RMC No. 27-2011: Revokes BIR Ruling Nos. 002-99, DA-184-04, DA-569-04 and DA-087-06

Summary

RMC No. 27-2011 revokes BIR Ruling Nos. 002-99, DA-184-04, DA-569-04 and DA-087-06 and limits the income tax exclusion to mandatory contributions.

Key points

1. Rulings revoked. The rulings dated January 12, 1999, April 6, 2004, November 10, 2004 and March 6, 2006 excluded from gross income contributions above the mandatory monthly contribution to Pag-Ibig 2, GSIS, SSS, Life Insurance and Pre-Need Plan, and certain GSIS optional insurance, educational plan and memorial plan premiums.
2. Mandatory contributions only. Section 32(B)(7)(f) of the NIRC of 1997 covers only mandatory or compulsory employee contributions to SSS, GSIS, PHIC and HDMF. Voluntary contributions above what the law allows are not excludible from gross income and are not exempt from Income Tax and Withholding Tax.
3. Withholding tax exemption. The exemption in Section 2.78.1(B)(12) of Revenue Regulations No. 2-98 applies only to mandatory GSIS, SSS, Medicare and Pag-ibig contributions.
4. Audit. Inconsistent revenue issuances are repealed. Revenue Officers conducting audits must disallow claims for exemption of voluntary contributions and, where applicable, make a deficiency assessment.

Who is affected

• Employees contributing to SSS, GSIS, PHIC and HDMF
• Revenue Officers conducting audit investigations

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.