Posts from — October 2011

The long awaited PERA tax rules have been posted.

DRAFT TAX RULES for the long-delayed Personal Equity and Retirement Account (PERA) scheme have been issued by the Bureau of Internal Revenue (BIR), which is seeking final private sector feedback before implementation.

“We published the exposure draft [on our Web site]. We have also had a lot of meetings already with other private sector representatives to incorporate their comments into the tax rules. We don’t expect any major revisions,” Internal Revenue Commissioner Kim S. Jacinto-Henares yesterday said.

The Capital Market Development Council (CMDC) will review the draft rules in the next two weeks and the Department of Finance will approve the final guidelines, CMDC executive director Rescina S. Bhagwani told BusinessWorld.

The tax rules are the last thing needed to roll out the PERA law or Republic Act 9505, which was signed in 2008 to encourage people to save up for retirement. Its implementing rules and regulations were issued in 2009 by the Securities and Exchange Commission and the Bangko Sentral ng Pilipinas.

Similar to the tax rules issued for the Real Estate Investment Trust Act a few months back, the BIR has drawn up stringent guidelines to ensure that the PERA tax exemptions are not abused.

According to the still-unnumbered regulations, a Filipino can contribute a maximum of P100,000 to a PERA account. Overseas Filipino workers (OFWs) are allowed P200,000 in annual contributions. A total of five PERA accounts can be held but they must be maintained by one duly registered administrator.

All PERA contributors are required to submit proof of income for the year to attest that the accounts — and their attendant tax perks — are taken solely from their earnings.

“If they are receiving somebody else’s money, they must be paying donor’s tax,” Ms. Henares said.

The investment income of PERA contributors are exempted from 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. Non-income taxes such as percentage taxes, value-added taxes and documentary stamp taxes, are still applicable, the draft states.

PERA holders will also be 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 tax credit arising from PERA contributions shall not be refundable or transferable,” the draft adds.

Moreover, the tax breaks will not be extended to employers who contribute to their employees’ PERA accounts.

“The total of the employer’s and the employee’s contribution to his PERA and all the benefits, including tax incentives and privileges arising therefrom, shall belong to the employee…,” the issuance reads.

“The employee also retains the prerogative to make investment decisions pertaining to his PERA, including the contribution made in his favor by the employer,” it continues.

The employer’s contribution should also be in addition to, and not in lieu of, mandatory Social Security System remittances and retirement benefits required by the Labor Code.

The BIR has proposed a steep penalty system for “any person, natural or juridical, who unduly avails of the tax exemptions and privileges granted herein…”

Those found violating the law will be fined anywhere between P50,000 to P200,000 or imprisoned for six to 12 years. They will also be required to refund the government double the amount of the tax exemptions enjoyed under the PERA Act, plus a 12% interest per annum.

“The PERA Act is a major revenue-eroding measure, but it is a law so we must implement it. The best thing we can do is to ensure that the only exemptions that will be given are those that are granted by the law,” Ms. Henares said.

I have recently got a hold of an advertisement by BPI AutoLoans to act in their commercial as himself. Here’s the advertisement.

Ayala-led Bank of the Philippine Islands seeks to widen its suite of cash management solutions with the roll-out of a mobile facility designed to serve the banking needs of corporate clients. The facility called “ExpressLink Mobile”—an enhancement of the electronic banking platform ExpressLink (E-Link) that has been operational for 11 years—allows decision-makers such as chief executive officers, treasurers and chief finance officers to use their mobile devices to inquire on their company’s deposit account balances and approve financial transactions. “For instance, your boss is caught in traffic and you need his signature to disburse payroll. That could be solved with a laptop but the boss doesn’t always carry a laptop. We can safely assume, however, that everyone carries a mobile device. This allows decision-makers to approve transactions that need immediate action,” BPI vice president for corporate banking marketing Jo Ann Eala said in an interview. “Given that, imagine the mobility and efficiency that it creates. There’s now no excuse to delay the transaction because the authorization and everything else can move very fast,” Eala said. The service allows easier approval of financial transactions, not just for payroll, but also for payment of bills, utilities, taxes and other regulatory payments using a secure mobile platform. Using the mobile device, corporate clients can remit payments to the Bureau of Internal Revenue, Social Security System, Pag-Ibig, Bureau of Customs, PhilHealth and other entities with collection agreements or bank accounts with BPI. The mobile facility can run on Nokia, Apple or any phone running on Android and will soon be available on the iPad, catering to clients who are more comfortable using a larger screen, Eala explained. Any business client with a deposit account with BPI can use this service, she added. Among the companies that participated in the pilot-testing of the new facility and are thus the first business customers to hook up to ExpressLink Mobile are Pilipinas Kao Inc., Goodream Printers Corp., Bodega Site IT Solutions Inc., Quick Delivery, Philippine Seven Corp., ABS-CBN Broadcasting Corp., Upsight Construction Inc., CDC Holdings and Globe Telecoms.

source: Technistock

I’ve recently watched an interesting video that advocates stock indexing. Which I myself am thinking of doing for several months to see how this strategy goes.

I hope this is something useful for you guys! Enjoy!