RR 15-2025: Clarifying tax rules for private retirement plans

The Bureau of Internal Revenue (BIR) released Revenue Regulation (RR) 15-2025 on April 29, 2025, clarifying and updating the tax rules applicable to qualified employee private retirement benefit plans.

- Dennice Clyte Ramirez

This RR aims to assist employers in understanding the terms, conditions and tax responsibilities associated with maintaining retirement plans that are eligible for tax exemptions—ensuring that employees receive fair and tax-free retirement benefits if certain conditions are met.

Definition of a reasonable private retirement benefit plan

A reasonable private retirement benefit plan is one maintained by an employer for some or all of its officials or employees. Contributions are made by the employer, or by both the employer and employees, to accumulate a fund whose earnings and principal will be distributed at a later time, typically upon the employee's retirement or separation from service. The plan must ensure that no part of the fund's corpus or income is used for any purpose other than the exclusive benefit of the employees.

A retirement plan may include a pension, gratuity, provident fund, stock bonus or profit-sharing plan or any other similar arrangements. This may be contributory or non-contributory on the part of the employees.

Key points under RR 15-2025

This RR builds on earlier issuances (RR 1-1983, RR11-2001 and RMC 10-1983) and provides clearer instructions on how to apply existing tax rules, as follows:

• The RR confirms that not only pension and gratuity plans but also provident funds, stock bonus plans and profit-sharing schemes can qualify for tax benefits.

• Related companies (e.g., parent and subsidiary firms) may share a single retirement plan under a multi-employer plan.