BIR Ruling [DA-248-06]

April 12, 2006 BIR RULING [DA-248-06] 32 (B) (6) (a); DA 282-00 Monde Nissin Corporation 22/F 6750 Office Tower Ayala Avenue, Makati City Attention: Ms. Corazon Sy Gonzales Personnel & Admin. Manager Gentlemen : This refers to your follow-up letter dated March 10, 2006 relative to your letter dated February 3, 2006 requesting for a ruling as to whether or not the retirement benefits to be received under the Early Retirement Program being offered by Monde Nissin Corporation (Monde Nissin) are exempt from income tax and consequently from withholding tax. It is represented that the Monde Nissin Corporation Retirement Plan has been determined and adjudicated by the BIR as a reasonable private benefit plan; that under the said Plan, any member may opt to retire with the consent of the company prior to his normal retirement date provided that he is at least age fifty (50) and has rendered at least ten (10) years of credited service; and that the retirement program will be offered with the aim of helping your employees who would like to retire early to be close to their loved ones or start a new career or business while they are still young and get compensation even better than the regular retirement program. In reply thereto, please be informed that Section 32(B)(6)(a) of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98, as amended, provides that "retirement benefits received under R.A. No. 7641 and those received by official 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 ten (10) years and is not less than fifty (50) years of age at the time of his retirement . . ." shall be excluded from gross income. The above-cited section provides merely for the minimum requirements of ten (10) years of service and not less than fifty (50) years of age in order that the retirement benefits may be exempt from income tax. Considering that the retirement plan rules and regulations of Monde Nissin Corporation particularly its early retirement date, is in compliance with the above-cited section of the Tax Code, employees availing of the early retirement incentive program being offered by Monde Nissin shall be exempt from income tax and consequently from withholding tax provided they have complied with the above-mentioned requirements of 50 years of age and at least 10 year of credited service. SUCH BEING THE CASE, the retirement benefits to be received from Monde Nissin under its Early Retirement Program are exempt from income tax and consequently from withholding tax. ( BIR Ruling No. DA282-00 dated July 10, 2000 ) 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. HCEcAa Very truly yours, (SGD.) PABLO M. BASTES, JR. OIC-Head Revenue Executive Assistant Legal Service