Request for Exemption from the Payment of Income and Withholding Taxes of the Cash Equivalent of Unused Leave Credits
BIR Ruling No. 335-92 • Bureau of Internal Revenue (BIR) Issuances • Rulings (Numbered) • Dec 1, 1992
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December 1, 1992 BIR RULING NO. 335-92 21-50 099-92 335-92 C.F. Sharp & Co., Inc. P.O. Box 370 Manila Attention: Mr . Raul V . Austria Senior Vice-President Finance & Administration Gentlemen : This refers to your letter dated 14 September 1992 requesting exemption from the payment of income and withholding taxes of the cash equivalent of unused vacation leave credits to be paid to your employees. It appears that your employees are allowed 15 days paid vacation leave annually; but that, due to their workloads they are not able to use the said leave. However, it is the company policy to convert the said unused vacation leave to cash in December of each year. In reply, I have the honor to inform you that only the monetized unused vacation leave credits not exceeding ten (10) days during the year are not subject to income tax and consequently, to the withholding tax. (BIR Ruling No. 031-92 dated January 23, 1992) However, in excess of ten (10) days, it shall then be subjected to both income and withholding taxes. aisadc Very truly yours, VICTOR A. DEOFERIO, JR. Commissioner of Internal Revenue (Officer-In-Charge)
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