Pera regulations

THE Bureau of Internal Revenue (BIR) has issued Revenue Regulations No. 17-2011 implementing the tax provisions of Republic Act No. 9505 otherwise known as the Personal Equity and Retirement Account (Pera) Act of 2008.

The Pera refers to a contributor’s voluntary retirement account established from the qualified Pera contributions and/or qualified employer contributions for the purpose of investing solely in qualified or eligible Pera investment products.

A contributor is a natural person who (1) established and contributes to a Pera, (2) has a tax identification number, and (3) has the capacity to contract. A person over 55 years of age may still open a Pera and be a qualified contributor.

Qualified or eligible Pera investment products are those duly approved by the concerned regulatory authority that could be a unit investment trust fund, share of stock of mutual fund, annuity contract, insurance pension product, pre-need pension plan, share of stock or other securities listed and traded in the local stock exchange, exchange-traded bond, government securities, and any other category of investment product or outlet that the concerned regulatory authority may allow for Pera purposes.

A contributor must comply with the following requirements in establishing a Pera: (1) the contributor’s Pera must not exceed five at any one time, (2) the maximum total of all contributor’s Pera should not exceed the amount or threshold as pegged in the regulations, (3) the contributor shall designate and maintain only one administrator for all his Pera, (4) each Pera shall be confined to one category of investment product, and (5) submission of proof of income earnings for the year or to be earned for the year when the Pera contribution was made.

A qualified contributor shall be entitled to a tax credit in the amount of 5 percent of the aggregate qualified Pera contributions made in one calendar year. However, if the contributor is an overseas Filipino, he shall be entitled to claim the 5 percent tax credit against any national internal revenue tax liabilities excluding the contributor’s withholding tax liabilities as withholding agent. Nevertheless, at no instance can there be any refund of the said tax credit arising from the Pera contributions.

Investment income of the contributor consisting of all income earned from the investments and reinvestments of his Pera assets in the maximum amount allowed herein shall be exempt from the final withholding tax on interest from any currency bank deposit, yield, or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements including a depository bank under the expanded foreign deposit system, the capital gains tax on the sale, exchange, retirement or maturity of bonds, debentures or other certificates of indebtedness, the 10 percent tax on dividends received from a domestic corporation, the capital gains tax on the sale, barter, exchange or other disposition of shares of stock, and the regular income tax.

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