Personal Equity and Retirement Account (PERA)
Posted On Thursday, November 3, 2011 at by Sun JunI am a Money Magnet! We are Money Magnets!
News Update: The Personal Equity and Retirement Account or PERA tax rules have already been issued by the Bureau of Internal Revenue. With this development, RA 9505 or the PERA Law which was signed 3 years ago can now be finally implemented. Self-Employed Filipino citizens who don't have an SSS account can now set up their own retirement funds tax free!
According to the news article from Business World Online:
Revenue Regulations 17-2011, published by the BIR yesterday, state that a resident Filipino can contribute a maximum of P100,000 per year to a PERA account, while overseas Filipino workers (OFWs) are allowed up to P200,000. An individual can hold a total of five PERA accounts.
The contributions, which will be received and administered by accredited financial institutions, can be invested in various products such as trust funds, mutual funds, insurance, pre-need plans, government securities and listed equities.
The contributions are exempted from a host of taxes such as the final withholding tax on interest, capital gains tax on the sale of bonds and shares, 10% tax on cash and property dividends and regular income tax.
PERA holders are also entitled to an annual tax credit equivalent to 5% of all their contributions for the year. Resident Filipinos can charge this tax credit against their income tax liability. OFWs, exempted from income taxes, can charge this against any other national internal revenue tax liability.
The PERA assets will be released once the account holder reaches the age of 55, as long as he or she has made contributions for at least five years. The release can be made either as a lump sum or as a pension. The assets will also be completely released upon the death of the PERA contributor, regardless of age.
The Philippine Chamber of Commerce and Industry welcomes this new development that can possibly encourage more people to become savings-conscious and encourage them to start their own retirement funds.
PERA is considered a substitute to the Social Security System (SSS) and the Government Service Insurance System (GSIS). While every Filipino citizen may avail of this account, the law particular targets self-employed individuals and OFWs who are not required to register with the SSS or GSIS.
PERA is considered a substitute to the Social Security System (SSS) and the Government Service Insurance System (GSIS). While every Filipino citizen may avail of this account, the law particular targets self-employed individuals and OFWs who are not required to register with the SSS or GSIS.
You can read the full news article here.
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