BIR Ruling No. 180-14

June 9, 2014 BIR RULING NO. 180-14 Section 60 (B) of the Tax Code of 1997; BIR Ruling No. ERP-01-2011 Union Bank of the Philippines UnionBank Plaza Meralco Ave. cor. Onyx & Sapphire Roads Ortigas Center, Pasig City Attention: Ms. Cecile Ma. G. Gaston Business Development Manager Ms. Jocelyn L. Sampedro Head, Business Development Gentlemen : This refers to your letter dated January 25, 2013, requesting, on behalf of the Philippine Duplicators, Inc. Employees Retirement Plan (the "Plan" ), revalidation of its exemption from the 20% and 7.5% final taxes on interest and/or yield on deposit substitute instruments, trust funds and similar arrangements, and interest income from local bank deposits and foreign currency deposits pursuant to Section 60 (B) of the 1997 Tax Code. Documents submitted show that on November 27, 1974, this Office had issued a BIR Ruling approving the Plan as a reasonable retirement plan within the contemplation of Section 32 (B) (6) (a) of the 1997 Tax Code, as amended, and accordingly, the retirements benefits received by employees who met the requirements set forth under the aforesaid Section were exempted from income tax, the income of the trust fund from its investments was exempted from income tax and the contributions of the company to the fund have been made deductible from the company's gross income. In support of your letter-request you submitted the following documents: 1. a copy of the Retirement Benefit Plan Information Sheet; 2. a copy of the Retirement Plan Rules and Regulations; DEAaIS 3. a copy of the Trust Agreement; 4. a copy of the Actuarial Report; 5. a copy of BIR Ruling dated November 27, 1974; and 6. a copy of the President and Chairman of the Board's Joint Sworn Statement that there has been no amendment or modification on the Retirement Plan Rules and Regulations since the issuance of the BIR Ruling. In reply thereto, please be informed that the exemption of the Plan from payment of the 20% and 7.5% final taxes on interest and/or yield on deposit substitute instruments and interest income from local bank deposits and foreign currency deposits imposed under Section 27 (D) (1) of the 1997 Tax Code, as amended, remains valid and subsisting provided that the conditions set forth by Section 32 (B) (6) (a) of the same Code are met, to wit: (1) the employee had been in the service of the same private firm for at least ten (10) years; and (2) he is at least fifty (50) years old at the time of retirement. It is understood that other benefits provided for in the Plan are not covered by this exemption, unless they are expressly exempt from tax pursuant to pertinent provisions of the Tax Code. Moreover, the separation benefits given to a member who voluntarily resigns from the company shall not be exempt from income tax. ITDHSE It must be emphasized that in its investment activities, no part of the corpus or income of the Fund shall be used for or diverted to purposes other than for the exclusive benefit of the member-employees/officials or their beneficiaries. Furthermore, the trustee bank should not in any way use the Retirement Fund to invest/deposit in any of the employer's business ventures because it would destroy the separate entity of the trust. 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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue