Article 17p. 17

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

(6) Royalties;

(7) Dividends;

(8) Annuities;

(9) Prizes and winnings;

(10) Pensions; and

(11) Partner's distributive share from the net income

of the general professional partnership.

(B) Exclusions from Gross Income. - The following items

shall not be included in gross income and shall be

exempt from taxation under this Title:

(1) Life Insurance. - The proceeds of life insurance

policies paid to the heirs or beneficiaries upon the

death of the insured, whether in a single sum or

otherwise, but if such amounts are held by the

insurer under an agreement to pay interest thereon,

the interest payments shall be included in gross

income.

(2) Amount Received by Insured as Return of

Premium. - The amount received by the insured, as

a

return

of

premiums

paid

by him under life

insurance, endowment, or annuity contracts, either

during the term or at the maturity of the term

mentioned in the contract or upon surrender of the

contract.

(3) Gifts, Bequests, and Devises. - The value of

property

acquired

by

gift,

bequest,

devise,

or

descent: Provided, however, That income from such

property, as well as gift, bequest, devise or descent

of income from any property, in cases of transfers of

divided interest, shall be included in gross income.

(4)

Compensation

for

Injuries

or

Sickness.

-

amounts

received,

through

Accident

or

Health

Insurance or under Workmen's Compensation Acts,

as compensation for personal injuries or sickness,

plus the amounts of any damages received, whether

by suit or agreement, on account of such injuries or

sickness.

(5) Income Exempt under Treaty. - Income of any

kind, to the extent required by any treaty obligation

binding upon the Government of the Philippines.

(6) Retirement Benefits, Pensions, Gratuities, etc. -

(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 fifty (50) years of

age at the time of his retirement: Provided,

further, That the benefits granted under this

subparagraph shall be availed of by an official

or employee only once. 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 benefit of some or all of his

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 its 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.

(b)

Any

amount

received by an official or

employee or by his heirs from the employer as

a consequence of separation of such official or

employee from the service of the employer

because of death sickness or other physical

disability or for any cause beyond the control of

the said official or employee.

(c) The provisions of any existing law to the

contrary

notwithstanding,

social

security

benefits, retirement gratuities, pensions and

other similar benefits received by resident or

nonresident citizens of the Philippines or aliens

who

come

to

reside

permanently

in

the

Philippines from foreign government agencies

and other institutions, private or public.

(d) Payments of benefits due or to become due

to any person residing in the Philippines under

the laws of the United States administered by

the United States Veterans Administration.

(e) Benefits received from or enjoyed under the

Social Security System in accordance with the

provisions of Republic Act No. 8282.

(f)

Benefits

received

from

the

GSIS under

Republic Act No. 8291, including retirement

gratuity received by government officials and

employees.

(7) Miscellaneous Items. -

(a) Income Derived by Foreign Government. -

Income

derived

from

investments

in

the

Philippines in loans, stocks, bonds or other

domestic

securities,

or

from

interest

on

deposits

in banks in the Philippines by (i)

foreign governments, (ii) financing institutions

owned, controlled, or enjoying refinancing from

foreign governments, and (iii) international or

regional financial institutions established by

foreign governments.

(b) Income Derived by the Government or its

Political Subdivisions. - Income derived from

any public utility or from the exercise of any

essential governmental function accruing to

the Government of the Philippines or to any

political subdivision thereof.

(c) Prizes and Awards. - Prizes and awards

made

primarily

in

recognition

of

religious,

charitable,

scientific,

educational,

artistic,

literary, or civic achievement but only if:

(i) The recipient was selected without any

action on his part to enter the contest or

proceeding; and

(ii) The recipient is not required to render

substantial future services as a condition

to receiving the prize or award.

(d) Prizes and Awards in sports Competition. -

All prizes and awards granted to athletes in

local and international sports competitions and

tournaments whether held in the Philippines or

abroad and sanctioned by their national sports

associations.

(e) 13 th Month Pay and Other Benefits. - Gross

benefits received by officials and employees of

public and private entities: Provided, however,

That

the

total

exclusion

under

this

subparagraph

shall

not

exceed

Ninety

thousand pesos (P90,000) which shall cover:

(i)

Benefits

received

by

officials

and

employees

of

the

national

and

local

government pursuant to Republic Act No.

6686;

(ii)

Benefits

received

by

employees

pursuant to Presidential Decree No. 851, as

amended by Memorandum Order No. 28,

dated August 13, 1986;

(iii)

Benefits

received

by

officials

and

employees

not

covered

by

Presidential

Decree

No.

851,

as

amended

by

Memorandum Order No. 28, dated August

13, 1986; and

© Compiled by RGL

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