RR No. 17-2011: Implements the tax provisions of Republic Act No. 9505, otherwise known as the “Personal Equity and Retirement Account (PERA) Act of 2008”

Key points

1. Administrator accreditation. An entity must be pre-qualified by the Regulatory Authority, be registered with the BIR, file its returns regularly and have no unpaid final and executory assessment. It files an Application for Accreditation with the PERA Processing Office and pays an Accreditation Fee of P 500.00.
2. Contributor requirements. A Contributor may have no more than five PERA at any one time and must designate only one Administrator for all of them. Each PERA is confined to one category of investment product, and proof of income earnings must be submitted.
3. Contribution limits. The yearly maximum is Php100,000.00 for a qualified Filipino citizen and Php200,000.00 for an Overseas Filipino, or the foreign currency equivalent. Amounts above the limit are not accepted under the PERA Account and get no PERA benefit.
4. 5% tax credit and employer contributions. A Qualified Contributor gets a tax credit of 5% of the aggregate Qualified PERA Contributions in one calendar year. It is not refundable or transferable, and the employer gets no 5% credit. A Qualified Employer’s Contribution is not part of the employee’s taxable gross income, and the employer may deduct it only up to the amount that completes the employee’s maximum allowable contribution.
5. Tax exemptions on PERA income. Investment income of the PERA Assets is exempt from the final withholding tax on interest, capital gains tax on bonds and shares, the 10% tax on dividends and regular income tax. Percentage taxes, VAT, stock transaction tax and Documentary Stamp Tax still apply. Qualified PERA Distributions are excluded from gross income and are not subject to Estate Tax.
6. Early withdrawal and penalties. Early withdrawal triggers payment of the 5% tax credit availed and the taxes otherwise exempted. Exceptions cover transfers to another product or Administrator within 2 working days, hospitalization beyond 30 days, and permanent total disability. Acting as an unaccredited Administrator or making false statements carries a fine of P 50,000.00 to P 200,000.00 or imprisonment of 6 years and 1 day to 12 years, or both.

Who is affected

• Administrators of PERA
• PERA Contributors
• Overseas Filipinos and their legitimate spouse and children
• Employers contributing to employee PERA

Deadlines and effectivity

• Effective January 1, 2012
• Administrator certification of Qualified PERA Contribution: within 45 days from close of calendar year
• PERA-TCC application: not later than 90 days after year end
• Quarterly report of withdrawals: within 60 days after quarter end