March 30, 1990

BIR RULING NO. 050-90

28 (b) (7) (A) 000-00 050-90

Gentlemen :

This refers to your letter dated February 28, 1990 requesting a ruling as to
whether or not the retirement bene ts under your company's retirement plan which has
been determined by this O ce as a reasonable retirement bene t plan within the
contemplation of Republic Act No. 4917 (now Section 28(b)(7)(A) of the Tax Code) is
subject to tax in view of the issuance of Presidential Decree No. 220. cdasia

In reply thereto, I have the honor to inform you that Presidential Decree No. 220
does not cover the retirement bene ts or pensions of o cials and employees of
private rms in the Philippines which shall continue to be governed by Republic Act No.
4917 as ampli ed by Revenue Regulations No. 1-68 as amended by Revenue
Regulations No. 1-83 (par. 2, Sec. 2, Revenue Regulations No. 6-73 dated July 10, 1973
implementing Presidential Decree No. 220).
Presidential Decree No. 220 which took effect on June 20, 1973 exempts from
Philippine income tax, social security bene ts, gratuities, pensions and other similar
benefits arising out of employment abroad and received by employees and workers
who are retired and who came to reside in the Philippines for the remaining years of
their lives, be they citizens of the Philippines or not, and whether the employer is a
foreign government or foreign private entity. The exemption equally, applies to such
incomes received by citizens of the Philippines after their retirement from the same
sources even if they should continue to reside in the foreign country where they may
emigrate after their retirement (Revenue Regulations No. 6-73 supra) In other words,
social security bene ts, gratuities, pensions or other similar bene ts received by
resident citizens, resident aliens, and non-resident citizens from foreign governments or
from foreign private entities during the taxable year 1973, i.e., January 1 to December
31, 1973 and thereafter shall be exempt from Philippine income tax.
Such being the case, the retirement bene ts to be received by your employees
under your company's retirement bene t plan which has been determined by this O ce
as a reasonable retirement bene t plan within the contemplation of Republic Act No.
4917 (now Section 28(b)(7)(A) of the Tax Code) on November 20, 1978 shall be
exempt from all taxes, notwithstanding P.D. No. 220. aisadc

Very truly yours,

(SGD.) JOSE U. ONG

Commissioner

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