Tax Exempt

3. Taxes paid and subsequently refunded

Taxes paid and subsequently refunded is not taxable if the taxes refunded were not originally
claimed as deductions. NIRC Section 34 (C) (1). However it will be taxable only if the taxes
were paid and claimed as deduction and which are subsequently refunded or credited. It
shall be included as part of gross income in the year of the receipt to the extent of the
income tax benefit of said deduction.
9. Separation pay received for occupying redundant position
Sec 32(b)(6) NIRC
10. Separation pay due to failing eyesight
It is considered as not taxable in accordance to Sec 32. B, Title II Chapter VI of the NIRC.
Under 6(B) of the said provision, 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.
11. Proceeds of life insurance policies received in a single sum
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 is excluded from gross income and not
subject to Philippine Income Tax. If the amounts are held by the insurer under an agreement
to pay interest thereon, the interest payments shall be included in gross income. Section 32
(B) of the NIRC:(B) Exclusions from Gross Income.- The following items shall not be included
in gross income and shall be exempt from taxation under this title: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.
13. Benefits on account of injury
15. Pension from GSIS
SEC. 32. (B) Exclusions from Gross Income. - The following items shall not be included in
gross income and shall be exempt from taxation under this title:
xxx
(f) Benefits received from the GSIS under Republic Act No. 8291, including retirement
gratuity received by government officials and employees.
17. Amounts received as compensation for personal injuries or sickness plus the amounts for
any damages received whether by suit or agreement on account of such injury or
sickness
19. 13th month pay not exceeding 30,000
13th month pay not exceeding 30,000 is not taxable. Under the National Internal Revenue
Code Section 32 (7) e, gross benefits received by officials and employees of public and
private entities which shall not exceed Thirty thousand pesos (P30,000). Since it includes
Presidential Decree 851 or the 13th Month Pay Law, therefore, it is not considered taxable.
22. Damages recovered for breach of promise to marry

The National Internal Revenue Code provides that any amount received as compensation for
personal injuries or sickness, plus the amounts for any damages received whether by suit or
agreement, on account of such injuries or sickness shall be excluded from gross income
income. Since the amount that shall be received represents award of damages.
Jurisprudence provides in a case cited in the book of Mamalateo, reviewer in taxation,
Farmers and Merchants Bank v. Commissioner that payments in settlement of an action for
breach of promise and compromise payments in settlement of an action for damages
against a bank on account of conduct impairing the taxpayers goodwill by injuring its
reputation are no taxable.
25. Income under tax treaty with foreign countries
Reason: Under Section 32 (B) of the National Internal Revenue Code (R.A. No. 8424),
income under tax treaty with foreign sources is not included in the gross income as shown
below:
Sec. 32 Gross Income.Xxx
(B) Exclusions from Gross Income. - The following items shall not be included in gross
income and shall be exempt from taxation under this title:

(5) Income Exempt under Treaty. - Income of any kind, to the extent required by any treaty
obligation binding upon the Government of the Philippines
27. Pension received b retirees from foreign sources
28. Income derived from the instalment sales of houses to their employees and
workers or to low income group in housing project or income derived from rentals
thereof
29. Amounts paid either as advances or reimbursement for transportation,
representation and other bona fide ordinary and necessary expenses incurred in
the performance of his duties
32. Security deposit received as a lessor
38. Damages recovered that represents return of capital or investment
42. A fishpond worker who has given a small hut as his residence in the
of the fishponds

middle

47. Interest Income from long term deposit or investment

Revenue Regulation No. 14-2012, dated November 7,2012:
Interest income from long-term deposit or investment in the form of savings, common or
individual trust funds, deposit substitutes, investment management accounts and other
investments evidenced by certificates in such form prescribed by the Bangko Sentral ng
Pilipinas (BSP) shall be exempt from the tax imposed. Provided, That should the holder of the
certificate pre-terminate the deposit or investment before the fifth (5th) year, a final tax
shall be imposed on the entire income and shall be deducted and withheld by the depository
bank from the proceeds of the long-term deposit or investment certificate based on the
remaining maturity thereo

52. The salaries and allowances received from being employed abroad for
indefinite period as full time worker.
The salaries and allowances received from being employed abroad for indefinite period as
full time worker are not taxable. In accordance to Section 23 (b) and (c) of NIRC, a
nonresident citizen is taxable only on income derived from sources within the Philippines
and an individual citizen of the Philippines who is working and deriving income from abroad
as an overseas contract worker is taxable only on income derived from sources within the
Philippines. Hence, salaries and allowances received from being employed abroad is not
taxable under the Code.
58. Representation and transportation Allowance (RATA) and Personal Economic
Relief Allowance (PERA)of government personnel
Under the Revenue Memorandum Order No. 23-2014 issued by the Bureau of Internal
Revenue, Representation and
Transportation Allowance( RATA) and Personal Economic Relief Allowance (PERA)of
government personnel are not subject to
income tax and withholding tax on compensation. It explains the obligation of government
offices to withhold on compensation
paid to government officials and employees and provides that the RATA and PERA are not
taxable as partly read below:
IV. NON-TAXABLE COMPENSATION INCOME Subject to existing laws and
issuances, the following income received by officials and employees in the public
sector are not subject to income tax and withholding tax on compensation:
D. Representation and Transportation Allowance (RATA) granted to public
officers and employees under the General Appropriations Act;
E. Personnel Economic Relief Allowance (PERA) granted to government
personnel;
59. Additional Compensation Allowance (ACA) of government personnel
Additional Compensation Allowance (ACA) of government personnel are treated as other
benefits along with Christmas bonus, 13th month pay and productivity incentives.
Therefore, the excess of the Php 30,000 limit is taxable as part of income tax. For example,
ACA is listed as one of the benefits granted under Section 77 of Republic Act (RA) No. 6975
as non-taxable compensation income of Uniformed PNP member.
60. Moral and exemplary damages as compensation for injuries sustained.
61. Reimbursement for hospitalization expenses on account of injury
62. Benefits received as a consequence of separation for any cause beyond the
control of the employees such as closure of business
64. Prize in winning a boxing competition sponsored by the Gold Cup Boxing
Council, a sports association duly accredited by the Philippine Boxing Association
65. Expenses for foreign travel paid by the employer for the employee for purpose
of attending business meeting or conventions
66. Monetized unused vacation leave credits of not more than ten (10) days
during the year.

Pursuant to Section 1, letter (a) of Revenue Regulations No. 10-2008 1 dated 08 July 2008 of
the Bureau Internal Revenue, enumerating the de minimis benefits, which are not subject
to income tax nor to withholding tax.