Republic of the Philippines
HOUSE OF REPRESENTATI
Quezon City, Metro Manila
SIXTEENTH CONGRE!
Second Regular Session

House Bill No. 47 04

Introduced by Rep. EVELIO R. LEONARDIA

EXPLANATORY NOTE

The current trend in employment is the coverage of retirement plan to the
employees. That in most instances, many employees retire at an early age to work with
another employer for a better compensation or for the advancement of his career but the
early decision to retire may be deterred because of the taxability of his / her retirement
pay under the present National Internal Revenue Code, or that retirement pay for the
second time past the age of 50 year old becomes taxable when, ironically, the older the
person gets like being a senior citizen, his life’s burden not need be too loaded for him let
alone the taxability of his benefits, Thus, the non-taxability of the retirement pay upon
reaching the age of 45 years whose employment with the same employer has
accumulated for at least 10 years, and the non-taxability of the subsequent retirement
benefits that he may be entitled to receive from his subsequent employer/s.

As such, the approval of this Bill is earnestly sought.

REP. EVELIO R. LEONARDIA
Lone District, Bacolod City


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SIXTEENTH CONGRESS
Second Regular Session

4704

House Bill No.

Introduced by Rep. EVELIO R. LEONARDIA

AN ACT
AMENDING SECTION 32 (B) (6) (a) OF REPUBLIC ACT NO. 8424, AS
AMENDED OTHERWISE KNOWN AS THE NATIONAL INTERNAL
REVENUE CODE OF 1997

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 32 (B) (6) (a) of Republic Act No. 8424, as amended,
otherwise known as the National Internal Revenue Code of 1997, is hereby
amended to read as follows:

(B) Exclusion from Gross Income — The following items shall not be included
in gross income and shall be exempt from taxation under this title:

XXXXK
(6 Retirement Benefits, Pensions, Gratuities, ete. —

(a) Retirement benefits received under Republic Act No. 7641 and those
received by officials and employees of private firms, whether individual
or corporate, in accordance with a reasonable private benefit plan
maintained by the employer: Provided, That the retiring official or
employee has been in the service of the same employer for at least ten (10)
years and is not less than forty five (45) years old. The same exclusion

‘subsequently gets emploved for another ten vears or more with private
firms whether individual or corporate or with public firms with a benefit
plan or retirement plan. For purposes of this Subsection, the term
“reasonable private benefit plan” means a pension, gratuity, stock bonus
or profit-sharing plan maintained by an employer for the officials or
employees, wherein contributions are made by such employer for the
officials or employees, or both, for the purpose of distributing to such
officials and employees the earnings and principal of the fund thus
accumulated, and wherein it is provided in said plan that at no time shall
any part of the corpus or income of the fund be used for, or be diverted
to, any purpose other than for the exclusive benefit of the said officials
and employees.



SECTION 2.  Separability Clause. — If any provision of this Act is declared
invalid or unconstitutional, other provisions hereof which are not affected thereby shall
continue to be in full force and effect.

SECTION 3. Repealing Clause. — Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or regulation contrary to
‘or inconsistent with any provision of this Act as hereby amended or modified
accordinaly.

SECTION 4. This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in two (2) newspapers of general circulation.

Approved,