BIR lowers charges on early PERA withdrawals
Under Revenue Regulations 10-2016 issued Dec. 27, the tax agency reduced to two from nine the number of penalties that will be charged for those who pre-terminate their PERA accounts ahead of schedule. File photo
MANILA, Philippines – The Bureau of Internal Revenue (BIR) has lowered charges on early withdrawals on Personal Equity and Retirement Accounts (PERA) to lure more placements in the new state-led investment scheme.
Under Revenue Regulations 10-2016 issued Dec. 27, the tax agency reduced to two from nine the number of penalties that will be charged for those who pre-terminate their PERA accounts ahead of schedule.
PERA, mandated under Republic Act 9505, is an investment mechanism that allows voluntary opening of accounts, funds under which will be invested by a chosen fund manager or PERA administrator.
Under the law passed in 2008 but implemented only this year, an individual may open up to five PERA accounts collectively worth P100,000. Overseas Filipino workers have a higher cap of P200,000.
According to RR 10-2016, a contributor who chooses to terminate early their PERA account must pay a “flat rate” of 20 percent based on total income earned by the account.
This will be on top of the five percent tax credit granted by law “for the entire period of PERA.”
“A flat rate penalty is a more simplified approach in imposing the penalty,” BIR spokesperson Marissa Cabreros said in a text message.
The regulations amended RR 17-2011, which laid out nine early withdrawal penalties that include capital gains tax, regular income tax, 10 percent flat rate for dividend earnings of PERA, as well as final withholding taxes.
In addition, it tasked PERA administrators to report every quarter any withdrawals or terminations made during the period.
“For full transparency, the administrator shall fully disclose the penalty arising from withdrawals to the contributor prior to account opening” the regulation stated.
“The administrator shall submit a quarterly report of such termination or withdrawal to the PERA processing office within 60 days following the end of the quarter of the date or termination or withdrawal,” the regulations said.
Under the Duterte administration, BIR has made “taxpayer satisfaction” one of its core mandates.
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