23 May 2014
The Commissioner of Internal Revenue (“CIR”) has issued Revenue Memorandum Circular (“RMC”) No. 39-2014 dated 12 May 2014 which provides that Section 60(B) of the National Internal Revenue Code subjects to income tax, in the year of distribution, any amount actually distributed to an employee to the extent that it exceeds the amount contributed by such employee.
The RMC provides that any amount or benefit paid by a pension, stock bonus or profit-sharing plan of an employer for the benefit of employees is taxable on the part of the latter. However, the rule does not apply to payouts representing a return of an employee’s personal contributions to the fund and to retirement benefits exempt under Section 32(B)(6)(a) of the NIRC.
This RMC is effective immediately.