BIR Ruling [DA-594-04]
BIR Ruling [DA-594-04] • Bureau of Internal Revenue (BIR) Issuances • Rulings (Unnumbered) • Nov 23, 2004
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November 23, 2004 BIR RULING [DA-594-04] General Electric Philippines Meter & Instrument Co., Inc. 28 1st Avenue, Bagumbayan Taguig, Metro Manila Attention: Ms. Ester L. De Jesus Manager-Financial Operations Gentlemen : This refers to your letter dated June 28, 2004 requesting for an opinion as to whether or not monetized unused vacation and sick leave credits are exempt from income tax and consequently from withholding tax. AEITDH In reply thereto, please be informed that the monetized unused vacation leave credits not exceeding ten (10) days during the year are not subject to income tax and consequently to the withholding tax. Conversely, the cash equivalent of vacation leave exceeding ten (10) days is subject to tax. However, considering that monetization of leave credits is the payment of the money value of the accumulated vacation leave credits without actually going on leave of absence, the monetization of leave credits therefore shall not apply to sick leave credits because the employee who avails of the sick leave credits has to go on sick leave. ( Joint Civil Service Commission and the Department of Budget and Management Circular No. 1, Series of 1991) (BIR Ruling No. DA033-97 dated January 21, 1997 ) Very truly yours, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group
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