In general, allowances and other form of compensation income, are taxable, irregardless of how they are called. However, there are noted exceptions on this rule by virtue of a law or a regulations. For sure, they will make employees happier because no withholding tax on compensation will be deducted from their salaries.

As a rule under the regulations, employers are appointed withholding agents who shall withhold corresponding taxes on compensation. This is to ensure that employee’s taxes are being paid so that if an employee is under the employ of a single employer with no other taxable income subject to regular income tax rates, there is no [...]