BIR Ruling [DA-211-01]

October 19, 2001 BIR RULING [DA-211-01] RR-2-98; DA-245-99 Senate Electoral Tribunal COA-NCR Bldg., Batasan Road Quezon City Attention: Atty. Irene R. Guevarra Secretary of the Tribunal Gentlemen : This refers to your letter dated July 2, 2000 requesting for a ruling on whether or not the monetized unused vacation leave credits of more than ten (10) days of a government officer and employee in the civil service, whether permanent, temporary or provisional, is subject to the payment of income, withholding and/or the fringe benefit tax. In reply, please be informed that pursuant to Section 1 of Executive Order No. 291, abrogating Section 2.78.1 (A)(7) of Revenue Regulations No. 2-98, and other BIR Rulings which subject the monetization of vacation leave credits in excess of ten (10) days and sick leave credits to income tax, " the monetized leave credits of government officials and employees shall continue to be exempted from income tax ." Under Memorandum Circular No. 31, S 1991 implementing Joint Civil Service Commission-Department of Budget and Management, Circular No. 1, S. of 1991, as amended by Joint CSC-DBM Circular No. 2-97, S. of 1997 which is the basis of EO 291, both vacation and sick leave credits are allowed to be monetized. In view of the foregoing, the monetization of vacation and sick leave credits is exempt from income tax. Very truly yours, Commissioner of Internal Revenue By: (SGD.) EDMUNDO P. GUEVARA Deputy Commissioner (Legal and Inspection Group)