BIR Ruling [DA-700-99]

December 21, 1999 BIR RULING [DA-700-99] Quality Container Corporation No. 37 Eulogia Drive, Barrio Kangkong Quezon City Attention: Mr . Carlos C . Cruz President and General Manager Gentlemen : This refers to your letter dated October 28, 1999 requesting, in effect, for a ruling that the retirement benefits pad under R.A. No. 7641 to your regular employees are exempt from income tax consequently and from withholding tax. It appears that Quality Container Corporation, a corporation duly organized and existing under the laws of the Philippines and Sangguniang Manggagawa sa Quality Container Corporations Federation of Free Workers entered into a Collective Bargaining Agreement (CBA) in order to promote and foster cordial and harmonious relationship between the former and the latter; that CBA established a basic understanding relative to rate of pay, wages, hours of work and other terms and conditions of employment and provided means for the prompt and amicable adjustment of all disputes or grievances arising thereunder; that under the CBA, an employee who reaches the age of sixty-five (65) shall be retired and shall be entitled to retirement benefits as per Retirement Law; and that Quality Container Corporation has no retirement benefit plan duly approved by the Bureau of Internal Revenue. LibLex In reply, please be informed that pursuant to Section 32(B)(6)(a) of the Tax Code of 1997, retirement benefits received under R.A. No. 7641 shall not be included in the gross income and therefore not forming pat of taxable income. Accordingly, the retirement benefits to be paid to your regular employees under R.A. No. 7641 shall not be subject to income tax consequently to withholding tax prescribed by Section 79, Chapter XIII, Title II of the Tax Code of 1997. (BIR Ruling No. 050-98 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. Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)