BIR Ruling

October 17, 1973 Mr. Romulo F. Hernandez P. O. Box 441 Manila S i r : In reply to your letter dated September 6, 1973, I have the honor to inform you that Presidential Decree No. 220 does not cover the retirement benefits or pensions of officials and employees of private firms in the Philippines which shall continue to be governed by Republic Act No. 4917 as amplified by Revenue Regulations No. 1-68. (par. 2, Sec. 2, Rev. Regs. No. 6-73 dated July 10, 1973 implementing Presidential Decree No. 220). cdt In view thereof, and considering that, as represented, you are retiring on September 30, 1973 at the age of 47 years and 2 months, and after 18 years, 5 months and 15 days in the service of your employer, Arabay, Incorporated, this Office is of the opinion as it hereby holds that the retirement gratuity which will be received by you from the Retirement Benefit (Gratuity) Plan maintained by your employer is subject to income tax and consequently to the withholding tax prescribed by Revenue Regulations No. V-8 as amended by Revenue Regulations No. V-70 because Republic Act No. 4917 provides as a condition precedent to exemption of the employee benefits under the Plan that the employee must, among others, be in the service of the same private firm for at least 10 years and must be at least 50 years old at the time of retirement. Although the Retirement Benefit (Gratuity) Plan maintained by your employer has been found to qualify under Republic Act No. 4917 and has been duly approved, however, you do not qualify under said Act for purposes of the tax exemption provided in said law, as you will retire at age of 47 or three years short of the age requirement of Republic Act No. 4917. aisadc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5