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...
