BIR Ruling

April 12, 1972 Mr. Ambrosio Agamata Barrio Barat Bambang, Nueva Vizcaya S i r : This is in reply to your request for exemption from the payment of income tax of the pension which you are presently receiving from the U.S. Social Security System as a retired employee of the Waimea Sugar Mill Company, Ltd., Hawaii. Under Section 45(1)(A) & (B) of the Tax Code as amended by Republic Act No. 6110, every Filipino citizen, whether residing in the Philippines or abroad, and every alien residing in the Philippines, regardless of whether his gross income was derived from sources within or without the Philippines, are required to file income tax returns and to pay the tax thereon. Unlike the retirement benefits of government employees in the Philippines which by express provisions of law are exempt from income tax, there is no law which exempts from income tax retirement benefits or pensions received by retirees for previous services rendered on account of employment in the United States. Furthermore, Section 29(b) of the Tax Code does not exempt the said retirement benefits or pensions from income tax. Republic Act No. 4917 is by express provision applicable only to retirement benefits of officials and employees of private firms in the Philippines. In view thereof, and considering that there is no law declaring U.S. Social Security pensions exempt from the Philippine income tax, the pensioner or retiree, like you, is required to file an income tax return and pay the corresponding tax every year if his total gross income which include said pension received each year amounts to one thousand eight hundred pesos, or more. (See Sec. 45, N.I.R.C.) Very truly yours, MISAEL P. VERA Commissioner of Internal Revenue