BIR Ruling

February 18, 1969 Mr. Severino Mercano 365 Shaw Boulevard Mandaluyong, Rizal S i r : This refers to your letter dated January 6, 1969 requesting information on a query stated thus: "Ninety nine percent of Filipino civilian employees in the military establishment of the Federal Government of the United States are covered by Social Security System of the Philippines and one percent are covered by the U.S. Civil Service Retirement Act. "Advise is respectfully requested if retiring Filipino civilian employees of U.S. military establishments are entitled to the benefits provided under Republic Act No. 4917 granting tax exemption." In reply, I have the honor to inform you as follows: Republic Act No. 4917 is an Act exempting retirement benefits received by employees of private firms from attachment, levy, execution or any tax whatsoever. Section 1 of the Act provides that the retirement benefits received by officials and employees in accordance with a reasonable private benefit plan maintained by the employer shall be exempt from all taxes and shall not be liable to attachment, garnishment, levy or seizure by or under any legal or equitable process whatsoever except to pay a debt of the official or employee concerned to the private benefit plan or that arising from liability imposed in a criminal action. Provided, that retiring official or employee has been in the service of the same employer for at least ten (10) years and is not less than fifty (50) years of age at the time of his retirement. Filipino citizens employed in U.S. Civil Service are not covered by the provisions of Republic Act No. 4917, hence, they cannot claim the benefits of tax exemption under it. However, Filipino citizens employed in U.S. service, who are members of the Social Security System can claim exemption from payment of income tax for the retirement pension and benefit paid to and received by them under Republic Act No. 1161, otherwise known as "the Social Security Act of 1954", as amended by Section 9 of Republic Act No. 1792. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue