BIR Revenue Regulations No. 15-2025: How a Private Retirement Plan Qualifies for Tax-Exempt Retirement Pay
Revenue Regulations No. 15-2025, issued April 29, 2025, updates the BIR’s approval process for private retirement plans under Republic Act No. 4917, replacing rules that had stood since 1968. A plan that secures BIR approval lets retirement pay — and the trust fund’s own investment income — flow to employees free of income tax and withholding tax, but the employer must apply for a Certificate of Qualification within 30 days of the plan’s effectivity date.
Generate Accurate BIR Form 2316s for Your Payroll FREE →What RR No. 15-2025 Changed #
RR No. 15-2025 replaces the BIR’s 1968 rules (RR No. 1-68) on tax-qualified employee retirement benefit plans established under Republic Act No. 4917. It sets out updated documentary requirements for BIR approval, distinguishing between trusteed plans (retirement funds held by a trustee), non-trusteed or insured plans (funded through an insurance contract), and multi-employer plans covering several related companies. The regulation also reaffirms that once a plan is BIR-qualified, both the retirement benefits paid to employees and the trust fund’s own investment income are exempt from income tax and withholding tax.
Two Different Retirement-Pay Exemptions (Don’t Confuse Them) #
Philippine tax law actually has two separate routes to tax-free retirement pay, and conflating them is a common employer mistake. The first is a BIR-approved, tax-qualified plan under RA 4917 and RR No. 15-2025, which requires formal registration and a Certificate of Qualification before any exemption applies. The second is the NIRC Section 32(B)(6)(a) exemption for a “reasonable private benefit plan,” which applies automatically — without BIR pre-approval — as long as the retiring employee is at least 50 years old, has rendered at least 10 years of service, and has not previously availed of the exemption.
The RA 4917 route gives the employer certainty and lets the retirement trust fund itself earn tax-free investment income year after year — a benefit the unapproved route does not provide. The NIRC Sec. 32(B)(6)(a) route is simpler to rely on for a single retiring employee but only ever applies once per person, and it does not shelter the fund’s ongoing investment earnings from tax the way a qualified plan does.
| BIR-Qualified Plan (RA 4917 / RR No. 15-2025) | NIRC Sec. 32(B)(6)(a) Exemption | |
|---|---|---|
| Requirement | Formal retirement plan document and trust (or insurance) agreement | No formal plan required — a “reasonable private benefit plan” or even none at all |
| Age / service test | Set by the plan document itself, subject to BIR review | Employee must be at least 50 years old and have at least 10 years of service |
| One-time use | Not limited to once per employee — applies to every qualifying retiree under the plan | Once-in-a-lifetime per employee |
| Approval needed | Yes — BIR Certificate of Qualification required within 30 days of plan effectivity | No — self-executing if the employee meets the age/service test |
| Trust fund investment income exempt | Yes, once the plan is qualified | Not applicable (no separate qualified trust) |
How to Apply for a Certificate of Qualification (Worked Example) #
To get BIR approval, the employer must file with the BIR’s Legal and Legislative Division at the National Office within 30 days of the retirement plan’s effectivity date. As Grant Thornton Philippines summarized the requirement in its client alert on RR No. 15-2025:
“The employer shall apply with the BIR, through the Legal and Legislative Division at the National Office, for the issuance of the certificate of qualification for tax exemption of the employee retirement benefit plan within thirty (30) days from the date of effectivity of the retirement benefit plan.”
(That wording is drawn from Grant Thornton’s secondary summary of the regulation, not a direct quote pulled from the BIR’s own PDF of RR No. 15-2025 — the primary text was not accessible during this article’s research.)
Consider Maria, an HR manager setting up a new trusteed retirement plan for her 40-employee company:
- Plan effectivity date is set. The board approves the retirement plan document and trust agreement, effective June 1, 2026.
- The 30-day clock starts. Maria has until July 1, 2026 to file the application for a Certificate of Qualification with the BIR’s Legal and Legislative Division, along with the plan document, trust agreement, and the documentary requirements specific to a trusteed plan under RR No. 15-2025.
- The BIR reviews and issues (or denies) the certificate. Once issued, the plan is treated as tax-qualified from its effectivity date, and both future retirement payouts and the trust’s investment income are exempt.
- If Maria misses the window, the plan does not automatically fail forever, but until a certificate is obtained, retirement pay disbursed under it risks being treated as ordinary taxable compensation income — subject to withholding tax like regular salary — rather than exempt retirement pay, and the trust’s investment earnings would not benefit from the exemption either.
Contrast this with a smaller employer that never set up a formal BIR-qualified plan at all. One of its employees retires at age 55 with 12 years of service. Because that employee meets the age-50-plus and 10-years-of-service test and has never previously claimed the exemption, the retirement pay is still tax-free — not under RA 4917 or RR No. 15-2025, but under the separate, self-executing NIRC Section 32(B)(6)(a) once-in-a-lifetime exemption. No BIR application was required for that payout to be exempt.
What Happens If the Plan Isn’t BIR-Qualified #
Without an issued Certificate of Qualification, an employer cannot treat retirement payouts under that plan as automatically exempt on the strength of the plan document alone. Payroll and compliance teams should default to withholding tax on retirement pay disbursed from an unapproved or pending-approval plan unless the specific retiring employee independently qualifies under the NIRC Sec. 32(B)(6)(a) age-and-service test. Getting this wrong at year-end shows up as a mismatch between what was reported as non-taxable and what should have been withheld on the employee’s BIR Form 2316.
Restrictions on the Trust Fund #
Tax qualification under RR No. 15-2025 comes with conditions on how the retirement trust fund itself is managed. The exemption does not extend to the stock transaction tax under Title V of the Tax Code on any listed-share trading the fund executes — that tax still applies regardless of the plan’s qualified status. The regulation also requires strict separation of employer assets from the trust: the fund cannot be invested back into the employer’s own business, which protects the retirement benefit from being treated as an extension of company working capital rather than a genuinely separate employee trust.
Summary #
RR No. 15-2025 modernizes the BIR’s approval process for tax-qualified retirement plans under RA 4917, and the 30-day window to file for a Certificate of Qualification with the Legal and Legislative Division is the deadline employers most often overlook. Missing it puts retirement pay at risk of full taxation as compensation income rather than exempt retirement pay. Where no BIR-qualified plan exists, the separate NIRC Sec. 32(B)(6)(a) exemption can still apply to an individual retiree who meets the age-50, 10-years-of-service, once-in-a-lifetime test — but it does not extend the trust-fund income exemption that a properly qualified RA 4917 plan provides. For how the ₱90,000 combined exemption applies to bonuses paid alongside a retirement package, see Is 13th Month Pay Taxable?; for other tax-free employee benefit ceilings, see De Minimis Benefits in the Philippines.