BIR Ruling [DA-403-05]

September 26, 2005 BIR RULING [DA-403-05] RA 7641; DA-159-04 The Family Clinic, Inc . 1474 Ma. Clara Street Sampaloc, Manila Attention: Dr. Lydia Y. Congco, M.D. President Gentleman : This refers to your letter dated August 31, 2005 requesting, in effect, for a ruling that the payment of retirement benefits to your employees in accordance with the provision of Republic Act (R.A.) No. 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 provision of R.A. No. 7641. In reply, please be informed that pursuant to Section 32(B)(6)(a) of the Tax Code of 1997, as amended, 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, as amended. (BIR Ruling No. DA-159-2004 dated April 2, 2004 citing BIR Ruling No. 50-98 dated April 27, 1998) 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. IDScTE Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service