Monetized Unused Vacation Leaves - Tax-Exempt

January 15, 1993 BIR RULING NO. 034-93 MONETIZED UNUSED VACATION LEAVES TAX-EXEMPT 21 (a) 031-92 034-93 Banco de Oro Savings and Mortgage Bank Aurora Boulevard Corner Yale Street Cubao, 1100 Quezon City Attention: Ms . Rosemarie M . Diamzon Internal Audit Division This refers to your letter dated 04 September 1992 stating that your company has a policy to pay the cash equivalent of earned but unused vacation leave credits in excess of 30 days accumulated credits and that the payment of this is made on January of every year. In connection therewith, you would like to know if BIR Ruling No. 29-92 dated January 17, 1992 exempting from income tax and consequently from the withholding tax the monetized unused vacation leave credits not exceeding ten (10) days during the year is applicable to your employees. cdtech In reply, please be informed that the monetized unused vacation leave credits not exceeding (10) days during the year are not subject to income tax and consequently, to the withholding taxes. (BIR Ruling No. 031-92 dated 23 January 1992) The above ruling is applicable to employees of both the government and the private sector like your company. acd JOSE U. ONG Commissioner of Internal Revenue