money received by the transferor on the exchange. If the
transferor receives several kinds of stock or securities, the Commissioner is authorized to allocate the basis among
the several classes of stocks or securities. The substituted basis of the property transferred in the hands of the
transferee, on the other hand, shall be as follows: 1) the original basis in the hands of the transferor; 2) plus: the
amount of the gain recognized to the transferor on the transfer. The original basis of the property to be transferred
are specified in the Regulations. The substituted basis shall be the basis for determining the gain or loss on a
subsequent sale or disposition of property subject of the tax-free exchange. The Certificate Authorizing
Registration/Tax Clearance for the real property or share of stock/unit of participation/interest involved in the
exchange shall be issued by the Revenue District Officer/authorized Internal Revenue Officer on the basis of the
certification or ruling to be issued by the Commissioner or his duly authorized representative to the effect that the
transaction qualifies as a tax-free exchange. No certification/ruling issued by the Bureau of Internal Revenue (BIR)
shall be valid unless the parties to the exchange submit to the BIR copies of the new Transfer Certificates of the
Title, Condominium Certificates of Title, or certificates of stock/units of participation, duly certified by the Register
of Deeds or the Corporate Secretary, as the case may be, within ninety (90) days from receipt by any of the parties to
the exchange transaction of the certification-ruling by the Bureau. Every applicant/taxpayer who wants to avail of
the tax-free exchange shall secure a form that the BIR shall provide for such purpose, and shall pay in advance a
processing and certification fee of Five Thousand Pesos (P 5,000.00) for each application not involving more than
ten (10) real properties and/or Certificates of Stock. An additional fee of One Hundred Pesos (P 100.00) shall be
paid for every Transfer Certificate of Title/Condominium Certificate of Title/Certificate of Stock in excess of ten
(10).

REVENUE MEMORANDUM ORDER NO. 32-2001 issued December 5, 2001 prescribes the guidelines on the
monitoring of the basis of the property transferred and shares of stock received in a tax-free exchange transaction, as
well as revises and updates the requirements and conditions precedent to the nonrecognition of gain or loss in said
transactions. The application for Certification/Ruling on the tax consequence of the exchange of properties described
in the Order shall be filed with the BIR Law Division using the form provided for the purpose, together with a
transmittal letter containing a brief overview of the transaction and three (3) copies of each of the documents
specified in the Order. In the case of executed and/or completed transactions, either original executed and notarized
copies or certified true copies of the specified documents must be submitted, together with a proof of payment of the
applicable Documentary Stamp Taxes (DST) on the transactions. In the case of issuance of shares/unit of
participation by the transferee, the due dates for the payment of the corresponding DST prescribed under RMO No.
8-98, as amended, shall apply. Soft copy of the form of request for ruling and certification is available at the
Taxpayers Information and Education Division and Law Division of the BIR. It may also be downloaded from the
BIR website at www.bir.gov.ph. If the application is to be signed and submitted not by the taxpayer himself, but
only by his authorized representative, the appropriate special power of attorney shall be submitted with the
application for a certification-ruling. In the case of a juridical person, the corporate secretary shall issue a sworn
statement that the signing officer has been authorized by the Board of Directors to represent the company and has
personal knowledge of the facts of the exchange transaction. Before filing the request for certification-ruling, the
taxpayer/applicant shall pay first the applicable processing and certification fee as provided in RR No. 18-2001. Said
fee shall be adjusted accordingly if additional transfer certificates of title/condominium certificates of
title/certificates of stock are submitted for processing. The Certificate Authorizing Registration/Tax Clearance for
the real property or share of stock/unit of participation/interest involved in the exchange shall be issued by the
Revenue District Officer or by the authorized Internal Revenue Officer, on the basis of the certification-ruling issued
by the Commissioner or his duly authorized representative to the effect that the transaction qualifies as a tax-free
exchange or corporate reorganization.