BIR Ruling No. 405-2021

REPUBLIC OF THE PHILIPPINES

BUREAU OF INTERNAL REVENUE DEPARTMENT OF FINANCE

Quezon City DD

RMO No. 42-2016 RA No. 9505: RA No. 17-2011; RMC No. ?31-2016; OT ' 0 - 20 21 Person to Contact: Chief, Law & Legislative Division Tel. Nos. 926-55-36/927-09-63

Date: NOV_3.20

Malate, 1004 Manila, Philippines LANDBANK Plaza LAND BANK OF THE PHILIPPINES 1598 M.H. Del Pilar corner Dr. J. Quintos Sts.

Attention: Trust Banking Group Head, Trust Oversight & Strategic Management Department ATTY. JOSE TROY A. ALMARIO

Gentlemen:

from tax. confirmatory ruling that LBP's Personal Equity and Retirement Account ("PERA") products namely the LANDBANK PERA Money Market Fund,LANDBANK PERA Bond Fund,and LANDBANK PERA Global $ Fund (collectively,the "LBP PERA Products") are exempt This refers to your request on behaif of Land Bank of the, Philippines ("LBP") for a

the BSP letter dated November 28, 2016; and that on May 17, 2021, the LANDBANK PERA Bond Fund was offered to the public through the PERA digital platform. Pilipinas ("BSP") on February 24, 2016 and included in the approved PERA products listed in It is represented that the LBP PERA Products were approved by the Bangko Sentral ng

to Secticn 9 ofRepublic Act No. 9505, otherwise known as the Personal Equity and Retirement and reinvestments of the maximum amount allowed under the PERA Act is exempt from the Account Act of 2008 ("PERA Act"),2 provides that all income earned from the 'investments In reply, please be informed that Section 9 of Revenue Regulations No. 17-11' in relation

following taxes, to wit:

income of the Contributor consisting of all income earned from the investments and "SECTION 9. Tax Treatment of the PERA Investment Income. Investmeni

' Implementing the Tax Provisions of Republic Act No. 9505, Otherwise Known as the "Personal Equity and Retirement Account (PERA) Act of 2008", October 27, 2011; also in Section I1I(12) of Revenue Memorandum Order No. 42-2016, Prescribing the Guidelines and Procedures in the Implementation of Republic Act No. 9505, Otherwise Known as the Personal Equity and Retirement Account (PERA) Act of 2008, July 21, 2016. 2 August 22, 2008.

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reinvestments of his PERA Assets in the maximum amount allowed herein shall be

exempt from the following taxes as may be applicable:

(1) 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 currency

deposit system;

(2) The capital gains tax on the sale, exchange, retirement or maturity of bonds, debentures or other certificates of indebtedness;

(3) The 10% tax on cash and/or property dividends actually or constructively

received from a domestic corporation, including a mutual fund company,

(4) The capital gains tax on the sale, barter, exchange or other disposition of shares of stock in a domestic corporation:

(S) Regular income tax.

Provided, that each specific investment products, as defined in Section 2 (a) hereof. must be approved by the concerned Regulatory Authority in accordance with the provisions of PER4 before its income or distribution can be granted tax incentives and privileges herein provided.

Provided, further, that non-income taxes, if applicable, relating to the above investment income of the PERA Account of a Contributor, shall remain imposable. including the following:

(1) Percentage taxes on persons exempt from value-added tax, domestic carriers and keepers of garages, international carriers, franchise holders, overseas dispatch. message or conversation originating from the Philippines, banks and non-bank financial intermediaries performing quasi-banking functions, other non-bank finance intermediaries, life insurance premiums, agents of foreign insurance companies, amusement, and winnings;

(2) Value-added tax;

and traded through the local stock exchange or through initial public offering; and (3) Stock transaction tax on the sale, barter, or exchange of shares of stock listed

(4) Documentary stamp tax. "(Underscoring supplied)

Corollarily, Section 2 (q) of Revenue Regulations No. 17-11 states:

following terms shall have the following meanings for purposes of these Regulations, SECTION 2. Definition of Terms. --- Unless the context otherwise requires, the

Viz.

