PHILDEVFINANCE: BIR buys time to soften revenue impact of PERA

BIR buys time to soften revenue impact of PERA

THE government is deferring implementation of the Personal Equity Retirement Account Act on fears the law would be used as a means to avoid tax payments, the Bureau of Internal Revenue said.

Commissioner Kim Jacinto-Henares told reporters that the revenue regulation for Republic Act 9505 would be issued by the end of the month at the earliest instead of June 30 as originally planned as the bureau is still identifying the citizens entitled to claim tax credits under the law.
?There is still a problem that needs to be resolved in drafting the RR for the PERA Law. You see, PERA enables the citizens, residents or otherwise to claim tax credit from us. But how do we determine as to who are qualified to avail the same?? she said.
The PERA Law should have taken effect on January 1, 2009, but its implementing rules have languished at the ?conception? stage because of the BIR?s reluctance. A fifth or some 6.2 million of the country?s labor force is not covered by any type of retirement plan.
The bureau chief said that ?tax credit? as a form of tax exemption is susceptible to misuse.
?Our concern is with regard to non-resident citizens. Who are these people, how do we document them. Otherwise, everyone could claim that they are overseas Filipino workers, and hence entitled to avail of the tax credit,? Jacinto-Henares said.
Estela Sales, BIR deputy commissioner for legal and eforcement, said the bureau is coming up with measures to ensure that only those qualified may enjoy tax relief.
Data from the Department of Finance showed that the government would incur a revenue lesion of P12 billion upon the first year of implementating the PERA law.
Under the law, a contributor is entitled to tax deduction of five percent provided that they invest in Philippine financial instruments.
To qualify for a tax deduction of 5 percent in the case of a Filipino citizen, the investment of a qualified PERA holder shall not exceed P100, 000 a year. If married, each spouse may invest up to P100,000 a year.
In the case of an overseas Filipino, a higher investment cap of P200,000 is imposed every year. If married and both spouses are overseas workers, each spouse is entitled to a maximum investment of P200,000 per year to qualify for tax credits.
KATRINA MENNEN A. VALDEZ

Source: http://phildevfinance.blogspot.com/2011/07/bir-buys-time-to-soften-revenue-impact.html

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