Revenue Memorandum Circular (RMC) No. 27-2011 Revocation of BIR Ruling Nos. 002-99, DA-184- 04, DA-569-04 and DA-087-06

BIR Ruling Nos. 002-99 dated Jan BIR Ruling Nos. 002-99 dated Jan.12,1999 rendered an opinion regarding Sec 32(B)(7)(f) of the NIRC of 1997, to wit: “Since the law and implementing regulations do not categorically state that the exemption covers only the regular GSIS and Pag-Ibig contributions, it is safe to conclude that GSIS optional and Pag-Ibig 2 contributions are likewise excludible from the gross income of the taxpayer and hence, exempt from income tax”

BIR Ruling Nos. 002-99: -being abused; -money being invested in programs are not being taxed; -employers find difficulty to comply with the withholding of the correct tax since voluntary contributions by their employees may not always pass thru them

GSIS Contribution - (RA 8291) means the amount payable to GSIS by the member and the employer in accordance with Sec. 5 of this Act; - it shall be mandatory for the member and the employer to pay the monthly contributions specified in the following schedule; SSS Contribution -(RA 8292) the amount paid to the SSS by and on behalf of the member in accordance with Sec. 18 of this Act.

SSS Employee’s Contribution: - (RA 8282) (a) beginning as of the last day of the calendar month when an employee’s compulsory coverage takes effect and every month thereafter during his employment, the employer shall deduct and withhold from such employee’s monthly salary, wage, compensation or earnings, the employee’s contribution in an amount corresponding to his salary, wage, compensation or earnings during the month in accordance with the following schedule.

Philhealth Contribution - (RA 7875) the amount paid by or in behalf of a member to the Program for coverage, based on salaries or wages in the case of formal sector employees, and on household earnings and assets, in the case of the self-employed, or on other criteria as may be defined by the Corp. Pag-Ibig Contribution -(RA 9697) the amount payable to the Fund by the members and their employers

Pag-Ibig Fund Generation and Contributions - the money of the Fund shall be generated by the provident savings that the covered employees shall contribute for the purpose every month, and the equal amounts that their respective employers shall mandatorily contribute. Rates: 1% -employee’s income is <= P1,500/mo. 2% -employee’s income is >P1,500/mo 2% -employer’s share for all employees (P5,000 max. X 2%)

RMC 27-11, RMC 53-11: “Therefore, contributions referred to in Sec RMC 27-11, RMC 53-11: “Therefore, contributions referred to in Sec. 32(B)(7)(f) of the NIRC of 1997 cover only the mandatory/compulsory contributions of the concerned employees to SSS, GSIS, PHIC and HDMF. Thus, this Office holds that voluntary contributions to these institutions in excess of the amount considered compulsory are not excludible from the gross income of the taxpayer and hence, not exempt from Income Tax and Withholding Tax. Consequently, the exemption from withholding tax on compensation referred to in Sec. 2.78.1(B)(12) of RR 2-98 shall apply only to mandatory/compulsory SSS, GSIS, Medicare and Pag-ibig contributions”

Effectivity: -the taxability of the voluntary contributions of employees to SSS, GSIS, PHIV and HDM shall apply to employees’ contributions beginning July 1, 2011

End

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