Withholding Tax Interest and/or Dividends from Bonds, Debentures or Shares of Stock of Retirement Fund

February 11, 1958 BIR RULING NO. 085-58 Messrs. Ker & Co., Ltd. P.O. Box 312 Manila Gentlemen : Reference is made to your letter of December 19, 1957, wherein you stated that in our letter to you of March 8, 1955, it was ruled that "the amounts periodically contributed by the employer into a retirement fund set for the benefit of the employees, as well as the interest which will accrue thereto when the retirement fund is deposited in a bank, are not subject to the withholding tax." You now would like to be informed whether the interest and/or dividends from bonds, debentures or shares of stock in which part of said fund may be invested would also not be subject to the withholding tax. In reply thereto, I have the honor to inform you that the interest on bonds or debentures and the dividends on shares of stock which will accrue to the retirement fund as a result of the investment of a part thereof in such bonds, debentures and shares, are not subject to the withholding tax. However, when an employee is finally paid the retirement benefit out of said fund, the amount paid or set aside for the employee, whether drawn from the principal of the fund or its accruals, will be subject to withholding tax. It is understood that the retirement plan referred to above is not established in accordance with the provisions of the Social Security Act of 1954. LexLib Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue