CHAPTER VI - COMPUTATION OF GROSS INCOME
services performed during one-half (1/2) or more of any payroll
Section 32. Gross Income. -
(A) General Definition. - Except when otherwise provided in this
Title, gross income means all income derived from whatever
source, including (but not limited to) the following items:
(1) Compensation for services in whatever form paid,
including, but not limited to fees, salaries, wages,
commissions, and similar items;
(2) Gross income derived from the conduct of trade or
business or the exercise of a profession;
(3) Gains derived from dealings in property;
(4) Interests;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
(9) Prizes and winnings;
(10) Pensions; and
(11) Partner's distributive share from the net income of the
general professional partnership.
CHAPTER XIII - WITHHOLDING ON WAGES
Section 78. Definitions. - As used in this Chapter:
(A) Wages. - The term 'wages' means all remuneration (other than
fees paid to a public official) for services performed by an employee
for his employer, including the cash value of all remuneration paid
in any medium other than cash, except that such term shall not
include remuneration paid:
(1) For agricultural labor paid entirely in products of the
farm where the labor is performed, or
(2) For domestic service in a private home, or
(3) For casual labor not in the course of the employer's
trade or business, or
(4) For services by a citizen or resident of the Philippines
for a foreign government or an international organization.
If the remuneration paid by an employer to an employee for
period of not more than thirty-one (31) consecutive days
constitutes wages, all the remuneration paid by such employer to
such employee for such period shall be deemed to be wages; but
if the remuneration paid by an employer to an employee for
services performed during more than one -half (1/2) of any such
payroll period does not constitute wages, then none of the
remuneration paid by such employer to such employee for such
period shall be deemed to be wages.
Section 73. Distribution of dividends or Assets by Corporations. -
(A) Definition of Dividends. - The term 'dividends' when used in this
Title means any distribution made by a corporation to its
shareholders out of its earnings or profits and payable to its
shareholders, whether in money or in other property.
Where a corporation distributes all of its assets in complete
liquidation or dissolution, the gain realized or loss sustained by the
stockholder, whether individual or corporate, is a taxable income
or a deductible loss, as the case may be.
(B) Stock Dividend. - A stock dividend representing the transfer of
surplus to capital account shall not be subject to tax. However, if a
corporation cancels or redeems stock issued as a dividend at such
time and in such manner as to make the distribution and
cancellation or redemption, in whole or in part, essentially
equivalent to the distribution of a taxable dividend, the amount so
distributed in redemption or cancellation of the stock shall be
considered as taxable income to the extent that it represents a
distribution of earnings or profits.
(C) Dividends Distributed are Deemed Made from Most Recently
Accumulated Profits. - Any distribution made to the shareholders
or members of a corporation shall be deemed to have been made
form the most recently accumulated profits or surplus, and shall
constitute a part of the annual income of the distributee for the year
in which received.
REVENUE REGULATION 02-40
Section 250. Dividends. — Dividends, for the purpose of the law, comprise
any distribution whether in cash or other property, in the ordinary course of
business, even though extraordinary in amount, made by a domestic or
resident foreign corporation, joint-stock company, partnership, joint
account (cuentas en participacion), association, or insurance company to
the shareholders or members out of its earnings or profits accumulated
since March 1, 1913.
Although interest on certain Government bonds and other similar
obligations is not taxable when received by a corporation, upon
amalgamation with the other funds of the corporation, such income loses
its identity and when distributed to shareholders, is taxable to the same
extent as other dividend.
A taxable distribution made by a corporation to individual stockholders or
members shall be included is the gross income of the distributees when
the cash of other property is unqualifiedly made subject to their demand.
Dividends, in cash or other property received by an individual, are subject
to tax in his hands in the same manner another income.
Dividends, whether in cash or other property, received by a domestic or
resident foreign corporation from a domestic corporation are taxable only
to the extent of 25 per cent thereof in accordance with Section 24 of the
Code. Dividends received by a domestic corporation from a foreign
corporation, whether resident or nonresident, are taxable to the extent that
they constitute income from sources within the Philippines, as provided in
Section 37 (a) (2) (b) of the Code. Dividends paid by the domestic
corporation to a nonresident foreign corporation are taxable in full. (For
definition of the different classes of corporations, see Section 84 of the
Code).
Section 251. Dividends paid in property. — Dividends paid in securities or
other property (other than its own stock), in which the earnings of a
corporation have been invested, are income to the recipients to the amount
of the full market value of such property when receivable by individual
stockholders. When receivable by corporations, the amount of such
dividends includible for purposes of the tax on corporations are specified
in Section 24 of the Code. (See also Section 250 of these regulations). A
dividend paid in stock of another corporation is not a stock dividend, even
though the stock distributed was acquired through the transfer by the
corporation declaring the dividends of property to the corporation the stock
of which is distributed as a dividend. Where a corporation declares a
dividend payable in a stock of another corporation, setting aside the stock
to be so distributed and notifying the stockholders of its action, the income
arising to the recipients of such stock is its market value at the time the
dividend becomes payable. Scrip dividends are subject to tax in the year
in which the warrants are issued.
Section 252. Stock dividends. — A stock dividend which represents the
transfer of surplus to capital account is not subject to income tax. However
a dividend in stock may constitute taxable income to the recipients thereof
notwithstanding the fact that the officers or directors of the corporation (as
defined in Section 84) choose to call such distribution as a stock dividend.
The distinction between a stock dividend which does not, and one which
does, constitute income taxable to the shareholder is the distinction
between a stock dividend which works no change in the corporate entity,
the same interest in the same corporation being represented after the
distribution by more shares of precisely the same character, and a stock
dividend where there either has been a change of corporate identity or a
change in the nature of the shares issued as dividends whereby the
proportional interest of the shareholders after the distribution is essentially
different from his former interests. A stock dividend constitutes income if it
gives the shareholder an interest different from that which his former stock
holdings represented. A stock dividend does not constitute income if the
new shares confer no different rights or interests than did the old — the
new certificates plus the old representing the same proportionate interest
in the net assets of the corporation as did the old.
Section 253. Sale of stock received as dividends. — Stock issued by a
corporation, as a dividend, does not constitute taxable income to a
stockholder in such corporation, but gain may be derived or loss sustained
by the stockholder, whether individual or corporate, from the sale of such
stock, which gain or loss will be treated as arising from the sale or
exchange of a capital asset. (See Section 34 of the Code.) The amount of
gain derived or loss sustained from the sale of such stock, or from the sale
of the stack with respect to which it is issued, shall be determined in
accordance with the following rules:
(a) Where the stock issued as dividend is all or substantially the same
character or preference as the stock upon which the stock dividend is paid,
the cost of each share (or when acquired prior to March 1, 1913, the fair
market value as of such date) will be the quotient of the cost (or such fair
market value) of the old shares of stock divided by the total number of the
old and new shares.
(b) Where the stock issued as a dividend is in whole or in part of a character
or preference materially different from the stock upon which the stock
dividend is paid, the cost (and when acquired prior to March 1, 1913, the
fair market value as of such date) of the old shares of stock shall be divided
between such old stock and the new stock, in proportion, as nearly as may
be, to the respective value of each class of stock, old and new, at the time
the new shares of stock are issued, and the cost (or when acquired prior
to March 1, 1913, the fair market value as of such date) of each share of
stock will be the quotient of the cost (or such fair market value as of March
1, 1913) of the class to which such share belongs divided by the number
of shares in that class.
(c) Where the stock with respect to which a stock dividend is issued was
purchased at different times and at different prices and the identity of the
lots can. not be determined, any sale of the original stock, will be charged
to the earliest purchases of such stock, and any sale of dividend stock
issued with respect to such stock will be presumed to have been made
from the stock issued with respect to the earliest purchased stock, to the
amount of the dividend chargeable to such stock.
(d) Where the stock with respect to which a stock dividend is declared was
purchased at different times and at different prices, and the dividend stock
issued with respect to such stock can not be identified as having been
issued with respect to any particular lot of such stock, then any sale of such
dividend stock will be presumed to have been made from the stock issued
with respect to the earliest purchased stock, to the amount of the stock
dividend chargeable to such stock.
Section 254. Declaration and subsequent redemption of a stock dividend.
— A true stock dividend is not subject to tax on its receipt in the hands of
the recipient. Nevertheless, if a corporation, after the distribution of a stock
dividend, proceeds to cancel or redeem its stock at such time and in such
manner as to make the distribution and cancellation or redemption
essentially equivalent to the distribution of a taxable dividend, the amount
received in redemption or cancellation of the stocks shall be treated as a
taxable dividend to the extent of the earnings or profits accumulated by
such corporation since March 1, 1913.
Section 256. Distribution in liquidation. — In all cases where a corporation
(as defined in Section 84) distributes all of its property or assets in
complete liquidation or dissolution, the gain realized from the transaction
by the stockholder, whether individual or corporate, is taxable to the extent
recognized in Section 34(b) of the Code. For this purpose, the term
"complete liquidation" includes any one of a series of distributions made by
a corporation in complete cancellation or redemption of all of its stock in
accordance with a bona fide plan of liquidation under which the transfer of
all the assets under liquidation is to be complete within a reasonable time
from the date of the first distribution, usually not to exceed one year from
the time of such first distribution. If the amount received by the stockholder
in liquidation is less than the cost or other basis of the stock, the loss in the
transaction is deductible to the extent allowed in Section 34(c) of the Code.
(Section 84 of the Code)
TAX CODE
Section 34. Deductions from Gross Income. - Except for taxpayers
earning compensation income arising from personal services rendered
under an employer-employee relationship where no deductions shall be
allowed under this Section other than under subsection (M) hereof, in
computing taxable income subject to income tax under Sections 24 (A); 25
(A); 26; 27 (A), (B) and (C); and 28 (A) (1), there shall be allowed the
following deductions from gross income;
(C) Taxes.-
(1) In General. - Taxes paid or incurred within the taxable
year in connection with the taxpayer's profession, trade or
business, shall be allowed as deduction, except
(a) The income tax provided for under this Title;
(b) Income taxes imposed by authority of any
foreign country; but this deduction shall be allowed
in the case of a taxpayer who does not signify in his
return his desire to have to any extent the benefits
of paragraph (3) of this subsection (relating to
credits for taxes of foreign countries);
(c) Estate and donor's taxes; and
(d) Taxes assessed against local benefits of a kind
tending to increase the value of the property
assessed.
Provided, That taxes allowed under this
Subsection, when refunded or credited, shall be
included as part of gross income in the year of
receipt to the extent of the income tax benefit of
said deduction.
 REVENUE MEMORANDUM CIRCULAR NO. 16-2013
This Circular is being issued to provide guidelines to be observed in
accounting and recording of deposits/advances for the payment of the
pertinent expenses received by taxpayers other than General Professional
Partnerships (GPP) covered by Revenue Memorandum Circular (RMC) No.
89-2012 dated December 28, 2012.
I. Policies and Guidelines
Deposits/Advances Part of Gross Receipts
An Official Receipt shall be issued for every deposit and advances
pursuant to Section 113 of the Tax Code. The Official Receipt shall cover
the entire amount which the Client/Customer pays.
For VAT Taxpayers, the VAT Official Receipt will constitute the Output Tax
for taxpayers other than GPP and in turn, the input tax of its client/customer.
II. PRO-FORMA ENTRIES
Upon receipt of the deposit/advances, the same shall be treated and
recorded as outright Income.

When cash deposits or advances are received by taxpayers other than Accounting entries in the Books of the Taxpayer other than GPP
GPP covered by RMC 89-2012 from the Client/Customer, a corresponding
Official Receipt shall be issued. The amount received shall be booked as 1. For VAT Taxpayers
Income and shall form part of the Gross Receipts and subject to Value-
added Tax (VAT) or Percentage Tax (Gross Receipt Tax), if applicable, Dr. Cr.
and shall in turn be deductible as expense by the Client/Customer provided Cash xxx
that it is duly substantiated by Official Receipts pursuant to Section 34 (A) Prepaid Income Tax (Creditable) xxx
(1) of the Tax Code. Income xxx
Output VAT xxx
Claim for Deduction of Expenses
2. For Non-VAT Taxpayers
Receipts incurred, paid for and issued in the name of the taxpayer shall be
recorded as its own expenses for income tax purposes. These expenses Dr. Cr.
shall be claimed as deductions from gross income provided these are duly Cash xxx
substantiated by Official Receipts/Invoices issued by third-party Prepaid Income Tax (Creditable) xxx
establishments. Income xxx

Income Payments are subject to appropriate Withholding Taxes

All Client/Customer shall, upon payment of deposits/advances, withhold In turn, upon making deposit/advances for the necessary expenses, the
tax at the rate prescribed in Revenue Regulations No. (RR) 2-98, as Client/Customer shall treat such deposit/advances as an outright
th expense.
amended, which shall be remitted/paid on or before the 10 day of the
following month using the Monthly Remittance Return of Creditable Income
Taxes Withheld (Expanded) [BIR Form No. 1601E] except for taxes Accounting entries in the Books of the Client/Customer
withheld for the month of December of each year, which shall be filed on
or before January 15 of the following year pursuant to RR 2-98, as 1. For VAT Taxpayers
amended. For those filing using the Electronic Filing and Payment System
(EFPS), the regulations pertaining to EFPS filers shall apply. Dr. Cr.
Expense xxx
Issuing Official Receipts for the Deposit and Advances Input VAT xxx
 Cash xxx
Withholding Tax Payable xxx
2. For Non-VAT Taxpayers
Dr. Cr.
Expense xxx
Cash xxx
Withholding Tax Payable xxx
All revenue officials and employees are enjoined to give this Revenue
Memorandum Circular as wide a publicity as possible.
This Circular shall take effect immediately.
REVENUE REGULATION 02-40
Section 50. Forgiveness of indebtedness.—The cancellation and
forgiveness of indebtedness may amount to a payment of income, to a gift,
or to a capital transaction, dependent upon the circumstances. If, for
example, an individual performs services for a creditor, who, in
consideration thereof cancels the debt, income to that amount is realized
by the debtor as compensation for his services. If, however, a creditor
merely desires to benefit a debtor and without any consideration therefor
cancels the debt, the amount of the debt is a gift from the creditor to the
debtor and need not be included in the latter's gross income. If a
corporation to which a stockholder is indebted forgives the debt, the
transaction has the effect of the payment of a dividend.
REVENUE MEMORANDUM CIRCULAR NO. 88-2012
For the information and guidance of all concerned, this Circular is being
issued to clarify the tax implications of income or gain derived by an
employee from the exercise of stock option plans.
In BIR Ruling No. 119-2012 dated February 22, 2012, it was ruled that any
income or gain derived by the employees from their exercise of stock
options is considered as additional compensation subject to income tax,
and consequently, to withholding taxes on compensation. In the said ruling,
stock options were granted by domestic corporations as part of their
compensation plan. Under the plan, the employees were given the right to
buy a specified number of shares of a foreign corporation, up to a specified
time/period from the grant date, at a fixed price regardless of the stock’s
future market price. It was designed to reward employees and the criteria
for the reward was dependent on performance, outstanding business
achievements, and exemplary organization, technical or business
accomplishments/demonstrated expertise yielding significant effects on
business/society. At the same time, all full-time and most part-time
employees were given one-time number of shares upon employment.
The foregoing notwithstanding, any income or gain derived from stock
option plans granted to managerial and supervisory employees which
qualify as fringe benefits is subject to fringe benefit tax imposed under
Section 33 of the National Internal Revenue Code (NIRC) of 1997, as
amended.
The additional compensation or the taxable fringe benefit, as the case
may be, is the difference of the book value (BV)/ fair market value (FMV)
of the shares, whichever is higher, at the time of exercise of the stock
option and the price fixed on the grant date. The option has value only if,
at the time of the exercise, the stock is worth more than the price fixed on
the grant date. The additional compensation or taxable fringe benefit arises
whether the shares of stocks involved are that of a domestic or foreign
corporation.
If the shares to be issued at the exercise of the stock options come from
the unissued shares of stock of the issuing corporation, the original
issuance of said shares is subject to documentary stamp tax (DST)
pursuant to Section 174 of the NIRC, as amended.
In the event that employees subsequently sell, barter, exchange or
otherwise dispose of shares of stock obtained from their exercise of the
stock options, the tax treatment is as follows:
A) If the shares involved are shares of stock in a domestic corporation not
traded in the Stock Exchange, the gain, if any, is subject to capital gains
tax imposed under Sections 24 and 25 of the NIRC, as amended. The gain
from sale or transfer of the shares of stock is the difference between the
selling price/book value (BV)/fair market value (FMV) of the shares,
whichever is higher, at the date of sale and the price at the time of exercise
of the option.
Further, the sale of transfer of the said shares is subject to the DST
imposed under Section 175 of the NIRC, as amended, as implemented by
Revenue Regulations No. 13-2004, upon execution of the deed
transferring ownership or rights thereto, or upon delivery, assignment or
indorsement of such shares in favor of another.
(B) If the shares involved are shares of stock listed and traded through the
Local Stock Exchange, the transaction is subject to stock transaction tax
imposed under Section 127(A) of the NIRC, as amended.
(C) If the shares involved are shares of stock in a foreign corporation, the
gain, if any, is subject to ordinary income tax.
All other issuances including rulings inconsistent herewith are hereby
revoked or modified accordingly.
All revenue officers and employees are hereby enjoined to give this
Circular as wide a publicity as possible.
This Circular takes effect immediately.
TAX CODE
Section 41. Inventories. - whenever in the judgment of the Commissioner,
the use of inventories is necessary in order to determine clearly the income
of any taxpayer, inventories shall be taken by such taxpayer upon such
basis as the Secretary of Finance, upon recommendation of the
Commissioner, may, by rules and regulations, prescribe as conforming as
nearly as may be to the best accounting practice in the trade or business
and as most clearly reflecting the income.
If a taxpayer, after having complied with the terms and a conditions
prescribed by the Commissioner, uses a particular method of valuing its
inventory for any taxable year, then such method shall be used in all
subsequent taxable years unless:
(i) with the approval of the Commissioner, a change to a different
method is authorized; or
(ii) the Commissioner finds that the nature o the stock on hand (e.g.,
its scarcity, liquidity, marketability and price movements) is such
that inventory gains should be considered realized for tax purposes
and, therefore, it is necessary to modify the valuation method for
purposes of ascertaining the income, profits, or loss in a move
realistic manner: Provided, however, That the Commissioner shall
not exercise his authority to require a change in inventory method
more often than once every three (3 years: Provided, further, That
any change in an inventory valuation method must be subject to
approval by the Secretary of Finance
Section 32. Gross Income. -
(B) Exclusions from Gross Income. - The following items shall not
be included in gross income and shall be exempt from taxation
under this title:
(1) Life Insurance. - The proceeds of life insurance policies
paid to the heirs or beneficiaries upon the death of the
insured, whether in a single sum or otherwise, but if such
amounts are held by the insurer under an agreement to pay
interest thereon, the interest payments shall be included in
gross income.
(2) Amount Received by Insured as Return of Premium. -
The amount received by the insured, as a return of
premiums paid by him under life insurance, endowment, or
annuity contracts, either during the term or at the maturity
of the term mentioned in the contract or upon surrender of
the contract.
(3) Gifts, Bequests, and Devises. _ The value of property
acquired by gift, bequest, devise, or descent: Provided,
however, That income from such property, as well as gift,
bequest, devise or descent of income from any property, in
cases of transfers of divided interest, shall be included in
gross income.
(4) Compensation for Injuries or Sickness. - amounts
received, through Accident or Health Insurance or under
Workmen's Compensation Acts, as compensation for
personal injuries or sickness, plus the amounts of any
damages received, whether by suit or agreement, on
account of such injuries or sickness.
(5) Income Exempt under Treaty. - Income of any kind, to
the extent required by any treaty obligation binding upon
the Government of the Philippines.
(6) Retirement Benefits, Pensions, Gratuities, etc.-
(a) Retirement benefits received under Republic
Act No. 7641 and those received by officials and
employees of private firms, whether individual or
corporate, in accordance with a reasonable private
benefit plan maintained by the employer: Provided,
That the retiring official or employee has been in
the service of the same employer for at least ten
(10) years and is not less than fifty (50) years of
age at the time of his retirement: Provided, further,
That the benefits granted under this subparagraph
shall be availed of by an official or employee only
once. For purposes of this Subsection, the term
'reasonable private benefit plan' means a pension,
gratuity, stock bonus or profit-sharing plan
(7) Miscellaneous Items. -
maintained by an employer for the benefit of some
or all of his officials or employees, wherein
contributions are made by such employer for the
officials or employees, or both, for the purpose of
distributing to such officials and employees the
earnings and principal of the fund thus
accumulated, and wherein its is provided in said
plan that at no time shall any part of the corpus or
income of the fund be used for, or be diverted to,
any purpose other than for the exclusive benefit of
the said officials and employees.
(b) Any amount received by an official or employee
or by his heirs from the employer as a
consequence of separation of such official or
employee from the service of the employer
because of death sickness or other physical
disability or for any cause beyond the control of the
said official or employee.
(c) The provisions of any existing law to the
contrary notwithstanding, social security benefits,
retirement gratuities, pensions and other similar
benefits received by resident or nonresident
citizens of the Philippines or aliens who come to
reside permanently in the Philippines from foreign
government agencies and other institutions, private
or public.
(d) Payments of benefits due or to become due to
any person residing in the Philippines under the
laws of the United States administered by the
United States Veterans Administration.
(e) Benefits received from or enjoyed under the
Social Security System in accordance with the
provisions of Republic Act No. 8282.
(f) Benefits received from the GSIS under Republic
Act No. 8291, including retirement gratuity received
by government officials and employees.
(a) Income Derived by Foreign Government. -
Income derived from investments in the Philippines
in loans, stocks, bonds or other domestic securities,
or from interest on deposits in banks in the
Philippines by (i) foreign governments, (ii) financing
institutions owned, controlled, or enjoying
refinancing from foreign governments, and (iii)
international or regional financial institutions
established by foreign governments.
(b) Income Derived by the Government or its
Political Subdivisions. - Income derived from any
public utility or from the exercise of any essential
governmental function accruing to the Government
of the Philippines or to any political subdivision
thereof.
(c) Prizes and Awards. - Prizes and awards made
primarily in recognition of religious, charitable,
scientific, educational, artistic, literary, or civic
achievement but only if:
(i) The recipient was selected without any
action on his part to enter the contest or
proceeding; and
 (ii) The recipient is not required to render
substantial future services as a condition to
receiving the prize or award.
(d) Prizes and Awards in sports Competition. - All
prizes and awards granted to athletes in local and
international sports competitions and tournaments
whether held in the Philippines or abroad and
sanctioned by their national sports associations.
(e) 13th Month Pay and Other Benefits. - Gross
benefits received by officials and employees of
public and private entities: Provided, however,
That the total exclusion under this subparagraph
shall not exceed Ninety thousand pesos (₱90,000)
which shall cover:
(i) Benefits received by officials and
employees of the national and local
government pursuant to Republic Act No.
6686;
(ii) Benefits received by employees
pursuant to Presidential Decree No. 851,
as amended by Memorandum Order No.
28, dated August 13, 1986;
(iii) Benefits received by officials and
employees not covered by Presidential
Decree No. 851, as amended by
Memorandum Order No. 28, dated August
13,1986; and
(iv) Other benefits such as productivity
incentives and Christmas bonus.
(f) GSIS, SSS, Medicare and Other Contributions.
- GSIS, SSS, Medicare and Pag-ibig contributions,
and union dues of individuals.
(g) Gains from the Sale of Bonds, Debentures or
other Certificate of Indebtedness. - Gains realized
from the same or exchange or retirement of bonds,
debentures or other certificate of indebtedness with
a maturity of more than five (5) years.
(h) Gains from Redemption of Shares in Mutual
Fund. - Gains realized by the investor upon
redemption of shares of stock in a mutual fund
company as defined in Section 22 (BB) of this Code.
RA 10653
AN ACT ADJUSTING THE 13th MONTH PAY AND OTHER BENEFITS
CEILING EXCLUDED FROM THE COMPUTATION OF GROSS
INCOME FOR PURPOSES OF INCOME TAXATION, AMENDING FOR
THE PURPOSE SECTION 32(B), CHAPTER VI OF THE NATIONAL
INTERNAL REVENUE CODE OF 1997, AS AMENDED
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
Section 1. Section 32(B), Chapter VI of the National Internal Revenue
Code of the Philippines (Republic Act No. 8424) is hereby amended as
follows:
"SEC. 32. Gross Income. —
"x x x
"(B) Exclusions from Gross Income. — The following items shall not be
included in gross income and shall be exempt from taxation under this Title:
"xxx
"(7) Miscellaneous Items. — "xxx
"(e) 13th Month Pay and Other Benefits. — Gross benefits received by
officials and employees of public and private entities: Provided,
however, That the total exclusion under this subparagraph shall not
exceed eighty-two thousand pesos (P82,000) which shall cover:
"xxx
"(iv) Other benefits such as productivity incentives and Christmas
bonus: Provided, That every three (3) years after the effectivity of this Act,
the President of the Philippines shall adjust the amount herein stated to its
present value using the Consumer Price Index (CPI), as published by the
National Statistics Office (NSO)."
Section 2. Implementing Rules and Regulations. — The Secretary of
Finance shall promulgate the necessary rules and regulations for the
faithful and effective implementation of the provisions of this Act: Provided,
That, the failure of the Secretary of Finance to promulgate the said rules
and regulations shall not prevent the implementation of this Act upon its
effectivity.
Section 3. Repealing Clause. — All laws, orders, issuances, circulars,
rules and regulations or parts thereof which are inconsistent with the
provisions of this Act are hereby repealed or modified accordingly. 1âwphi1
Section 4. Separability Clause. — If any provision of this Act is declared
unconstitutional or invalid, other parts or provisions hereof not affected
thereby shall continue to be in full force and effect.
Section 5. Effectivity. — This Act shall take effect fifteen (15) days
following its publication in at least two (2) newspapers of general circulation.
REVENUE REGULATION MEMORANDUM 27-2011
This Circular is being issued to revoke BIR Ruling Nos. 002-99 (dated
January 12, 1999), DA-184-04 (dated April 6, 2004), DA-569-04 (dated
November 10, 2004), and DA-087-06 (dated March 6, 2006) which
excludes from the gross income of the taxpayer and hence, exempt from
Income Tax, contributions to Pag-Ibig 2, GSIS, SSS, Life Insurance, Pre-
Need Plan in excess of the mandatory monthly contribution; GSIS Optional
Insurance Premium, GSIS Educational Plan Premium, GSIS Memorial
Plan Premium, and GSIS Unlimited Optional Insurance Premium.
The abovementioned BIR Rulings rendered an opinion regarding Section
32(B)(7)(f) of the NIRC of 1997, to wit:
“Since the law and implementing regulations do not categorically state that
the exemption covers only the regular GSIS and Pag-Ibig contributions, it
is safe to conclude that GSIS optional and Pag-Ibig 2 contributions are
likewise excludible from the gross income of the taxpayer and hence,
exempt from income tax.”
It has been observed that the grant of Income Tax exemption to SSS, GSIS,
PHIC and Pag- ibig contributions in excess of the mandatory contributions
is being abused. As an example, aside from the mandatory contribution of
Php100.00/month to Pag-ibig Fund and 1% (for those with monthly
compensation of Php1,500.00 and below) or 2% (for those with monthly
compensation of over Php1,500.00) to PHIC, an employee may contribute
additional Php1,000.00/month to Pag-ibig 2 and Php1,000.00/month to
PHIC as voluntary contributions which can be gleaned as a form of
investment. The money being invested by the employees in these
programs are not being taxed. Aside from that, employers which are
mandated by the Bureau to correctly withhold the tax due of their
employees (i.e. tax due is equivalent to tax withheld), find it difficult to
comply since voluntary contributions by their employees may not always
pass thru them.
The term contribution is defined in Republic Act (RA) No. 8291, otherwise
known as The Government Service Insurance System Act of 1997, as
follows:
“SECTION 2. Definition of Terms. —
xxx xxx xxx
(j) Contribution — The amount payable to the GSIS by the member and
the employer in accordance with Section 5 of this Act;”
Moreover, Section 5 of RA No. 8291 provides:
“SECTION 5. Contributions. — (a) It shall be mandatory for the member
and the employer to pay the monthly contributions specified in the following
schedule:
xxx xxx xxx” (Underscoring provided)
Similarly, Section 8 of RA No. 8282, otherwise known as the Social
Security Act of 1997, defined the term contribution, viz:
“SECTION 8. Terms Defined. —
xxx xxx xxx
(i) Contribution — The amount paid to the SSS by and on behalf of the
member in accordance with Section Eighteen of this Act.”
Subsequently, Section 18 of RA No. 8282 states:
“SECTION 18. Employee's Contribution. — (a) Beginning as of the last day
of the calendar month when an employee's compulsory coverage takes
effect and every month thereafter during his employment, the employer
shall deduct and withhold from such employee's monthly salary, wage,
compensation or earnings, the employee's contribution in an amount
corresponding to his salary, wage, compensation or earnings during the
month in accordance with the following schedule:” (Emphasis provided)
Further, the term Medicare “contribution” is defined in Section 4 of RA No.
7875, otherwise known as the National Health Insurance Act of 1995, as
follows:
“SECTION 4. Definitions of Terms. — For the purpose of this Act, the
following terms shall be defined as follows:
xxx xxx xxx
d) Contribution — The amount paid by or in behalf of a member to the
Program for coverage, based on salaries or wages in the case of formal
sector employees, and on household earnings and assets, in the case of
the self-employed, or on other criteria as may be defined by the
Corporation in accordance with the guiding principles set forth in Article I
of this Act.”
Furthermore, Sections 4 and 7 of RA 9697, otherwise known as the Home
Development Mutual Fund Law of 2009 provided for the definition of Pag-
ibig “contribution”, to wit:
“SEC. 4. Definition of Terms. - The following shall mean: xxx xxx xxx
(c) “Contributions” - the amount payable to the Fund by the members and
their employers, in accordance with this Act.”
“SEC. 7. Fund Generation and Contributions.- The money of the Fund shall
be generated by the provident savings that the covered employees shall
contribute for the purpose every month, and the equal amounts that their
respective employers shall mandatorily contribute.
Covered employees and employers shall contribute to the Fund based on
the monthly compensation of covered employees as follows:
Employees earning not more than One thousand five hundred pesos
(P1,500.00) per month – one percent (1%).
Employees earning more than One thousand five hundred pesos
(P1,500.00) per month – two percent (2%).
All employers - two percent (2%) of the monthly compensation of all
covered employees.
The maximum monthly compensation to be used in computing employee
and employer contributions shall not be more than Five thousand pesos
(P5,000.00): Provided, That this maximum may be fixed from time to time
by the Board of Trustees through rules and regulations adopted by it, taking
into consideration actuarial calculations and rates of benefits.”
Therefore, contributions referred to in Section 32(B)(7)(f) of the NIRC of
1997 cover only the mandatory/compulsory contributions of the concerned
employees to SSS, GSIS, PHIC and HDMF. Thus, this Office holds that
voluntary contributions in excess to what the law allows to these institutions
are not excludible from the gross income of the taxpayer and hence, not
exempt from Income Tax and Withholding Tax. Consequently, the
exemption from withholding tax on compensation referred to in Section
2.78.1(B)(12) of Revenue Regulations (RR) No. 2-98 shall apply only to
mandatory/compulsory GSIS, SSS, Medicare and Pag-ibig contributions.
In this regard, BIR Ruling Nos. 002-99, DA-184-04, DA-569-04 and DA-
087-06 are hereby revoked and invalidated, and all revenue issuance
inconsistent with this Circular are deemed repealed.
All revenue officers conducting audit investigations shall take the
provisions of this Circular into consideration. Accordingly, any claim for
exemption for voluntary contributions shall be disallowed, and, where
applicable, the corresponding deficiency assessment shall be made.
All revenue officials and employees are enjoined to give this Circular the
widest possible publicity.
RA 9505
AN ACT ESTABLISHING A PROVIDENT PERSONAL SAVINGS PLAN,
KNOWN AS THE PERSONAL EQUITY AND RETIREMENT ACCOUNT
(PERA)
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
SECTION 1. Title. - This Act shall be known as the "Personal Equity and
Retirement Account (PERA) Act of 2008".
SEC. 2. Declaration of Policy. - It is declared the policy of the State to
promote capital market development and savings mobilization by
establishing a legal and regulatory framework of retirement plans for
persons, comprised of voluntary personal savings and investments. The
State recognizes the potential contribution of PERA to long-term fiscal
sustainability through the, provision of long-term financing and reduction of
social pension benefits.
SEC. 3. Definition of Terms. -Unless the context requires otherwise, the
following terms shall have the following significance as used in this Act:
(a) "Administrator" is an entity accredited by the Bureau of Internal
Revenue (BIR), after pre qualification by the concerned Regulatory
Authority. The Administrator shall be responsible for overseeing
the PERA, whose core functions shall include, but not limited to:
reporting on contributions made to the account, computing the
values of investments, educating the Contributor, enforcing PERA
contributions and withdrawal limits, collecting appropriate taxes
and penalties for the government, securing BIR Income Tax Credit
Certificates for the Contributor, consolidating reports on all
investments, income, expenses and withdrawals on the account
and ensuring that PERA contributions are invested in accordance
with the prudential guidelines set by the Regulatory Authorities.
(b) "Contributor" is any person with the capacity to contract and
possesses a tax identification number. The Contributor establishes
and makes contributions to a PERA.
(c) "Custodian" is a separate and distinct entity unrelated to the
Administrator, accredited by the Bangko Sentral ng Pilipinas,
providing services in connection with the custodianship of funds
and securities comprising the PERA investments. The Custodian
shall be responsible for receiving all funds in connection with the
PERA, maintaining custody of all original securities, evidence of
deposits or other evidence of investment. The Custodian shall
operate independently from the Administrator. The Custodian is
required to report to the Contributor and the concerned Regulatory
Authority at regular intervals all financial transactions and all
documents in its custody under a PERA.
(d) "Early withdrawal" shall pertain to any withdrawal prior to the
period of distribution as set forth under Section 12 hereof.
(e) "Investment Manager" is a regulated person or entity authorized
by a Contributor to make investment decisions for his PERA. As
such, it shall assume fiduciary duty and responsibility for PERA
investments. An Investment Manager shall act with utmost fidelity
by observing policies directed towards confidentiality, scrupulous
care, safety and prudent management of PERA funds.
(f) "Personal Equity and Retirement Account (PERA)" refers to the
voluntary retirement account established by and for the exclusive
use and benefit of the Contributor for the purpose of being invested
solely in PERA investment products in the Philippines. The
Contributor shall retain the ownership, whether legal or beneficial,
of funds placed therein, including all earnings of such funds.
(g) "PERA Investment Product" refers to a unit investment bust
fund, mutual fund, annuity contract, insurance pension products,
pre-need pension plan, shares of stock and other securities listed
and traded in a local exchange, exchange-traded bonds or any
other investment product or outlet which the concerned Regulatory
Authority may allow for PERA purposes: Provided, however, That
to qualify as a PERA investment product under this Act, the product
must be non-speculative, readily marketable, and with a track
record of regular income payments to investors. The concerned
Regulatory Authority must first approve the product before being
granted tax-exempt privileges by the BIR.
(h) "Regulatory Authority" refers to the Bangko Sentral ng Pilipinas
(BSP) as regards banks, other supervised financial institutions and
trust entities, the Securities and Exchange Commission (SEC) for
investment companies, investment houses stockbrokerages and
pre-need plan companies, and the Office of the Insurance
Commission (OIC) for insurance companies.
(i) "Oveseas Filipino" refers to (1) an individual citizen of the
Philippines who is working or deriving income from abroad,
including one who retained or reacquired his Philippine citizenship
under Republic Act No. 9225, otherwise known as the "Citizenship
Retention and Reacquisition Act of 2003"; or (2) the legitimate
spouse, whether or not said spouse is of Filipino ancestry, and the
children of the Filipino citizen mentioned in item (1) hereof.
SEC. 4. Establishment of a PERA. - A Contributor may create and
maintain a maximum of five (5) PERA, at any one time: Provided, That the
Contributor shall designate and maintain only one (1) Administrator for all
his PERA. The Contributor shall make all investment decisions pertaining
to his PERA. However, he has the option of appointing an Investment
Manager, either in writing or in electronic form, to make investment
decisions on his behalf without prior consultation.
SEC. 5. Maximum Annual PERA Contributions. - A Contributor may
make an aggregate maximum contribution of One hundred thousand
pesos (P l00,000.00) or its equivalent in any convertible foreign currency
at the prevailing rate at the time of the actual contribution, to his her PERA
per year: Provided, That if the Contributor is married, each of the spouses
shall be entitled to make a maximum contribution of One hundred thousand
pesos (P l00,000.00) or its equivalent in any convertible foreign currency
per year to his her respective PERA: Provided, further, That if the
Contributor is an overseas Filipino, he shall be allowed to make maximum
contributions double the allowable maximum amount. A Contributor has
the option to contribute more than the maximum amount prescribed
herein: Provided, That the excess shall no longer be entitled to a tax credit
of five percent (5%). The Secretary of Finance may adjust the maximum
contribution from time to time, taking into consideration the present value
of the said maximum contribution using the Consumer Price Index as
published by the National Statistics Office, fiscal position of the
government and other pertinent factors.
SEC. 6. Employer's Contribution. - A private employer may contribute to
its employee's PERA to the extent of the amount allowable to the
Contributor: Provided, however: That the employer complies with the
mandatory Social Security System (SSS) contribution and retirement pay
under the Labor Code of the Philippines. Such contribution shall be allowed
as a deduction from the employer's gross income. The Contributor,
however, retains the prerogative to make investment decisions pertaining
to his PERA.
SEC. 7. Separate Asset. -The PERA shall be kept separate from the other
assets of an Administrator/Custodian and shall not be part of the general
assets of the Administrator/Custodian for purposes of insolvency.
SEC. 8. Tax Treatment of Contributions. - The Contributor shall be given
an income tax credit equivalent to five percent (5%) of the total PERA
contribution: Provided, however: That in no instance can there be any
refund of the said tax credit arising from the PERA contributions. If the
Contributor is an overseas Filipino, he shall be entitled to claim tax credit
from any tax payable to the national government under the National
Internal Revenue Code of 1997, as amended.
SEC. 9. Tax Treatment of Investment Income. - All income earned from
the investments and reinvestments of the maximum amount allowed herein
is tax exempt.
SEC. 10. Tax Treatment of Distributions. - All distributions in
accordance with Section 12 hereof are tax exempt.
SEC. 11. Termination. -Any premature termination shall be treated as an
early withdrawal under Section 13 hereof: Provided, That the penalties
thereunder shall not apply if the entire proceeds there from are immediately
transferred to another PERA investment and/or another Administrator.
SEC. 12. Distributions Upon Retirement/Death. - Distributions may be
made upon reaching the age of fifty-five (55) years: Provided, That the
Contributor has made contributions to the PERA for at least five (5) years.
The distribution shall be made in either lump sum or pension for a definite
period or lifetime pension, the choice of which shall be at the option of the
Contributor. The Contributor, however, has the option to continue the
PERA. Complete distribution shall be made upon the death of the
Contributor, irrespective of the age of the Contributor at the time of his
death.
SEC. 13. Penalty on Early Withdrawal. - Any early withdrawal shall be
subject to a penalty, the amount of which would be determined by the
Secretary of Finance and payable to the government: Provided, That the
amount of the penalty shall in no case be less than the tax incentives
enjoyed by the Contributor.
No early withdrawal penalty shall be imposed on any withdrawal of any
funds for the following purposes:
(a) For payment of accident or illness-related hospitalization in
excess of thirty (30) days; and
(b) For payment to a Contributor who has been subsequently
rendered permanently totally disabled as defined under the
Employees Compensation Law, Social Security Law and
Government Service Insurance System Law.
SEC. 14. Non-Assignability. - No portion of the assets of a PERA may be
assigned, alienated, pledged, encumbered, attached, garnished, seized or
levied upon. PERA assets shall not be considered assets of the Contributor
for purposes of insolvency and estate taxes.
SEC. 15. Rules and Regulations. - Consistent with the policy of
promoting transparency in PERA investment and thereby affording
protection to the Contributor, the Department of Finance, the Bureau of
Internal Revenue and the concerned Regulatory Authorities, with the
Bangko Sentral ng Pilipinas as lead agency, shall coordinate to establish
uniform rules and regulations pertaining to the following subject matters:
(a) Qualification and disqualification standards for Administrators,
Custodians and Investment Managers, including directors and
officers thereof;
(b) Qualified and/or eligible PERA investment products;
(c) Valuation standards for PERA investments;
(d) Disclosure requirements on the terms and conditions of the
PERA investments;
(e) Minimum requirements imposed on the Administrators as
regards inculcating financial literacy in investors;
(f) Ascertainment of client suitability for PERA products;
(g) Fees to be charged by the Administrator, Custodian or
Investment Manager shall always be reasonable and approved by
the concerned Regulatory Authority;
(h) Record-keeping, reporting and audit requirement of
Administrators and Custodians pertaining to records for all
contributions, earnings and total account balances; and
(i) Other pertinent matters to be determined by the Regulatory
Authorities.
SEC. 16. Administration of Tax Incentives. - The BIR shall issue the
implementing rules and regulations regarding all aspects of tax
administration relating to PERA. The BIR shall coordinate the qualification
standards of the Administrator with the Regulatory Authorities.
SEC. 17. Penalty. - A fine of not less than Fifty thousand pesos (P
50,000.00) nor more than Two hundred thousand pesos (P 200,000.00) or
imprisonment of not less than six (6) years and one (1) day to not more
than twelve (12) years or both such fine and imprisonment, at the discretion
of the court, shall be imposed upon any person, association, partnership
or corporation, its officer, employee or agent, who, acting alone or in
connivance with others, shall:
(a) Act as Administrator, Custodian or Investment Manager without
being properly qualified or without being granted prior accreditation
by the concerned Regulatory Authority;
(b) Invest the contribution without written or electronically
authenticated authority from the Contributor, or invest the
contribution in contravention of the instructions of the Contributor;
(c) Knowingly and willfully make any statement in any application,
report, or document required to be filed under this Act, which
statement is false or misleading with respect to any material fact;
(d) Misappropriate or convert, to the prejudice of the Contributor,
contributions to and investments or income from the PERA;
(e) By gross negligence, cause any loss, conversion, or
misappropriation of the contributions to, or investments from, the
PERA or
(f) Violate any provision of this Act or rules and regulations issued
pursuant to this Act. Notwithstanding the foregoing, any willful
violation by the accredited Administrator, Custodian or Investment
Manager of any of the provisions of this Act, or its implementing
rules and regulations, or other terms and conditions of the authority
to act as Administrator, Custodian or Investment Manager may be
subject to the administrative sanctions provided for in applicable
laws. The above penalties shall be without prejudice to whatever
civil and criminal liability provided for under applicable laws for the
same act or omission.
SEC. 18. Abuse of the Tax Exemption and Privileges. - Any person,
natural or juridical, who unduly avails of the tax exemption privileges herein
granted, possibly by co-mingling PERA accounts in an investment with
other investments, when such person is not entitled hereto, shall be subject
to the penalties provided in Section 17 hereof. In addition, the offender
shall refund to the government double the amount of the tax exemptions
and privileges enjoyed under this Act, plus interest of twelve percent (12%)
per year from the date of enjoyment of the tax exemptions and privileges
to the date of actual payment.
SEC. 19. Separability Clause. - If any provision or part hereof is held
invalid or unconstitutional, the remainder of the law or the provision not
otherwise affected shall remain valid and subsisting.
SEC. 20. Repealing Clause. - All laws, decrees, orders, rules and
regulations or parts thereof inconsistent with this Act are hereby amended
or modified accordingly.
SEC. 21. Effectivity. -This Act shall take effect fifteen (15) days following
its publication in a newspaper of general circulation: Provided, That the tax
incentives granted hereunder shall take effect on January 1, 2009.
REVENUE REGULATIONS NO. 8-2000
amends specific provisions of RR No. 2- 98 and RR No. 3-98 with respect
to the "De Minimis" Benefits, Additional Compensation Allowance (ACA),
Representation and Transportation Allowance (RATA) and Personal
Economic Relief Allowance (PERA). Said benefits/allowances received by
employees are not considered as items of income and, therefore, are not
subject to income tax and, consequently, to the withholding tax. Effective
the Taxable Year 2000, ACA will be classified as part of the "Other
Benefits" excluded from one's gross compensation income, provided that
the total amount of such benefits does not exceed P 30,000. Items of "de
minimis" benefits exempt from the fringe benefits tax are enumerated in
the Regulations.
REVENUE REGULATIONS NO. 5-2011
Pursuant to Sections 4 and 244 in relation to Section 33 of the Tax Code
of 1997, these Regulations are hereby promulgated to further amend
Revenue Regulations (RR) No. 2-98, as last amended by RR No. 5-2008,
with respect to "De Minimis" benefits which are exempt from income tax on
compensation as well as from fringe benefit tax.
Section 1. Section 2.78.1 (A) (3) (c) and (d) of RR 2-98, as last amended
by RR 5- 2008, is hereby further amended to read as follows:
"Sec. 2.78.1 Withholding of Income Tax on Compensation Income. — (A) ...
(1) ...
xxx xxx xxx
(3) Facilities and privileges of relatively small value. — . . .
xxx xxx xxx
The following shall be considered as "de minimis" benefits not subject to
income tax as well as withholding tax on compensation income of both
managerial and rank and file employees:
a) Monetized unused vacation leave credits of private employees not
exceeding ten (10) days during the year;
b) Monetized value of vacation and sick leave credits paid to government
officials and employees;
c) Medical cash allowance to dependents of employees, not exceeding
P750 per employee per semester or P125 per month;
d) Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month
amounting to not more than P1,500;
e) Uniform and Clothing allowance not exceeding P4,000 per annum;
f) Actual medical assistance, e.g. medical allowance to cover medical and
healthcare needs, annual medical/executive check-up, maternity
assistance, and routine consultations, not exceeding P10,000.00 per
annum;
g) Laundry allowance not exceeding P300 per month;
h) Employees achievement awards, e.g., for length of service or safety
achievement, which must be in the form of a tangible personal property
other than cash or gift certificate, with an annual monetary value not
exceeding P10,000 received by the employee under an established written
plan which does not discriminate in favor of highly paid employees;
i) Gifts given during Christmas and major anniversary celebrations not
exceeding P5,000 per employee per annum;
j) Daily meal allowance for overtime work and night/graveyard shift not
exceeding twenty-five percent (25%) of the basic minimum wage on a per
region basis;
All other benefits given by employers which are not included in the
above enumeration shall not be considered as "de minimis"
benefits, and hence, shall be subject to income tax as well as
withholding tax on compensation income. xxx xxx xxx”
Section 2. Section 2.33 (C) of RR 3-98, as last amended by RR 5-2008,
is hereby further amended to read as follows:
"Sec. 2.33. Special Treatment of Fringe Benefits. — (A) Imposition of
Fringe Benefits Tax — . . .
c) Medical cash allowance to dependents of employees, not exceeding
P750 per employee per semester or P125 per month;
d) Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month
amounting to not more than P1,500;
e) Uniform and Clothing allowance not exceeding P4,000 per annum;
f) Actual medical assistance, e.g. medical allowance to cover medical and
healthcare needs, annual medical/executive check-up, maternity
assistance, and routine consultations, not exceeding P10,000.00 per
annum;
g) Laundry allowance not exceeding P300 per month;
h) Employees achievement awards, e.g., for length of service or safety
achievement, which must be in the form of a tangible personal property
other than cash or gift certificate, with an annual monetary value not
exceeding P10,000 received by the employee under an established written
plan which does not discriminate in favor of highly paid employees;
i) Gifts given during Christmas and major anniversary celebrations not
exceeding P5,000 per employee per annum;
j) Daily meal allowance for overtime work and night/graveyard shift not
exceeding twenty-five percent (25%) of the basic minimum wage on a per
region basis;
All other benefits given by employers which are not included in the
above enumeration shall not be considered as "de minimis" benefits,
and hence, shall be subject to income tax as well as withholding tax
on compensation income. xxx xxx xxx”
Section 2. Section 2.33 (C) of RR 3-98, as last amended by RR 5-2008,
is hereby further amended to read as follows:
"Sec. 2.33. Special Treatment of Fringe Benefits. — (A) Imposition of
Fringe Benefits Tax — . . . xxx xxx xxx (B) Definition of Fringe Benefit — . . .
xxx xxx xxx
(C) Fringe Benefits Not Subject to Fringe Benefit Tax — In general, the
fringe benefit tax shall not be imposed on the following fringe benefits:
xxx xxx xxx
The term "DE MINIMIS" benefits which are exempt from the fringe benefit
tax shall, in general, be limited to facilities or privileges furnished or offered
by an employer to his employees that are of relatively small value and are
offered or furnished by the employer merely as a means of promoting the
health, goodwill, contentment, or efficiency of his employees. The following
are considered as “de minimis” benefits granted to each employee:
a) Monetized unused vacation leave credits of private employees not
exceeding ten (10) days during the year;
b) Monetized value of vacation and sick leave credits paid to
government officials and employees;
c) Medical cash allowance to dependents of employees, not
exceeding P750 per employee per semester or P125 per month;
d) Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month
amounting to not more than P1,500;
e) Uniform and Clothing allowance not exceeding P4,000 per annum;
f) Actual medical assistance, e.g. medical allowance to cover medical
and healthcare needs, annual medical/executive check-up, maternity
assistance, and routine consultations, not exceeding P10,000.00 per
annum;
g) Laundry allowance not exceeding P300 per month;
h) Employees achievement awards, e.g., for length of service or safety
achievement, which must be in the form of a tangible personal property
other than cash or gift certificate, with an annual monetary value not
exceeding P10,000 received by the employee under an established
written plan which does not discriminate in favor of highly paid
employees;
i) Gifts given during Christmas and major anniversary celebrations not
exceeding P5,000 per employee per annum;
j) Daily meal allowance for overtime work and night/graveyard shift not
exceeding twenty-five percent (25%) of the basic minimum wage on a
per region basis.
All other benefits given by employers which are not included in the
above enumeration shall not be considered as "de minimis"
benefits, and hence, shall be subject to income tax as well as
withholding tax on compensation income.
xxx xxx xxx"
Section 3. Transitory Provisions. — The benefits herein provided shall
apply to income earned starting the year 2011.
Section 4. Repealing Clause. — All existing rules and regulations or parts
thereof which are inconsistent with the provisions of these regulations are
hereby revoked, repealed or modified accordingly.
Section 5. Effectivity Clause. — These Regulations shall take effect after
fifteen (15) days following its publication in any newspaper of general
circulation.
REVENUE REGULATIONS NO. 17-2011
Section 1. Scope. - Pursuant to Section 244 of the National Internal
Revenue Code of 1997, as amended (Tax Code), in relation to Sections
15 and 16 of Republic Act No. 9505, otherwise known as the “Personal
Equity and Retirement Account (PERA) Act of 2008, ” these Regulations
are hereby promulgated to implement the tax provisions of the said Act,
thereby establishing uniform guidelines in the administration of tax
privileges and incentives providing rules on qualification and accreditation
of Administrators.
Section. 2. Definition of Terms. - Unless the context otherwise requires,
the following terms shall have the following meanings for purposes of these
Regulations, viz:
(a) “Administrator” - shall refer to an entity which had been pre-
qualified by the concerned Regulatory Authority in accordance with
the PERA Rules, and accredited by the Bureau of Internal Revenue
(BIR) in accordance with the provisions of these Regulations. The
Administrator shall be responsible for administering and
overseeing the PERA of the Contributor.
(b) “BIR” – shall refer to the Bureau of Internal Revenue.
(c) “Contributor” - shall refer to a natural person who: (i)
establishes and contributes to a PERA; (ii) has a Tax Identification
Number (TIN); and (iii) has the capacity to contract. A person over
fifty-five (55) years of age may still open a PERA and be a qualified
Contributor.
(d) “Early Withdrawal” - shall pertain to a withdrawal of the PERA
Assets, whether in full or in part, in such manner and at such time
as to make the receipt of such PERA Assets not a Qualified PERA
Distribution.
(e) “Early Withdrawal Penalty” – shall have the meaning ascribed
to such term under Section 10 of these Regulations.
(f) “Overseas Filipino”- shall refer to (1) an individual citizen of the
Philippines who is working or deriving income from abroad; (2) an
individual who retained or reacquired his Philippine citizenship
under Republic Act No. 9225, otherwise known as the “Citizenship
Retention and Reacquisition Act of 2003 ” and is working or
deriving income from abroad; or (3) the Overseas Filipino’s
legitimate spouse, whether or not said spouse is of Filipino
ancestry, who does not qualify under either (1) or (2) above and
whose spouse does not avail of the benefits of the PERA Act; and
(4) the legitimate children of the Overseas Filipino, who do not
qualify under either (1) or (2) above and is joining his parent in
representing the spouse OFW opening a PERA Account. For the
avoidance of doubt, any of the persons mentioned in (1) to (4)
above must meet the qualifications of a Contributor to avail of the
benefits under the PERA Act.
(g) “PERA Act” – shall refer to Republic Act No. 9505, otherwise
known as the “Personal Equity and Retirement Account (PERA)
Act of 2008.”
(h) “PERA Assets”- shall mean the aggregate assets of the
Contributor in his PERA at any one time, including the cash funds
and the Qualified / Eligible PERA Investment Products into which
the funds of the PERA are invested and reinvested, and all the
income earned therefrom.
(i) “PERA Processing Office” – shall refer to the Audit Information
Tax Incentives and Exemption Division of the Bureau of Internal
Revenue which will be tasked to process all applications, reports,
and other transactions in connection with the PERA Act and these
Regulations.
(j) “PERA Rules” - shall refer to the rules and regulations
implementing the PERA Act jointly promulgated by the Regulatory
Authorities.
(k) “PERA TCC” – shall refer to a BIR – issued Tax Credit
Certificate which will serve as entitlement by a qualified to the five
percent (5%) tax credit for PERA related transaction as discussed
in Section 8 of these Regulations.
(l) “Personal Equity and Retirement Account (PERA)”- shall refer
to a Contributor’s voluntary retirement account established from
the Qualified PERA Contributions and/or Qualified Employer
Contributions, for the purpose of being invested solely in Qualified
/ Eligible PERA Investment Products.
(m) “Qualified Employer’s Contribution”- shall refer to the
contribution made by the employer (whether as a single proprietor,
a partnership, or a corporation) from the private sector to the PERA
established by his/its employee which, together with such
employee’s contribution, if any, shall not exceed such employee’s
Qualified PERA Contribution;
(n) “Qualified PERA Contributions”- shall refer to the contributions
of the Contributor to his PERA, which shall not exceed
P100,000.00 per calendar year (if the Contributor is a non-
Overseas Filipino), or P200,000.00 per calendar year (if the
Contributor is an Overseas Filipino or in representation of an
Overseas Filipino), and in accordance with the provisions of
Section 6 of these Regulations, subject to the adjustments
authorized by the Secretary of Finance, taking into consideration
the present value of the contribution using the Consumer Price
Index as published by the National Statistics Office, fiscal position
of the Government and other pertinent factors.
(o) “Qualified PERA Distribution” - shall refer to the distribution of
the PERA Assets, after the Contributor and/or his employer has
made Qualified PERA Contributions and/or Qualified Employer’s
Contributions for at least five (5) years (which need not be
consecutively made for five [5] years), and after the Contributor
reaches the age of fifty-five (55) years, or upon the death of the
Contributor, irrespective of the age of the Contributor and the
number of yearly contributions made by the Contributor at the time
of his death.
(p) “Qualified PERA Investment Income” - shall refer to all the
income earned by the PERA Assets.
(q) ”Qualified / Eligible PERA Investment Products”- shall refer to
the investment products duly approved by the concerned
Regulatory Authority which could be any of the following:
(a) aunitinvestmenttrustfund(UITF);
(b) share of stock of mutual fund;
(c) annuitycontract;
(d) insurance pension product;
(e) pre-needpensionplan;
(f) shares of stock or other securities listed and traded in
the local stock exchange;
(g) exchange-tradedbond;
(h) government securities;
(i) any other category of investment product or outlet which
the concerned Regulatory Authority may allow for PERA
purposes.
(r) Regulatory Authorities- shall refer to the (1) Bangko Sentral ng
Pilipinas (BSP) as regards banks, trust entities, and other BSP-
supervised financial institutions; (2) the Securities and Exchange
Commission (SEC), for investment companies, investment houses,
stock brokerages; and (3) the Office of the Insurance Commission
(OIC), for insurance companies and pre-need plan companies.
Section 3. Accreditation of Administrator. A. Qualifications
B.
An entity may only act as Administrator after having been pre-qualified by
the concerned Regulatory Authority and upon compliance with the
following requirements:
(1) It possesses adequate systems and technological capabilities
and the necessary technical expertise and personnel to ensure the
proper recording of PERA transactions;
(2) It is duly registered with the BIR;
(3) It has regularly filed tax returns as required by law; and
(4) It has no unpaid final and executory national internal revenue
tax assessment.
Documentary Requirements
For purposes of accreditation, the applicant-Administrator shall file an
Application for Accreditation (BIR Form No. _______) in triplicate copies (2
copies for the BIR and 1 file copy for the applicant) with the PERA
Processing Office, and shall pay an Accreditation Fee of Five Hundred
pesos (P500.00). The Application for Accreditation and the Official Receipt
of payment of Accreditation Fee shall be accompanied by the following
documents:
(1) Qualification Certificate issued by the concerned Regulatory Authority;
(2) Copy of the current Certificate of BIR Registration;
