MANILA, Philippines - The Bureau of Internal Revenue (BIR) pushed back the issuance of the revenue regulation that would pave the way for the implementation of the Personal Equity Retirement Account (PERA).
The BIR is careful in issuing the implementing regulation amid fears that such law would be used as a means to defeat payment of taxes.
In an interview, BIR Commissioner Kim Jacinto-Henares told reporters that the issuance of the implementing regulation for the PERA Law otherwise known as Republic Act 9505 has been pushed back toward the end of the month at the earliest. This is instead of June 30 as originally planned.
BIR Deputy Commissioner Estela Sales said the agency is still in the process of identifying the citizens entitled to claim tax credit from such law.
“We are coordinating with the OWWA (Overseas Workers Welfare Administration),” Sales said.
Henares said there is still a problem that needs to be resolved in drafting the regulation.
“You see, PERA (law) enables the citizens, residents or otherwise to claim tax credit from us [BIR], but how do we determine as to who are qualified to avail the same?” she added.
The PERA law aims to provide a retirement plan to Filipino workers.
Under it, a contributor is entitled to a tax deduction of five percent. This is provided that he or she invests in regulated facilities. These include unit investment trust fund, share of stock of mutual fund, annuity contract, insurance pension product, pre-need pension plan, shares of stock or other securities listed and traded in the local stock exchange, exchange-traded bond, and government securities.
The government will extend a tax deduction of five percent in the case of a Filipino citizen if the investment of a qualified PERA holder shall not exceed P100, 000 a year.
For overseas Filipinos, the government is allowing a higher investment cap of P200, 000 every year to qualify for tax credits.
Government statistics show that about a fifth or some 6.2 million of the country’s labor force do not have any type of retirement plan.
The implementation of the PERA Law which should have taken effect on Jan. 1, 2009, has been delayed.
The BIR is careful in approving regulations that extend tax credits because these can be susceptible to being misused, abused, and is being taken advantage of by those who merely want to avoid payment of taxes.
“Our concern is with regard to non-resident citizens. Who are these people, how do we document them. Otherwise, everyone could claim that they are overseas Filipino workers, and hence entitled to avail tax credit,” Henares said.