XXX XXX XXX

a products duly approved by the concerned Regulatory Authority which could be "Qualified/Eligible PERA Investment Products" any of the following: -- shall refer to the investment

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(a) a unit investment trust fund (UITF).

(b) share of stock of mutual fund:

(c) annuity contract:

(d) insurance pension product;

(e) pre-need pension plan:

() shares of stock or other securities listed and traded in the local stock

exchange:

(g) exchange-traded bond;

(h) government securities;

(i) any other category of investment product or outlet which the concerned Regulatory Authority may allow for PERA purposes. "

A perusal of the above provisions shows that before the income or distribution can be granted tax incentives and privileges granted by the PERA Act and related rules and regulations, each specific investment products must belong to the above list of qualified/eligible PERA investment products and is duly approved by the concerned regulatory authority.

Under Revenue Memorandum Circular No. 131-16,3 this Office has circularized the list of duly approved/accredited several unit investment trust funds/investment products by the BSP based on the BSP letter dated November 28, 2016, which includes the LBP PERA Products, to wit:

"Under Rule 11 of the Rules and Regulations Implementing Republic Act No. 9505 otherwise known as the Personal Equity Retirement Account (PERA) Act of 2008. and Section 9 of Revenue Regulations (RR) No. 1 7-2011, all income earned from the investments and re-investments of PERA assets in PERA investment products shall be exempt from income taxes provided that said PERA investment products have been duly accredited by the concerned Regulatory Authority.

:by.the latter in its letter dated November 28, 2016, to wit: duly approved/accredited by the Bangko Sentral ng Pilipinas (BSP), as confirmed Below is the list of PERA Unit Investment Trust Funds (UITFs)/investment products

No. XXX Land Bank Philippines Name Bank of the of XXX Name Fund LANDBANK Dollar Fund PERA Global of [type [Bond XXX Sub. XXX PERA- Bond Detailed type fund of nation XXX Dollar Denomi Date XXX BSP Approval 11/11/2015 Of

3 Circularizing the List of Personal Equity Retirement Account (PERA) Unit Investment Trust Funds (UITFs) Duly Approved by the Bangko Sentral ng Pilipinas (BSP), December 13, 2016.

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9 10 XX Land Bank Philippines Land Bank Philippines Qf the the XXX LANDBANK PERA Fund LANDBANK PERA Money Market Fund Bond Market Bond Money XXX Money PERA- Bond XXX PERA- Market Peso XXX Peso XXX 11/11/2015 11/11/2015

It is emphasized that only income earned from the investments and re-investments of PERA assets in the above-enumerated PERA investment products shall be exempt from income taxes under Rule 11 of the Rules and Regulations Implementing the PERA Act of 2008._ and Section 9 of RR No. 17-2011. Moreover, income from investments and re-investments of PERA assets in government securities is likewise exempt from income taxes under the said provisions. " (Underscoring supplied)

Please note that Section 3(h) of Republic Act No. 9505 and section 2(r) of Revenue Regulations No. 17-2011 provide that the BSP is the regulatory authority over banks, trust entities, and other BSP-supervised financial institutions.

Based on the foregoing disquisitions, the LBP PERA Products are (l) unit investment trust funds, which are qualified/etigible investment products under Section 2(q) of the Revenue Regulations No. 17-11; and (2) were duly approved by the BSP, the concerned regulatory authority. Thus, this Office hereby confirms that the income earned from investments and reinvestment of PERA Assets in LBP PERA Products are exempt from taxes, without prejudice to existing laws, rules and regulations.

This ruling is issued on the basis of the foregoing facts as represented. However, if upon investigation it shall be disclosed that the facts are different, then this ruling shall be considered null and void.

Very truly yours.

1eesaay

Commissioner of Internal Revenue CAESAR R. DULAY 046749

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