BIR Ruling [DA-093-02]

May 15, 2002 BIR RULING [DA-093-02] 32 (B) (6) (a) SB-057-2000 FILCEL Manufacturing Corporation 52 Tandang Sora Avenue Quezon City Attention: Mr . Ildefonso C. Lim, Jr . Plant Manager Gentlemen : This refers to your letter dated May 9, 2002 requesting for a ruling that the retirement benefits to be received by Mr. Rogelio dela Pea pursuant to Republic Act No. 7641 is exempt from income tax and consequently from withholding tax. It is represented that Mr. Dela Pea was born April 13, 1942; that he has been a regular employee of Filcel Manufacturing Corporation (FILCEL) since July 9, 1984 continuously up to April 30, 2002, or a total period of eighteen (18) years, nine (9) months and twenty-one (21) days; that as a matter of company policy, you employees will be retired upon reaching the age of sixty (60) years; and that since there is no retirement plan or agreement providing for retirement benefits of your employees. Mr. Dela Pea shall receive retirement benefits, in accordance to the provisions of Republic Act No. 7641. In reply, please be informed that Section 32(B)(6)(a) of the Tax Code of 1997 provides in part as follows: "SEC. 32 Gross Income . "(A) . . . "(B) Exclusions from Gross Income . The following items shall not be included in gross income and shall be exempt from taxation under this Title:. . . "(6) Retirement Benefits, Pensions, Gratuities, etc. (a) Retirement benefits received under Republic Act No. 7641 and those received by officials and employees of private firms, whether individual or corporate, in accordance with a reasonable private benefit plan maintained by the employer: Provided, That the retiring official or employee has been in the service of the same employer for at least (10) years and is not less than fifty (50) years of age at the time his retirement: Provided, further, That the benefits granted under this subparagraph shall be availed of by an official or employee only once. . . ." In view thereof, the retirement benefits received by Mr. Dela Pea are exempt from income tax and consequently from the withholding tax prescribed by Section 79, Chapter XIII, Title II of the Tax Code of 1997. (BIR Ruling No. SB-057-2000 dated October 11, 2000) This shall apply also to the employees of your company who are similarly situated as Mr. Dela Pea. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Acting Assistant Commissioner Legal Service