BIR Ruling [UN-450-95]

1995 BIR RULING [UN-450-95] Citytrust Banking Corporation 379 Sen. Gil J. Puyat Avenue Makati City Attention: Ms . Maripaz L . Mendoza AM & Trust Officer and Mr . Manuel C . Malabanan VP & Trust Officer Gentlemen : This refers to your letter dated August 16, 1995 requesting, in effect, for a ruling exempting it from the payment of the creditable expanded withholding tax prescribed under Revenue Regulations No. 1-90 as amended by Revenue Regulations No. 12-94 implementing Section 50(b) of the Tax code, as amended, the sale by the following BIR-approved duly trusteed and tax exempt private employees retirement benefit trust funds represented by you, as trustee, of their real estate property located at Laurel St., Industrial Valley, Marikina, Metro Manila, viz: Account Name Trust Account No. 1. Goodyear Phils., Inc. TA # 5C-013 (formerly Goodyear Tire & Rubber Co. of the Phils.) 2. Philtread Tire & Rubber Corp. TA # 5C-015 Retirement Plan (formerly Firestone Tire & Rubber Co. of the Philippines) 3. Miguel J. Ossorio Pension TA # 5C-019A Foundation, Inc. Trust Fund 4. Del Monte Phils., Inc. Retirement TA # 5C-020/ Plan 5C-021B 5. Dow Chemical Pacific Ltd. TA # 5C-030 Retirement Plan 6. Armco Marsteel Alloy Corporation TA # 5C-044 Retirement Plan 7. Citytrust Banking Corporation TA # 5C-002 Retirement Plan (formerly FEATI Bank Trust Co.) 8. Alcatel Phils., Inc., Retirement TA # 5C-003 Plan (formerly ITT Phils., Inc.) 9. Mercury Group of Companies, Inc. TA # 5C-017 Provident Plan 10. Catholic Education Association TA # 5C-032 of the Phils. Retirement Plan 11. Boehringer Ingelheim Phils., Inc. TA # 5C-036 Retirement Plan 12. Pacific Enamel Retirement Plan TA # 5C-042 13. BASF Phils., Inc. Retirement Plan TA # 5C-054 14. Admiral Hotel Retirement Plan TA # 5C-060 (formerly Admiral Realty Co., Inc.) 15. Mapua Institute of Technology TA # 5C-066 Retirement Plan 16. Amkor Anam Pilipinas Inc. TA # 5C-070 Retirement Plan 17. Sharp Phils., Corporation TA # 5C-072 Retirement Plan 18. Caltex Philippines, Inc. TA # 5C-028 Retirement Plan In reply, please be informed that under Section 53(b) of the Tax Code, as amended, the tax imposed in Title II of the Tax Code shall not apply to employee's trust which forms part of a pension, stock bonus or profit-sharing plan of an employer for the benefit of some or all of his employees (1) if contributions are made to the trust by such employer, or employees, or both for the purpose of distributing to such employees the earnings and principal of the fund accumulated by the trust in accordance with such plan, and (2) if under the trust instrument it is impossible, at any time prior to the satisfaction of all liabilities with respect to employees under the trust, for any part of the corpus or income to be (within the taxable year or thereafter) used for, or diverted to, purposes other than for the exclusive benefit of his employees. In connection therewith, Section 4(b) of Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 implementing Section 50(b) of the Tax Code, as amended, provides that the withholding of tax (EWT) prescribed in these regulations shall not apply to income payments to persons enjoying exemption from the payment of income taxes pursuant to the provisions of any law, general or special. cdtech Such, being the case, and since your above enumerated private employees benefit trust funds have met the requirements of the law and the regulations and therefore qualify as reasonable retirement benefit plans within the contemplation of Republic Act No. 4917 (now Sec. 28(b)(7)(A), Tax Code) as determined by this Office, income from their (Trust Funds) investments are therefore exempt from the payment of income tax, and consequently, from the payment of the creditable expanded withholding tax imposed under Revenue Regulations No. 6-85 as amended by Revenue Regulations No. 12-94 on the sale of their aforesaid real property. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)