MCRP Construction Corporation
BIR Ruling [SB-(002) 021-09] • Bureau of Internal Revenue (BIR) Issuances • Rulings on Social Benefits • Jan 14, 2009
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January 14, 2009 BIR RULING [SB-(002) 021-09] 050-98; DA 159-04 MCRP Construction Corporation Unit 1408, 14th Floor Tektite Tower I Building Exchange Road, Ortigas Center Pasig City Attention: Ms. Julieta S. Figueroa Admin. Manager Gentlemen : This refers to your letter dated October 28, 2008 requesting for a ruling that the payment of retirement benefits to Orlando Alovera in accordance with the provisions of Republic Act (RA) No. 7641 are exempt from income tax and consequently from withholding tax. It is represented that your company has no BIR-Approved Retirement Plan; and that your company pays retirement benefits to its retiring employees in accordance with the following: 1/2 month salary 15 days Five (5) days incentive leave 5 days One over twelve (1/12) 13th month pay 2.5 days 22.5 days In reply thereto, please be informed that pursuant to Section 32 (B) (6) (a) of the Tax Code of 1997 retirement benefits received under RA No. 7641 shall not be included in gross income and shall be exempt from income tax. Accordingly, retirement benefits to be paid by you to your employee under RA No. 7641 are not subject to income tax and consequently to the withholding tax prescribed in Section 79, Chapter XIII, Title II of the Tax Code of 1997. 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. HDTCSI Very truly yours, (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service
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