BIR Ruling No. 208-83

November 23, 1983 BIR RULING NO. 208-83 M a d a m : This refers to your letter dated October 5, 1983 requesting exemption from the withholding tax on the retirement benefits which you receive on account of your separation from the service of the Philippine Veterans Bank. cdt The certification issued by the Bank in response to a verification made by this Office disclosed that you were separated from the service of the Bank effective June 18, 1983, at the age of 39 years, 11 months and 4 days after 17 years, 8 months and 22 days of service in the said Bank on account of its retrenchment program per Board Resolution No. 9583-83 adapted on March 8, 1983; and that you received the amount of P138,246.23 as retirement/separation benefit. In reply thereto, I have the honor to inform you that pursuant to Section 29(c)(7)(B) of the Tax Code, as amended, any amount received by an official or employee or by his heirs from his employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee, such as retrenchment, redundancy and cessation of business, is exempt from taxes regardless of age or length of service . (Sec. 2(b)(2), Revenue Regulations No. 6-82 dated October 1, 1982) In view thereof, this Office is of the opinion as it hereby holds that any and all amounts you received from the Philippine Veterans Bank as a result of your separation from the service of the Bank due to retrenchment are exempt from all taxes and consequently, from 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. 6-82 supra . It is, however, understood that this tax exemption does not include the Bank's payments for your salary and cash equivalent of your accumulated vacation and sick leaves, if any. cdtech Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner Bureau of Internal Revenue