BIR RULING NO.

234-13

Section 60 (B) of the Tax Code of 1997;

ERP-267-07 dated September 21, 2007
Metropolitan Bank & Trust Company
Trust Banking Group, GT Tower International
6813 Ayala Ave., H.V. Dela Costa St.
Makati City
Attention:

Josephine G. Cervero
Vice President

Gentlemen :
This refers to your letter dated 22 August 2011 requesting revalidation of the exemption
from the 20% and 7.5% final taxes on interest income from local bank deposits and foreign
currency deposits of the Nokia Siemens Networks Philippines, Inc.'s Retirement Plan.
Documents submitted show that BIR Ruling No. ERP-267-07 dated September 21, 2007
was issued in favor of Nokia Siemens Networks Philippines, Inc.'s Retirement Plan, wherein the
said retirement plan was declared that, being a reasonable retirement trust, it is exempt from 20%
final tax and 7.5% tax on interest income from local banks deposits and foreign currency
deposits.
In reply thereto, please be informed that the exemption of the abovementioned
Retirement Plan from the payment of the 20% and 7.5% final taxes on interest income from local
bank deposits and foreign currency deposits imposed under section 27 (D) (1) of the National
Internal Revenue Code of 1997, as amended, remains valid and subsisting. The retirement
benefits to be received by the qualified employee-member shall be exempt from income tax
provided the two (2) conditions set forth under Section 32 (B) (6) (a) of the Tax Code are met.
It is observed, however, that Section 1, Article V, of the Plan provides that the normal
retirement date of a member shall be the first day of the month coincident with or next following
his sixtieth (60th) birthday provided he has served the company for at least five (5) years of
credited service. In such a case, the retirement benefits payable to the retiring member shall not
be exempt from income tax because Section 32 (B) (6) (a) of the Tax Code of 1997, as amended,
requires the presence of these two conditions in order that the employee benefits may be granted
tax exemption: (1) the employee had been in the service of the same private firm for at least ten
(10) years; and (2) he is at least fifty (50) years old at the time of retirement.

It is understood that all other benefits provided for under the Plan are not covered by this
exemption unless they are expressly exempt from tax pursuant to different provisions of the 1997
Tax Code.
It must also be emphasized that in its investment activities, no part of the corpus or
income of the Retirement Fund shall be used for or diverted to purposes other than for the
exclusive benefit of the member-employees/officials or their beneficiaries. Furthermore, the
trustee bank should not in any way use the Retirement Fund to invest/deposit in any of the
employer's business ventures because it would destroy the separate entity of the trust.
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.

Very truly yours,

(SGD.) KIM S. JACINTO-HENARES
Commissioner
Bureau of Internal Revenue