BIR Ruling No. 429-2017

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARIMENT OF FINANGE

Quezon City

Sec.32(B)(6)(a) NIRC BIR Ruling No. ERP-01-201j 4-2017 CC-

MR. JUAN E. NECESARIO No. 1 Ligtasan Street, Brgy. San Roque Antipolo City

Dear Mr. Necesario.

about taxation of your retirement benefits. This refers to your letter dated November 24, 2016 requesting clarification

retirement benefits; and that the company has advised you to ask for a BIR ruling for that you resigned from the company as Technical Assistance Manager/Customer Support Manager iast September 30. 2014 at the age of 54 and after 25 years and 4 that the company, however. has deducted an amount equivalent to 32% of your the tax exemption of your retirement benefits. months of continuous service; that your company has a BIR-approved retirement plan: It represented that you were a former employee of Solid Cement Corporation:

which provides: and (2) he is at least fifty (50) years old at the time of retirement. As represented. however. you resigned from the service of the company. Thus. your resignation benefits are governed by Section 32(B)(6)(b) of the Tax Code of 1997. as amended. Code of 1997, as amended, the retiremcnt benefits received by a qualified employee in provided that the two (2) conditions set forth therein are satisfied. to wit: (1) the accordance with a reasonable retirement benefit plan shalt be exempt from income tax employee had been in the scrvice of the same private firm for at least ten (10) years: In reply. please be informed that pursuant to Section 32(B)(6)(a) of the Tax

shall be exempt from taxation under this Tille: following items shall not be included in gross income and "Section 32(B). Exclusions from Gross Income- The

XXX XXX XXX

(6) Retirement Benefits. Pensions. Gratuties, etc.-

heirs from the emplover as a consequence of separation of (b) Any amount received by an official or employee or by his

Mr. Juan E. Neccsario Page 2 of 2

for any cause beyond the control of the said official or such official or employee from the service ot the emplover because of death. or sickness or other physical disubility or

employee. "

resigned from the company. Thus, this Office is of the opinion, as it hereby rules. that your separation benefits from the company is subject to income tax and, consequently. account of his separation from employment due to sickness or other physical disability separation from the service of the company appears to bc voluntary as you. in fact. to the withholding tax. or for any cause beyond the control of said employcc is exempt from income tax. In the instant case, there is no showing that your separation from employment was due to sickness or other physical disability or for any cause beyond your control as to warrant the exemption of your separation bencfits from income tax. On the other hand. your Based on the above provision. separation benefits givcn to an employee on

Very truly yours.

Commissioner of Internal Revemuc CAESAR R. DULAY

K-1 Resource Management Group Deputy Commissioner Officer-tn-Charge CELIA C. KING i C