BIR to tax SSS, PAG-IBIG, GSIS, PhilHealth Contributions
The Bureau of Internal Revenue (BIR) recently issued a circular to fix the effectivity of a controversial move to tax voluntary contributions to the Social Security System (SSS), Government Service Insurance System (GSIS), Home Development Mutual Fund (HDMF), also known as Pag-ibig, and Philippine Health Insurance Corporation (PHIC), also known as Philhealth.
"Therefore, 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, this Office holds that voluntary contributions to these institutions in excess of the amount considered compulsory 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 (RR) No. 2-98 shall apply only to mandatory/compulsory SSS, GSIS, Medicare and Pag-ibig contributions".
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OFW group rejects taxes on SSS, Pag-IBIG contributions
MANILA, Philippines — A Filipino migrants’ rights group has thumbed down the Bureau of Internal Revenue’s (BIR) plan to impose taxes on overseas Filipino workers’ (OFWs) contributions to the Social Security System (SSS) and to the Home Development Mutual Fund, popularly known as Pag-IBIG.
“We know that it is the BIR’s duty to raise and collect taxes but the government must be reasonable and fair (enough to) consider the present socio-economic plight of our people,” said John Leonard Monterona, regional coordinator of Migrante-Middle East (M-ME).
The BIR earlier this week confirmed that it issued a circular to study the imposition of taxes to SSS and PAG-IBIG members who have contributed more than the amount allowed by law, as it is considered as an “investment”, and therefore should be taxed.
The BIR stressed that the proposal is still under study.
Monterona reckoned that imposing taxes on OFWs’ voluntary contributions to SSS and PAG-IBIG would “defeat the very intent, purpose and spirit” of the government’s programs on social security and housing loans.
He added that these contributions should not be classified as “million peso investments”, but rather investments that are only large enough to secure the OFWs and their families’ needs when retirement time comes.
The Saudi-based OFW leader likewise warned that many Filipino migrant workers would stop their contributions once the BIR begins to tax their SSS and PAG-IBIG contributions.
::: Manila Bulletin
