Optional Retirement Benefits Received under the Employees' Retirement Plan Exempt from All Taxes

December 21, 1984 BIR RULING NO. 189-84 29 (c) (7) (A)-000-00-189-84 Gentlemen : This refers to your letter dated July 16, 1984 requesting a ruling to the effect that the retirement pay which you received under the Marinduque Mining & Industrial Corporation Employees' Retirement Plan on account of your optional retirement from the service of your employer, the Marinduque Mining and Industrial Corporation is exempt from withholding tax. Verification from the records of this Office disclosed that the Marinduque Mining and Industrial Corporation Employees' Retirement Plan was approved on November 4, 1983 providing for retirement benefit at age 60 or 65 and after ten (10) years of service with the corporation. In reply, please be informed that pursuant to Section 29(c)(7)(A) of the Tax Code, as amended, the retirement benefits received by officials and employees who have been in the service of the same private firm for at least ten (10) years and who are not less than fifty (50) years of age at the time of retirement are exempt from all taxes provided that the retirement benefits are in accordance with a reasonable private benefit plan maintained by the employer. Documentary evidence submitted show that both of you, retired from the service in accordance with the Corporation's Retirement Plan at ages 60 and 62, after 17 years and 9 months and 17 years and 7 months of service respectively, with the corporation, and that you have received retirement benefits in the respective amount of P21,681.93 and P29,998.42 which were subjected to withholding tax. In view thereof, this Office is of the Opinion as it hereby holds that the optional retirement benefits received by you under the Marinduque Mining and Industrial Corporation Employees' Retirement Plan are exempt from all taxes and consequently from the withholding tax prescribed by Section 91, Chapter XI, Title II of the Tax Code, as amended by Batas Pambansa Blg. 135 and implemented by Revenue Regulations No. 8-82. It is however, understood that this tax exemption does not include payments for your salary and cash equivalent of your accumulated vacation and sick leaves, if any. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner