Global Connect Manpower Resources & Dev't., Inc.

July 15, 2008 BIR RULING [DA-(OSL-001) 039-08] R.A. No. 9257; BIR Ruling No. 058-97 & DA-249-02 Global Connect Manpower Resources & Dev't., Inc. G/F JAAA Building, 69 Apo St. Mandaluyong City Attention: Ms. Agnes C. Milan VP-Finance & Admin. Gentlemen : This refers to your letter dated February 18, 2008 requesting for clarificatory ruling on whether the remuneration of a senior citizen under your employ is exempt from withholding tax/income tax. aHcACT As represented, you have a seventy-year old employee who currently holds the position of Director and President of your company and receiving remuneration in the amount of PhP15,000.00 a month. In reply, please be informed that Section 4 of Republic Act (R.A.) No. 9257, otherwise known as "An Act Granting Additional Benefits and Privileges to Senior Citizens" amending R.A. No. 7432, as implemented by Section 3 (a) of Revenue Regulations (RR) No. 4-2006 provides that senior citizens are entitled to exemption from the payment of individual income tax and consequently, from the withholding tax provided that their annual taxable income does not exceed the poverty level as determined by the National Economic and Development Authority (NEDA) for that year. The current poverty thresholds as provided by the National Statistical Coordination Board are as follows: 2007 Annual Per Capita Poverty Thresholds (in PhP) NCR 2/ 19,345 1st District 2/ 19,907 2nd District 2/ 19,319 3rd District 2/ 18,838 4th District 2/ 19,807 Pursuant to Section 4 of RR No. 4-2006, the senior citizen's exemption shall be determined by the Revenue District Officer (RDO) having jurisdiction over the place where the senior citizen resides by submitting a certified true copy of his Senior Citizen Identification Card (OSCA ID) issued by the Office for Senior Citizens Affairs (OSCA) of the city or municipality where he resides. He must file an Annual Information Return (in lieu of the Income Tax Return) indicating that his annual taxable income does not exceed the poverty level as determined by the NEDA thru the National Statistical Coordinating Board (NSCB) through a formal written document sent to the Commissioner of Internal Revenue for this year and every year thereafter. If qualified, his name shall be recorded by the RDO in his Master List of Tax Exempt Senior Citizens for that particular year, which the RDO is mandatorily required to keep. DSHcTC Accordingly, if your employee is covered by R.A. No. 9257 amending R.A. No. 7432 and his annual taxable income does not exceed the poverty level for the entire year, his remunerations are exempt from income tax and consequently, from withholding tax and your company shall be exempt from the duty to withhold the corresponding tax on his remunerations. Conversely, if your employee's annual taxable income exceeds the poverty level, his remunerations are subject to income tax and consequently, to withholding tax and your company is required by law to withhold the corresponding tax on his remunerations. Please be guided accordingly. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service