Clarification on the Procedure of Computing the Withholding Tax on an Employee's Retirement Pay

February 11, 1959 BIR RULING NO. 096-59 Messrs. Lichauco, Picazo & Agcaoili Attorneys at Law Soriano Building Manila Gentlemen : Reference is made to your letter dated June 10, 1958, requesting clarification regarding the ruling (B.I.R. Ruling No. 136, series of 1958) issued by this Office on the procedure of computing the withholding tax on an employee's retirement pay which was paid to him in lump sum during the early part of a calendar year. In answer thereto, I have the honor to inform you that, since as stated in the last paragraph of said ruling "the amount of retirement pay and the salaries earned during the year (prior to retirement) may be averaged over a period covering one calendar year", it follows that the retirement pay plus the salaries received prior to retirement should be averaged over the number of payroll periods covering the whole taxable year, without excluding the number of payroll periods from the beginning of the taxable year to the payment of the retirement pay. cdtech Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue