BIR Ruling [DA-171-04]

April 6, 2004 BIR RULING [DA-171-04] 32 (B) (7) (f) DA-190-2001 Philippine Health Insurance Corporation Citystate Centre, 709 Shaw Boulevard Pasig City Attention: Ms. Ann Marie C. San Andres Chief Accountant Gentlemen : This refers to your letter dated December 13, 2002 requesting clarification regarding Sec. 2.78(B)(12) of Revenue Regulations No. 2-98 which exempts from withholding tax GSIS, SSS, Medicare and Pag-ibig contributions and union dues of individual employees and whether the payments of an individual employee is employed with government-owned and controlled corporations are his payments of his own SSS premiums also exempted from withholding tax? In reply, please be informed that Section 2.78(B)(12) provides, viz : "Sec. 2.78.1. Withholding of Income Tax on Compensation Income . . . . xxx xxx xxx (B) Exemption from withholding tax on compensation The following income payments are exempted from the requirement of withholding tax on compensation: xxx xxx xxx (12) GSIS, SSS, Medicare and other contributions GSIS, SSS, Medicare and Pag-ibig contributions and union dues of individual employees. Thus, GSIS, SSS, Medicare and Pag-ibig contributions and union dues of individual employees are excluded from the computation of gross income and therefore, exempt from the requirement of withholding tax on compensation. ( BIR Ruling No. DA-190-2001 dated October 17, 2001 ) Likewise, an individual employee employed with government-owned and controlled corporation, paying his own SSS premiums, is also exempt from the requirement of withholding tax on compensation with respect to such voluntary contribution. cHDaEI 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.) JOSE MARIO C. BUAG Deputy Commissioner Legal and Inspection Group