RMC No. 99-2018 — Clarifies certain provisions of RR No. 17-2011, as amended, implementing RA No. 9505 (Personal Equity and Retirement Account [PERA] Act of 2008) Digest | Full Text

REPUBLIC OF THE PHII,IPPINES BUREAU OF INTERNAL RF\.rt-.rur ir; DEPARTMENT OF FINANCE I: 5\ P. M, BUREAU OF INTERNAL RE\'ENUE DEC 0#' Quezon City RECORDS MGT. ISION DEC 0 7 2018 REVENUE MEMORANDUM CIRCULAR NO. q q- 2 OIg SUBJECT Ciarifying Certain Issues Relative to the Provisions of Revenue TO Regulations (RR) No. 17-2011, as Amended, Implernenting Republic Act (RA) No. 9505, Otherwise Known as the "Personal Eqr-rity and Retirement Account (PERA) Act of 2008". All Internal Revenue Officers and Others Concerned SECTION 1. SCOPE. This circular is issued to clarify certain provisions of RR No. 1 7-201 1 , as amended, in relation to Revenue Memorandum Order (RMO) No.42-2016 dated July 21, 2016 which establishes the guidelines and procedures in the implementation of RA No. 9505, otherwise known as the "Personal Equity and Retirement Account (PERA) Act of 2008". 'da- SECTION 2. CLARIF'ICATORY QUESTIONS AND ANSWERS. Ql. Ls the_Qualifred Employer's Contribution to the employee's PERA subject to fringe Al. benefit tu-r? To wltat extent shall it be exempt from tusc? No. The Qualified Ernployer's Contribution is not subject to fringe benefit tax since said Contribution does not fonn paft of the employer's gross taxable income. (Section 7 (B) (1), RR No,_l7-2011). The same holds true even if said Contlibution is granted by way of a benefit or other form and regardless of whether said benefit is granted to all or only sorne of the enrployees. Q2. Is lhe entployer who contribwtes to ihe empioyee's PERA entitled to Jive percent (5%) tttx credit? 42. No. Section 7 (B) of RR No. 17-2U l, as arnended, provides that the empioyer shall not be entitled to any five percent (5%) credit frorr its contribution to an employee's PERA. However, the employer can clairr the actual amount of his/its Qualified Ernployer's Contribution as a deduqtion frorn his/its gross income to the extent of the emplol,er's contribution that rvould complete the maximum al!owable PERA contribution of an ern plovee. The exarnple given in the same RR is as follows: E,lrrplolcc .4,.1r.4 alrcadl ntade PER,^, cotttribution I'crr thu \Jiir lnl.runring ti, P60.00C. Ernployer XYZ Corp decided to contribute as rvell to its employee's PEI{A accounr anci the emplol'er's contribution for the sarre period amounted to also to P60.000. In this case the employer can only claim as decjuction the amount o1P40.000. that is onl1 up to the extent needed to complete the maximum allowable PERA contribr:tion.

Q3. What is the effict of early withdrowal by on employee of his PERA contribution on tlte QualiJied Employer's Contributiott? A3. There will be no effect on the part of the employer. It will not be required to add back or increase its gross income by the PERA contributions it made in favor of its employee who made an early withdrawal of his PERA contributions. Q4. Can a PERA contributor change PERA Administrotor for reusons other than tlte adminislrqtor's revociltion o/ accreditation? 44. Yes. The transfer of PERA assets to another Qualified/Eligible PERA Investment Product and/or another Administrator is not limited to transfers due to the revocation of accreditation of the previous Adrninistrator by the Bureau of Internal Revenue (BIR) or the concerned Regulatory Agency (i.e., Securities and Exchange Commission or Insurance Commission), and such transfer shall not be subject to Early Withdrawal Penalty as long as it is rnade within fifteen (15) calendar days frorn the withdrawal thereol-. (RR No. 23-2018) Qs. Are PERA Contributors still entitled to substituted Jiling of their income toc return? A.5. Yes. PERA Contributors are not disqualified frorn substituted filing of their irrconre tax returns by reason of PERA contributions that they or their respective employees made, provided that they meet the conditions set forth in Revenue Memorandum Circular (RMC) No. l-2003 on Substituted Filing of Income Tax Returns of Qualified Pure Compensation Income Earners, Q6. For purposes of opening a PERA account, does the BIR reqwire submission of a tux identiJication number (TIN) und a Revenue District OfJice (RDO) Code of the Co ntr ib utor's emp I oy er ? A6. No, the BIR does not require submission of the TIN and RDO Code of the Contributor's employer for purposes of account opening. The Contributor, however, is required to have a TIN. (Section2 (c), RR No. 7-2011) Q7. How are the dffirent PER4 nccounls of a PERA contributor treated? Are these accounts considered sepurate und distinct accounts or one aggregate account? l-he different accounts of a I'ERA contributor are considered as one PERA accounts of the PERA contributor. QB. Are Overseas Filipinos (OFs) entitled to Truc Credit CertiJicates QCC)? A8. Yes. OFs are entitled to TCCs which they rnay use against any national internal revenLre tax liabilities (excluding the Contributor's withholding tax liabilities as u,ithholding agent). Qe, lilltat documents, other thun the Overseas Entployment Certi/icate (OEC) issued by- the Philippine Overseas Employment Administrution (POEA), muy be submitled to show proof of continuing stutus as an OF? 49. For OF's. any official document showing that he will earn or has earned income in a lbreign counir)' in the year oi'PI-RA contributioir lna) be subrnitted. sr-rch as tile follo'',ving: - Current employment certificate from existing employer: - Originalcopy/certified true copy of existing employment contract: BliRh.AtJ 0F l|.jTEiNAL RtVerur: P,IGE 2 OF'3 RECORDS MGT, DIVISIO

- Valid employment identification card issLred by ernployer abroad; - Copy of work perrnit/visa or re-entry permit; or - Sworn Certification made before a Philippine Consul. Ql0. Will OFs who do nol avail or use their TCCs be subject to eurly withdrawal penalty in cose of pre-terntinutioru of their PERA? A 10. OFs who do not avail of their tax credit will not be penalized with the five percent (5o%) early withdrawal penalty. However, the early withdrawal penalty of twenty percent (20%) will still apply. Ql1. How will an OF who ceases to be an OF in o given year, be classified and treoted for PERA purposes? l. Al A contributor whose OF status ceases in a given year shall be considered an OF up to the end ofthe calendar year. Q12. Are PERA transactions subject to stock transoction tusc? A12. Yes. The tax incentives ol'PERA transactions does not include exemption from stock transaction tax which is a percentage tax under Title V of the National Internal Revenue Code of 1997. as amended. All concerned revenue officials and employees are hereby enjoined to give this circular as wide a publicity as possible. *'{-l-t,MAT ---CrAfEfS-A^RAR. .DlU*L1AY - ' 497 Commissioner of InternaI revenue 0 ?1 BUREAU OF INTERNAL REVunue Rffi ID :3i t4, 0 T{i E\ttr#0Z lr$' rtr I Jltulz-v7 RECORDS MGT, D IVIS roN PAGE -1 OF 3