Senator Nancy Binay on Sunday lauded the bicameral conference committee for pushing through with plans to provide tax-free benefits for retirees under the Bayanihan to Recover as One Act or Bayanihan 2.
(Senate of the Philippines / FILE PHOTO / MANILA BULLETIN)
Binay had earlier pushed for the inclusion of a clause in Bayanihan 2 exempting tax-free retirement benefits for employees who have retired from private companies from June 5 until Dec. 31 of this year to help employees who were forced into retirement due to the COVID-19 crisis.
“Sa totoo lang kawawa yung mga pinag-force retire o yung mga nag-avail ng optional retirement packages ng mga kompanya—wala nang trabahong babalikan, aawasin pa ang tax sa konting natira sa benefits nila. (The truth is, those who were forced to retire or those who availed themselves of optional retirement packages in their companies are at a disadvantage—aside from having no more work to return to, their benefits get a huge slash on tax), Binay said.
“Gusto lang natin masiguro na all bases are covered sa Bayanihan 2. We want more people to benefit from this law since the pandemic has hit everybody,” she said.
Section 5 of the approved measure states that “retirement benefits received by officials and employees of private firms, whether individual or corporate, from June 5, 2020 until December 31, 2020 shall be excluded from gross income and shall be exempt from taxation. That is, provided, that any re-employment of such official or employee in the same firm, within the succeeding 12-month period, shall be considered as proof of non-retirement and shall subject the benefits received to appropriate taxes.”
The bill also seeks to hold criminally liable and penalize any person who willfully evades or defeats any imposable tax under this provision, as stated under Section 255 of Republic Act No. 8424.
Under the present Tax Code, retirement benefits are only tax-exempt if they satisfy certain conditions of length of service and age.
Under Bayanihan 2, only retirees who have been in the service of the same company for at least 10 years and not less than 50 years of age upon retirement qualify for tax exemption.
“Anumang revenue ang mawawala sa pamahalaan dahil sa tax exemption na ito, mababawi rin naman dahil sa value-added tax (VAT) ng mga binibili. Ang mahalaga, mabigyan natin sila ng dagdag na panggastos para sa kapakanan ng mga pamilya nila (Any revenue that the government will lose due to this tax exemption can be offset by the VAT in basic goods. What is important is we can help give them additional funds for the sake of their families),” she added.
By getting rid of the said conditions, she said retirees would be able to have more money to use.
“Malaking bagay yung tax exemption sa retirees. Ang ibig sabihin nito, ang ikakaltas sana sa benefits ng mga kababayan nating magre-retire sa kasagsagan ng pandemya, magagamit nila para sa gastusin ng kanilang mga pamilya, (Tax exemption is a big deal for our retirees. This means, these retirees can efficiently get more funds which they can use for their families),” the senator said.
Under the present Tax Code, retirement benefits are only tax-exempt if they satisfy certain conditions of length of service and age.
The Senate ratified the bicameral conference committee report on the Bayanihan 2 measure while the House of Representatives is expected to ratify it this week.