BIR Ruling [DA-159-04]
BIR Ruling [DA-159-04] • Bureau of Internal Revenue (BIR) Issuances • Rulings (Unnumbered) • Apr 2, 2004
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April 2, 2004 BIR RULING [DA-159-04] Horizon Can Corporation Tambler, General Santos City Attention: Mary Jean G. Sabanal Accounting & Administration Manager Gentlemen : This refers to your letter dated April 2, 2004 requesting for a ruling that the payment of retirement benefits to your employees in accordance with the provision of RA 7641 are exempt from income tax and consequently from withholding tax. It is represented that your company has no BIR-Approved Retirement Plan; and that your company pays Retirement benefits to retiring employees in accordance with the following: 1/2 month salary 15 days Five (5) days incentive leave 5 days One over twelve (1/2) 13th month pay 2.5 days ________ 22.5 days ======= In reply, please be informed that pursuant to Section 32(B)(6)(a) of the Tax Code of 1997 retirement benefits received under Republic Act No. 7641 shall not be included in gross income and shall be exempt from income tax. Accordingly, retirement benefits to be paid by you to your retiring employees under R.A. No. 7641 are not subject to income tax and consequently to the withholding tax prescribed under Section 79, Chapter XIII, Title II of the Tax Code of 1997. ( BIR Ruling No. 50-98 dated April 27, 1998 ) ESTCHa Very truly yours, Commissioner of Internal Revenue By: (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service
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