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BIR ISSUES TAX RULES FOR PERA

 

The Bureau of Internal Revenue (BIR) issued on October 27, 2011 Revenue Regulations No. 17-2011 (RR 17-2011) implementing the Tax Provision of Republic Act No. 9505 known as the Personal Equity and Retirement Account (PERA) Act of 2008.

 

Republic Act 9505, more commonly known as the PERA Act of 2008, was approved on August 22, 2008. Its main objectives are: (1) to establish a multi-pillar retirement income structure, and (2) to develop the domestic capital market.

 

PERA provides the following tax incentives: (1) five percent (5%) tax credit on contributions not exceeding P 100,000 annually and (2) tax-free investment income. The distribution or withdrawals shall not be subject to tax if the contributor : (1) has reached the Age of 55 and has contributed to his PERA account for 5 years, or (2) dies or becomes permanently disabled, or  (3)  was confined to a hospital in excess of 30 days. Otherwise, withdrawal shall be subject to a penalty equivalent to the tax incentives that were provided.

 

RR 17-2011 provides that a confirmation of an employee's entitlement to the 5% tax credit shall be issued to his employer to automatically adjust the withholding tax on the employee's compensation income. For this purpose, the employer must secure its employee's PERA tax credit entitlement from the PERA Processing Office.

 

It also provides that the qualified employer contribution shall be an allowable deduction from its gross income.

 

A copy of the said revenue regulation may be downloaded from the DOWNLOADS section of this website.

 


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