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REVENUE MEMORANDUM CIRCULAR NO. 27-2011

 

The Bureau of Internal Revenue issued Revenue Memorandum Circular No. 27-2011 dated July 1, 2011 revokes BIR Ruling Nos. 002-99 (dated January 12, 1999), DA-184-04 (dated April 6, 2004), DA-569-04 (dated November 10, 2004) and DA-087-06 (dated March 6, 2006). Said rulings exclude from the gross income of the taxpayer, and hence exempt from Income Tax, contributions to Pag-Ibig 2, GSIS, SSS, Life Insurance, Pre-Need Plan in excess of the mandatory monthly contribution; GSIS Optional Insurance Premium, GSIS Educational Plan Premium, GSIS Memorial Plan Premium and GSIS Unlimited Optional Insurance Premium.

Contributions referred to in Section 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, voluntary contributions in excess of what the law allows to these institutions 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 Section 2.78.1 (B)(12) of Revenue Regulations No. 2-98 shall apply only to mandatory/compulsory GSIS, SSS, Medicare and Pag-ibig contributions.

All revenue issuance inconsistent with this Circular are deemed repealed. All Revenue Officers conducting audit investigations shall take the provisions of this Circular into consideration. Accordingly, any claim for exemption for voluntary contributions shall be disallowed, and, where applicable, the corresponding deficiency assessment shall be made.