BIR Ruling No. 362-2022

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Quezon City

Sec.32(B)(6)(a)&(b),Tax Code, as amended BIR Ruling No. OT-480-21 0f='362-2022

AUG 1 2_2022

#6 Pines, Mandaluyong City BO'S COFFEE

Attention: Mr. Richel Borde Sr. Human Resources Manager

Gentlemen:

retirement benefits of your retiring employee, MR. EMMANUEL JOVENAL F. INOCIAN ("Mr. Inocian"). This refers to your request for exemption from payment of income tax on the

turned sixty (60) years old on October. 12, 2021. He .was an employee of Bo's Coffee from position of Senior Project and Business Development Manager. July 6, 2006 to November 5, 2021 or for a period of fifteen (15) years. He last held the As represented, Mr. Inocian, with Taxpayer's Identification No.

Viz: In reply, please be informed that Section 1-of Republic Act (RA) No. 7641 provides,

otherwise known as the Labor Code of the Philippines, is hereby amended to read as follows: "SEC.: 1. Article 287 of Presidential Decree No. 442, as amended.

agreement or other applicable employment contract. In case of retirement, the employee shall be entitled to receive suchi retirement benefits as he may have reaching the: retirement age established: in. the collective bargaining ART. 287. Retirement. -- Any employee may be retired upon

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earned underexisting laws and any :collective: bargaining agreement and other agreements: Provided, however, That an employee's retirement benefits under any collective bargaining and other:agreements shall not be less than those provided herein.

for every year of service, a fraction of at least six(6) months being considered reaching the age: of sixty.:(60) years or more,: but not beyond sixty-five (65) years which is hereby. declared the: compulsory retirement age, who has served at least five (5) years in the said:establishment, may retire and shall be entitled to retirement pay. equivalent to: at least/one-half (1/2) month salary as one whole year. retirement benefits.of emplovees in :the:establishment, an employee upon In the absence of.:.a retirement :plan or agreement providing for

service incentive leaves. " (1/2) month salary shall mean fifteen: (15):days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of.inot:more than five (5) days of Unless:the parties provide for broader inclusions, the term one-half

i in the company. [retirement benefits set forth under RA No. 7641 shall apply, i.e., at least one-half (1/2) month salary for every year of service of an employee who has reached the age of sixty (60) years agreement providing "for: the retirement: benefits of 'employees in the establishment, the or more; but not beyond sixty-five: (65) years,: and rendered at least five (5) years of service Pursuant to the above provision, in theabsence of a retirement plan or other

retirement benefits of its employees; and that Mr: Inocian is more than sixty (60) years of age and have more than "five (5) years in the 'service of Bo's Coffee, the retirement benefits provided in RANo.764I shall apply. Considering that' Bo's Coffee: has no.retirement plan or policy providing for

length of service requirements under RA No.:764 1 shall be exempt from withholding tax. (Tax Code) of 1997, as amended, the.retirement.benefits-of employees who meet the age and By express provision of Section 32 (B) (6) (a) of the.National Internal Revenue Code

withholding tax pursuant to Section 32(B) (6) (a) of the Tax Code of 1997, as amended. by Bo's Coffee to Mr: Inocian shall be: exempt from income tax and consequently, to the THEREFORE, thisOffice hereby holds: that the retirement benefits to be paid

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tax and consequently-to the withholding tax. However, the same principle cannot apply to No. 2-98, as amended; the terminal pay, i.e., commutation and payment of monetized unused leave credits. vacation leave credits not exceeding ten (10) days during the year are not subject to income sick leave credits since an employee must actually go on sick leave to be able to avail of said Please take note also that pursuant to Section 2.78.1 (A) (7) of Revenue Regulations

and other benefits in excess of the Ninety Thousand Pesos (P90,000.00) threshold is subject to income tax and consequently to.withholding tax: It must be understood that the payment to Mr: Inocian of his salaries, 13 th month pay

However, if upon investigation, it will: be ascertained; that the facts are different, then this ruling shall be considered as null and void. This ruling is being issued on the basis' of the foregoing facts as represented.

Very truly yours,

ihl lAu

Commissioner of Internal Revenue LILIA CATRIS GUILLERMO

:K- 000466