Retirement Benefits Received from Foreign Sources by an Alien Permanently Residing in the Philippines is Exempt from Income Tax

December 26, 1991 BIR RULING NO. 277-91 28 (b) (7) (c) 12-89 277-91 Gentlemen : This refers to your letter dated September 12, 1991 requesting for a ruling as to whether retirement benefits received by an alien who is residing permanently here in the Philippines are subject to income tax. It is represented that your client, Mr. Johannes H. Prudon, a citizen of Netherlands, is presently employed with the Philippine Refining Company (PRC), a domestic corporation; that on November 5, 1986, his temporary visitor's visa was changed into a permanent resident visa in view of his intention to stay in the Philippines permanently; that he is due to retire on March 1, 1991 from PRC, and consequently upon his retirement, he will be receiving retirement benefits from Stitching Unilever Pensioefone Progress (SUPP), a foreign institution with business address at Museum Park 1, P.O. Box 2071, 3200 CB Rotterdam. cdti In reply thereto, please be informed that pursuant to Section 28 (b) (7) (C) of the Tax Code, as hereunder quoted: "The provisions of any existing law to the contrary notwithstanding, social security benefits, retirement gratuities, pensions and other similar benefits received by resident or other similar benefits received by resident or non-resident citizens of the Philippines or aliens who come to reside permanently in the Philippines from foreign government agencies and other institutions, private or public shall not be included in gross income and shall be exempt from tax." Based on the foregoing, retirement benefits received from foreign sources by Mr. Prudon, an alien who now resides in the Philippines, is exempt from income tax. cdt Very truly yours, (SGD.) JOSE U. ONG Commissioner