BIR Ruling [DA-401-04]

July 22, 2004 BIR RULING [DA-401-04] 60 (B) DA 199-02 Far Eastern University Health Welfare & Retirement Fund Plan Nicanor Reyes Sr., Street Manila Attention: Mr. Glenn Z. Nagal Comptroller Gentlemen : This refers to your letter dated April 16, 2004 requesting a ruling to the effect that the yield from the investment of the trust fund of the Far Eastern University Health Welfare & Retirement Fund, specifically from the purchase of government securities thru the Bureau of Treasury is exempt from the 20% final tax. It appears that on March 20, 1969, this Office has duly approved the Far Eastern University Health Welfare & Retirement Fund Plan as a reasonable retirement benefit plan under then R.A. No. 4917. In reply thereto, please be informed that under Section 60(B) of the Tax Code of 1997, the income of an employees trust are exempt from income tax. SUCH BEING THE CASE, this Office holds that the yield from investment of the trust fund of the Far Eastern University Health Welfare & Retirement Fund which is an employee's trust in government securities are exempt from the 20% final tax under Section 24(B)(1) of the Tax Code of 1997. Moreover, the trust fund is also exempt from the 20% final tax on interest and/or yield on deposit substitute instruments and on interest on its Philippine currency bank deposits. ( CIR vs. GCL Retirement Plan , G.R. No. 95022 dated March 23, 1992) 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. cSATEH Very truly yours, (SGD.) MILAGROS V. REGALADO Assistant Commissioner Legal Service