(3) Clearance from RDO that taxpayer is a regular filer and has no unfiled
return on record; and
(4) Clearance from final and executory tax liability from the BIR.
Section 4. Establishment of a PERA. - A Contributor must comply with the
following requirements in establishing a PERA:
(1) The Contributor’s PERA must not exceed five (5) at any one time;
(2) The Maximum total of all Contributor's PERA should not exceed the
amount stated in Section 6 of these Regulations;
(3) The Contributor shall designate and maintain only one (1)
Administrator for all his PERA;
(4) Each PERA shall be confined to one category of investment product;
and
(5) Submission of proof of income earnings for the year or to be earned
for the year when the PERA contribution was made.
If the Contributor is an Overseas Filipino, he/she shall submit the following
supporting documents to the Administrator as proof of his/her status as an
Overseas Filipino:
(1) For a non-resident citizen of the Philippines who is working or deriving
income from abroad:
(i) Overseas Employment Certificate issued by the Philippine
Overseas Employment Administration (POEA); and
(ii) Any official document showing that he will earn or has earned
income in a foreign country in the year of PERA contribution.
(2) For an individual who has retained or reacquired his Philippine
citizenship under R.A. No. 9225, otherwise known as the “Citizenship
Retention and Reacquisition Act of 2003,”:
(i) Identification Certificate issued by the Bureau of Immigration, to
prove his reacquisition of Philippine citizenship; and
(ii) Any official document showing that he will earn or has earned
income in a foreign country in the year of PERA contribution.
(3) For the legitimate spouse, subject to the consent given by the individual
referred to in (1) and (2): (i) the marriage certificate attesting his/her
marriage with the individual referred to in (1) or (2); (ii) sworn certification
that he/she is opening a PERA for and in behalf of his/her spouse, who has
not availed of the benefits under the PERA Act; and (iii) the supporting
documents under (1) or (2), as the case may be.
(4) For the child, subject to the consent given by the individual mentioned
in (1) or (2): (i) the birth certificate attesting that he/she is the child of an
individual mentioned in (1) or (2); (ii) sworn certification that he/she is
opening a PERA for and in behalf of his/her parent who, being an individual
mentioned in (1) or (2) or the spouse of an individual mentioned in (1) or
(2), has not availed of the benefits under the PERA Act; and (iii) the
supporting documents under (1) or (2), as the case may be.
Section 5. Annual and Quarterly Reporting of PERA Transactions:
Contributions, Income, Withdrawals and/or Terminations - The
Administrator shall ensure that Contributors are under their exclusive
administration through an on-line validation with the PERA Contributor's
database to be established by the Bangko Sentral ng Pilipinas for this
purpose.
The Administrator shall record all the PERA contributions and related
transactions under its administration in a separate set of books of accounts,
the income earned by the PERA Assets, and the withdrawals made by the
Contributor and/or termination of any PERA under its administration. Each
contribution, withdrawal and/or termination shall be supported by
documentary proof of such contribution/income/withdrawal/termination
(such as official receipts, withdrawal slips, etc.) which shall be kept in the
Administrator's principal place of business as part of the books of accounts.
The Administrator is required to retain these documents subject to
validation or submission to the Bureau of Internal Revenue whenever
requested.
The Administrator shall submit, not later than the fifteenth (15th) day
following the close of every quarter, a Quarterly Report of PERA
transactions. Likewise the Administrator shall submit an Annual Report to
the PERA Processing Office of the Qualified PERA Contributions, income
earned by the PERA Assets, and withdrawals and terminations made by
each Contributor under its administration due on or before May 15 of every
year.
Section 6. Maximum Annual PERA Contributions. – Without limiting the appropriate advice given to Contributor but shall not be entitled to any
scope and coverage of the term “Qualified PERA Contributions” as defined benefit under the PERA Act.
under Section 2(n), the aggregate maximum Qualified PERA Contributions
in one calendar year for purposes of illustration shall be as follows: Section 7. PERA Contributions and Tax Credit. - A. Contributor’s Qualified
PERA Contribution
Maximum Qualified PERA
Contributor
Contribution in Peso* A Qualified Contributor shall be entitled to a tax credit in the amount of five
Unmarried Filipino Citizen Php 100,000.00 percent (5%) of the aggregate Qualified PERA Contributions made in one
Married Filipino Citizen and both spouses Php 100,00.00 for each calendar year.
qualify as a Contributor qualified contributor
Married Filipino Citizen and only one An employee qualified contributor shall be issued a Certificate of
Php 100,000.00 Entitlement to 5% tax credit (Form No. ____) as mentioned in subsection
spouse qualifies as a Contributor
Unmarried Overseas Filipino Php 200,000.00 C of these Section while a self-employed shall be issued a PERA TCC by
the Bureau as discussed under Section 8 of these Regulations. The
Married Overseas Filipino whose
entitlement to 5% tax credit for an employee or one who is self-employed
legitimate spouse is neither an Overseas Php200,000.00
shall be allowed to be credited only against the Contributor’s income tax
Filipino nor a qualified Contributor
liability.
Married Overseas Filipino whose
Php200,000.00, cumulative
legitimate spouse and children (not
for the spouse and children in However, if the Contributor is an overseas Filipino, he shall be entitled to
otherwise disqualified as contributors) of
representation of the Overseas claim the 5% tax credit against any national internal revenue tax liabilities
an Overseas Filipino who did not directly
Filipino (excluding the Contributor’s withholding tax liabilities as withholding agent).
open any PERA
Married Overseas Filipino whose
Php 200,000.00 for each Provided, that in no instance can there be any refund of the said tax credit
legitimate spouse is also an Overseas
qualified contributor arising from the PERA contributions.
Filipino
Married Overseas Filipino whose
B. Qualified Employer’s Contribution to the Employee’s PERA. - The
legitimate children are not Overseas Php 200,000.00 for the
Qualified Employer’s Contribution to his/its employee’s PERA shall be in
Filipinos and are not qualified Overseas Filipino
addition to, and not in lieu of, the employer’s contribution to the Social
Contributors
Security System (SSS) and its obligation to pay retirement benefits to
his/its employees under the Labor Code. The total of the employer’s and
*Or its equivalent in any convertible foreign currency at the prevailing rate the employee’s contribution to his PERA and all the benefits, including tax
at the time of actual contribution. incentives and privileges arising therefrom, shall all belong to the employee
and shall not, in anyway, inure to the benefit of the employer. The employer
If the Contributor is an Overseas Filipino, the person mentioned in Section shall not be entitled to any 5% credit from its contribution to an employee's
4 hereof shall submit to the Administrator a sworn certification of his PERA. The employee also retains the prerogative to make investment
continuing status as an Overseas Filipino for the year. Any false or decisions pertaining to his PERA, including the contribution made in his
misleading statement in such sworn certification shall subject the affiant to favor by the employer.
the penalties under Section 11 hereof.
I. On the part of the employee – The Qualified Employer’s Contribution to
Contributions to the PERA amounting to more than Php100,000.00 or his/its employee’s PERA shall not form part of the employee’s taxable
Php200,000.00, as the case may be, shall not be accepted by the gross income, hence, exempted from the withholding tax on income,
Administrator under the PERA Account, however, they may be accepted whether withholding tax on compensation or fringe benefits.
by the Administrator as other Savings/Investment Account after
II. On the part of the employer - The employer can claim the actual amount
of his/its Qualified Employer’s Contribution as a deduction from his/its
gross income, but only to the extent of the employer’s contribution that
would complete the maximum allowable PERA contribution of an
employee.
For example, Employee AAA already made PERA contribution for the year
amounting to P60,000. Employer XYZ Corp decided to contribute as well
to its employee’s PERA account and the employer’s contribution for the
same period amounted to also to P60,000. In this case the employer can
only claim as deduction the amount of P40,000, that is only up to the extent
needed to complete the maximum allowable PERA contribution.
The Qualified Employer’s Contribution allowable as deduction shall
likewise be exempt from withholding tax on compensation, the provisions
of Section 34(K) of the Tax Code notwithstanding. For this purpose, the
Administrator shall issue to the employer a certificate of the actual amount
of Qualified Employer’s Contributions.
C. Employee’s Qualified PERA Contributions – In cases where an
employee makes a Qualified PERA Contribution (apart from his employer’s
Qualified Employer’s Contribution), the Administrator shall submit a
Certification of the actual total amount of such Qualified PERA Contribution
to the Bureau of Internal Revenue within forty-five (45) days from the close
of the calendar year.
The PERA Processing Office on the other hand shall issue a confirmation
of an employee's entitlement to 5% tax credit of the Qualified PERA
Contribution to be issued to his employer which shall serve as authority for
the employer to automatically adjust the withholding tax on the employee’s
compensation income. For these purpose, the employer must secure his
own employee’s PERA tax credit entitlement from the PERA Processing
Office.
For the avoidance of doubt, the amount which the Administrator shall
certify on shall, together with the aggregate amount of the Qualified
Employer’s Contribution, not exceed such employee’s Qualified PERA
Contribution.
Section 8. PERA Tax Credits Certificate (PERA-TCC).
A. Coverage – The PERA-TCC may be issued only to a qualified Overseas
Filipino and self-employed contributor.
B. Application. – An Application for the PERA-TCC (BIR Form No. ) duly
signed by the Administrator shall be submitted in three (3) copies by the
Administrator.
