Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

2612

HOUSE BILL No.

Introduced by BAYAN MUNA
Representatives NERI J. COLMENARES and CARLOS ISAGANI T. ZARATE

AN ACT EXEMPTING CONTRIBUTIONS FOR THE GOVERNMENT SERVICH,
INSURANCE SYSTEM (GSIS), SOCIAL SECURITY SYSTEM (SSS), THE PHILIPPINE
HEALTH INSURANCE (PHILHEALTH) CORPORATION AND THE PAG-IBIG
FUND FROM TAXATION, AMENDING FOR THE PURPOSE REPUBLIC ACT
NO. 8424 OR THE NATIONAL INTERNAL REVENUE CODE,

EXPLANATORY NOTE

On July 1, 2011, Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares issued
Revenue Memorandum Circular no. 27-2011, revoking BIR Ruling No, 002-99, DA.184
DA-569-04 and DA-087-06 which excludes employees' mandatory and voluntary contributior

the Pag-Ibig Fund, the Philippine Health Insurance (PhilHealth) Coxporation, the Governn eat
Service Insurance System (GSIS) and the Social Security System (SSS) from the gross income of
taxpayers, exempting them from taxation, Henares argued that the term “contribution” as def ned
by RA 8291 or the Government Service Insurance System Act of 1997 refers only to mandarory
contributions.

However, the-law merely states that “it shall be mandatory for the member and the employer to
pay the monthly contributions.” Thus, there is no differentiation between mandatory and voluntary
contributions under the law. The same applies to Republic Act no, 8282 or the Social Security Act
of 1997, Republic Act no 7875 or the National Health Insurance Act of 1995 and Republic Act
no. 9697 or the Home Development Mutual Fund Law of 2009,

In addition to its questionable legal basis, the said policy discourages employees from putting their
hard earned income into funds thac would eventually benefit not only themselves but
government and the public at large. Employees are already slapped with withholding ta
income. Additional contributions for Pag-Ibig or SSS should not be taxed anymore. Furthe
would be unfair for the government to be collecting taxes from the contributions of the emplove
while at the same time granting tax deduction/credit to contributing employers.

‘There is a need to correct the unfair situation that the BIR wants to create. ‘The bill, therefore, in
clear and categotical terms expressly exempts all contributions for the GSIS, SSS, PhilHealth and


Pag-IBIG from taxation by amending Republic Act No. 8424 or the National Internal Revenue
Code of 1997.

In this light, the passage of this bill is earnestly soughe.

Approved,
“4b mid Ras
Rep.WNERTJ,, INARES Rep. CARLOS ISAGAMI TZARAT!
Bayan) list Bayan Muna Parby-tist


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SIXTEENTH CONGRESS
First Regular Session

HOUSE BILL No. _ 26 12

Introduced by BAYAN MUNA
Representatives NERI J. COLMENARES and CARLOS ISAGANI T. ZARATE

AN ACT EXEMPTING CONTRIBUTIONS FOR THE GOVERNMENT SERVICE
INSURANCE SYSTEM (GSIS), SOCIAL SECURITY SYSTEM (SSS), THE PHILIPPINE,
HEALTH INSURANCE (PHILHEALTH) CORPORATION AND THE PAG-IBIG
FUND FROM TAXATION, AMENDING FOR THE PURPOSE REPUBLIC ACT
NO. 8424 OR THE NATIONAL INTERNAL REVENUE CODE

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

SECTION 1. Sec. 32 (b) of Republic Act No. 8424 or the National Internal Reventi
1997 is hereby amended to read as follows:

Income. — The following items shall not be included in gross income
ion under this title:

“(B) Exclusions from Gros
and shall be exempt from t

exe
(7) Miscellaneous Items. =

XXX

(8) GSIS, SSS, [Medicare] PhilHealth, PAG-IBIG and Other Contributions
SSS, [Medicare] PhilHealth and Pag-IBIG contributions, REGARDI
MANDATORY OR VOLUNTARY, and union dues of individuals.

SECTION 2. Constitutionality. Should any provision of this Act be declared invalid or
unconstitutional, the validity or constitutionality of other provisions shall not be affected thereby.

SECTION 3. Repealing Clause, All laws, decrees, letters of instructions, resolutions, orders,
ordinances or parts thereof which are inconsistent with the provisions of this Act, are hercby

repealed, amended, or modified accordingly.


SECTION 4. Effectivity, This Act shall take effect fifteen (15) days after its publication in two
(2) newspapers of general circulation.

Approved,