BIR issues Pera Act rules

The Bureau of Internal Revenue has come out with the implementing rules for the 2008 law that grants tax perks to a provident personal savings plan.

Revenue Memorandum Order No. 42-2016 issued by BIR Commissioner Caesar R. Dulay on July 21 prescribed the guidelines and procedures to implement Republic Act (RA) No. 9505 or the Personal Equity and Retirement Account (Pera) Act of 2008.

RA 9505 established the legal and regulatory framework for retirement plans, composed of voluntary personal savings and investments, while granting tax incentives and privileges to investors, the order noted. “Under the law, individuals are allowed to set up their own Pera which should enjoy certain tax incentives.”

“With the engines all set out for the proper implementation of the provisions of the Pera Act of 2008, many employers are expected to take this opportunity to become an agent in furthering the objective of the state to promote capital market development and savings mobilization,” the BIR said.

“Employees, including self-employed individuals and overseas Filipinos, can start planning their future by establishing their own Pera,” the BIR said.

The BIR order laid down the specific procedures for administrative reporting of Pera transactions involving contributions, income, withdrawals and/or terminations, and put in place simplified procedures and uniform formats for Pera-related forms and reports.

The order also established a system allowing coordinated monitoring of the tax perks to be given away to qualified Pera contributions.

Under the rules, “contributions to Pera can come from employees and/or their employers or self-employed individuals which shall not exceed P100,000 per calendar year, or P200,000 per calendar year if the contributor is an overseas Filipino,” the order read.

“A contributor may create and maintain a maximum of five Peras at any one time. However, each Pera shall be confined to only one category of Pera investment product. Thus, a contributor can have five Peras and five categories of Pera investment products,” the BIR said.

According to the BIR, “an employee or self-employed qualified contributor shall be entitled to a 5-percent tax credit of the aggregate qualified Pera contributions made in a calendar year which shall be allowed to be credited only against their income tax liabilities.” Ben O. de Vera