The Application for PERA-TCC shall be filed with the PERA Processing
Office not later than ninety (90) days following the end of the calendar year.
C. Non-refundability of the PERA-TCC. – The tax credit arising from the
PERA Contributions shall not be refundable or transferable.
Section 9. Tax Treatment of the PERA Investment Income - Investment
income of the Contributor consisting of all income earned from the
investments and 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;
(5) Regular income tax.
Provided, that each specific investment products, as defined in Section
2(q) hereof, must be approved by the concerned Regulatory Authority in
accordance with the provisions of PERA 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;
(3) Stock transaction tax on the sale, barter, or exchange of shares
of stock listed and
traded through the local stock exchange or through initial public
offering; and
(4) Documentary stamp tax.
Section 10. PERA Distributions and Early Withdrawals. A. Qualified PERA
Distributions
Qualified PERA Distributions received by the Contributor, or in case of the
death of the Contributor, by his heirs or beneficiaries, whether in a lump
sum or pension for a definite period or lifetime pension, shall be excluded
from the gross income of the Contributor and shall not be subject to income
tax. The same shall also be excluded from the gross income in the hands
of his heirs or beneficiaries, as the case may be, and shall not be subject
to estate tax.
B. Early Withdrawal
The following shall not be subject to the Early Withdrawal Penalty:
(1) Immediate transfer of proceeds to another Qualified / Eligible
PERA Investment Product and/or another Administrator, who have
been dis- accredited either by the BIR or the concerned Regulatory
Agency, within two (2) working days from the withdrawal thereof;
(2) For payment of accident or illness-related hospitalization in
excess of thirty (30) days, in which case a duly notarized doctor’s
certificate attesting to the said event shall be attached to the Notice
of Termination/Withdrawal/Transfer to be submitted to the PERA
Processing Office.
(3) For payment to a Contributor who has been subsequently
rendered permanently totally disabled as defined under the
Employees Compensation Law or Social Security System Law, in
which case a certification duly issued by a pertinent government
agency that the Contributor had been permanently totally disabled
shall be attached to the Notice of Termination/Withdrawal/Transfer
to be submitted to the PERA Processing Office.
C. Imposition of Tax/Penalty.- In case of Early Withdrawals not falling
under any of the circumstances under Section 10 (B) above, the
Contributor shall pay the following Early Withdrawal Penalties:
(1) The five percent (5%) tax credit availed by the Contributor for
the entire period of the PERA;
(2) Withholding tax on compensation/Final Withholding Tax on
Fringe Benefits due on the Qualified Employer’s Contribution;
(3) Income tax due on all income from investment and/or
reinvestment;
(4) 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;
(5) The 10% final tax on cash and/or property dividends actually
or constructively received from a domestic corporation, including a
mutual fund company;
(6) The capital gains tax on the sale, barter, exchange or other
disposition of shares of stock in a domestic corporation;
(7) The stock transaction tax on the sale, barter, or exchange of
shares of stock listed and traded through the local stock exchange
or through initial public offering;
(8) The capital gains tax on the sale, exchange, retirement or
maturity of bonds, debentures or other certificates of indebtedness;
or
(9) Regular income tax.
The Administrator shall submit a quarterly report of such termination or
withdrawal to the PERA Processing Office, within sixty (60) days following
the end of the quarter of the date of termination or withdrawal.
Computation of tax on Early Withdrawal shall be reckoned from the date
the benefit accrues to the Contributor (e.g., on the date the tax credit has
been claimed in the tax return; on the date the employer contributed to the
employee’s PERA, etc.). In any case, unless the Contributor was able to
prove that he did not claim from such tax credit, the Administrator may
presume that the Contributor availed of the tax credit.
Section 11. Other Penalties. - In addition to the penalties provided under
the Tax Code, a fine of not less than Fifty thousand pesos (P50,000.00)
nor more than two hundred thousand pesos (P200,000.00) or
imprisonment of not less than six (6) years and one (1) day to not more
than twelve (12) years or both such fine and imprisonment, at the discretion
of the court, shall be imposed upon any person, association, partnership
or corporation, its officer, employee or agent, who, acting alone or in
connivance with others, who shall:
(1) Act as Administrator without being accredited by the BIR;
(2) Knowingly and willfully make any statement in any application,
report, or document required to be filed under these Regulations,
which statement is false or misleading with respect to any material
fact; or
(3) Violate any provision of the PERA Act or these Regulations
issued pursuant to the Act which affects the administration of tax
incentives.
Notwithstanding the foregoing, any willful violation by the accredited
Administrator of any of the provisions of the PERA Act and these
Regulations may be subject to the administrative sanctions provided for in
applicable laws.
The above penalties shall be without prejudice to whatever civil and
criminal liability provided for under applicable laws for the same act or
omission.
Section 12. Abuse of the Tax Exemption and Privileges. - Any person,
natural or juridical, who unduly avails of the tax exemptions and privileges
granted herein, possibly by co-mingling his investments with the
Contributor’s PERA when such person is not entitled hereto or conniving
with the Administrator in circumventing the provisions of the PERA Act and
the PERA Rules shall be subject to the penalties provided in Section 11
hereof. In addition, the offender shall refund to the government double the
amount of the tax exemptions and privileges enjoyed under the PERA Act
or these Regulations, plus interest of twelve percent (12%) per annum from
the date of enjoyment of the tax exemptions and privileges to the date of
actual payment.
Section 13. Grounds for Disqualification, Suspension or Revocation of
Accreditation of Administrator. – The accreditation of an Administrator may
be refused, revoked, suspended, or limitations placed thereon by the BIR
if, after due notice and hearing, the BIR determines that the applicant or
licensee:
(1) Has willfully violated any provision of the PERA Act, the PERA
Rules, these Regulations, or any order made, or any other law
administered by the BIR, or has failed to supervise, another person
who commits such violation, with a view to prevent such violation;
(2) Has willfully made or caused to be made a materially false or
misleading statement in the application for prequalification or
report filed with the BIR, or has willfully omitted to state any
material fact that is required to be stated therein or necessary to
make the statement therein not misleading;
(3) Has failed to maintain the qualifications or requirements for
accreditation prescribed under the PERA Rules and these
Regulations or has failed to maintain compliance with any of them;
(4) Any of its directors or officers has been convicted by a
competent body of an offense involving fraud, embezzlement,
counterfeiting, theft, estafa, misappropriation, forgery, bribery,
false oath, perjury, or of a violation of securities, commodities,
banking, real estate or insurance laws;
(5) Is enjoined or restrained by a competent body from engaging in
securities, commodities, banking, real estate or insurance
activities; and
(6) Is subject to an order of a competent body refusing, revoking or
suspending any license or other permit under the PERA Act, the
PERA Rules, these Regulations, and any other law or regulation
administered by the BIR.
Section 14. Issuance of Guidelines and Procedure - A separate Revenue
Memorandum Order (RMO) shall be issued defining the guidelines and
procedure for proper administrative reporting to the Bureau of Internal
Revenue of PERA Transactions involving Contributions, Income,
Withdrawals and/or Termination including the Administrators operational
expenses relative to PERA management. The same RMO shall include the
procedure to guide the PERA Processing Office in all the matters involving
BIR PERA-related transactions including all the PERA related forms and
formats of reporting.
Section 15. Repealing Clause. - All existing rules, regulations, revenue
issuances, rulings or parts thereof, which are contrary to or inconsistent
with the provisions of these Regulations are hereby amended, modified or
repealed accordingly.
Section 16. Effectivity. - These regulations shall take effect on January 1,
2012.
REVENUE REGULATIONS NO. 8-2012
further amends Revenue Regulations (RR) No. 2-98, as last amended by xxx xxx xxx
RR Nos. 5-2008 and 5-2011, relative to the “De Minimis Benefit,” uniform
and clothing allowance not exceeding P 5,000 per annum, which is exempt (k) Benefits received by an employee by virtue of a collective bargaining
from Income Tax on compensation as well as from fringe benefit tax. agreement (CBA) and productivity incentive schemes provided that the
total annual monetary value received from both CBA and productivity
REVENUE REGULATIONS NO. 1-2015 incentive schemes combined, do not exceed ten thousand pesos (Php
10,000.00) per employee per taxable year;
further amends Revenue Regulations (RR) Nos. 2-98 and 3-98, as last
amended by RR Nos. 5-2008, 5-2011 and 8-2012, with respect to “De xxx xxx xxx”
Minimis Benefits”, which are exempt from Income Tax as well as from
Fringe Benefit Tax.
These Regulations shall take effect immediately upon publication.
Section 2.78.1 (A)(3) of RR No. 2-98, as last amended by RR No. 8-2012,
is further amended to read as follows:

“Sec. 2.78.1(A)(3). Withholding Tax on Compensation Income. –

(A) …

xxx xxx xxx

(3) Facilities and privileges of relatively small value. –

xxx xxx xxx

(k) Benefits received by an employee by virtue of a collective bargaining

agreement (CBA) and productivity incentive schemes provided that the
total annual monetary value received from both CBA and productivity
incentive schemes combined do not exceed ten thousand pesos (Php
10,000.00) per employee per taxable year;

xxx xxx xxx”

Section 2.33 (C) of RR No. 3-98, as last amended by RR No. 8-2012, is

further amended to read as follows:

“Sec. 2.33. Special Treatment of Fringe Benefits. –

xxx xxx xxx

(C) Fringe Benefits Not subject to Fringe Benefit Tax. –