REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No. 8026

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

EXPLANATORY NOTE

Enacted on 2008, Republic Act No. 9505 or the Personal Equity and Retirement Account
‘Act provided for a long-term savings plan geared towards helping Filipinos attain a comfortable
and financially secure retirement. It encourages savings, because PERA contributors are entitled
to an income tax credit equivalent to 5% of the total PERA contribution, while earnings from
investments from such PERA savings are tax-exempt. A private employer is also enabled to
contribute to their employee’s PERA.

Despite being enacted in 2008, the PERA Act has only been formally launched by the
Bangko Sentral ng Pilipinas in Decemer 16, 2016. This proposed measure seeks to make PERA a
more attractive retirement option for Filipinos. It shall increase the maximum allowed annual
PERA contributions entitle to tax incentives from P100,000 to P200,000, or up to P400,000 for
Overseas Filipino Workers. Furthermore, instead of the original 5% income tax credit, PERA
contributions shall be treated as deductions from gross income.

Should the PERA succeed, it shall foster savings mobilization and the promotion of
capital market development, which are two factors needed to sustain rapid economic growth. The

success of PERA then is in the best interest of the entire Filipino nation.

In view of the foregoing, approval of this bill is earnestly sought.

“ARY C.
Representative
Magdalo Para sa Pilipino Party-List

|ANO


REPUBLIC OF THE PHILIPPINES
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
Third Regular Session

House Bill No. 8026

Introduced by MAGDALO Party-List Representative
HON. GARY C. ALEJANO

AN ACT
AMENDING SECTION 5 AND 8 OF REPUBLIC ACT (RA) NO. 9505, OTHERWISE
KNOWN AS THE PERSONAL EQUITY AND RETIREMENT ACCOUNT (PERA) LAW
AND FOR OTHER PURPOSES

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SEC. 1. Section 5 of Republic Act No. 9505 is hereby amended to read as follows:

“SEC.5. Maximum Annual PERA Contributions.— A Contributor may make
an aggregate maximum contribution of [One] TWO hundred thousand pesos
1(100,000.000)} (P200,000.00) 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] TWO hundred
thousand pesos [(100,000.00)] (P200,000.00) 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 ALLOWED AS
DEDUCTION FROM GROSS INCOME, AS PROVIDED IN SECTION 8
OF THIS ACT [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.2. Section 8 of Republic Act No. 9505 is hereby amended to read as follows;

SEC.8. Tax Treatment of Contributions.- FOR INCOME TAX PURPOSES,
PERA CONTRIBUTIONS UP TO THE MAXIMUM AMOUNT
PRESCRIBED IN SECTION 5 OF THIS ACT SHALL BE ALLOWED AS
DEDUCTIONS FROM GROSS INCOME OF EACH CONTRIBUTOR:
PROVIDED, HOWEVER, THAT ANY EXCESS IN THE MAXIMUM
AMOUNT SHALL NO LONGER BE ALLOWED AS DEDUCTIONS
THEREOF. [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.3. Implementing Rules and Regulations.- The Bureau of Internal Revenue (BIR)
shall issue the implementing rules and regulations regarding all aspects of tax administration
relating to PERA: Provided, That individuals earning purely compensation income, as defined in
Section 32 (A)(1) of the National Internal Revenue Code (NIRC), as amended, derived from
sources within the Philippines, the income tax on which has been correctly withheld under the
provision of Section 79 of the NIRC, as amended, and will be a Contributor to a PERA are still
not required to file an income tax return but are subject to substituted filing: Provided further,
That the BIR shall issue the necessary rules and regulations in relation to this matter such that
correct taxes are withheld and/or collected: Provided finally, That the failure of the concerned
agencies to promulgate the said rules and regulations shall not prevent the implementation of this
‘Act upon its effectivity.

SEC.4. Repealing Clause.- All laws, orders, issuances, circulars, rule and regulations or
parts thereof, which are inconsistent with the provisions of this Act are hereby repealed or
modified accordingly.

SECS. Separability Clause.- If any provision of this Act is declared unconstitutional or
invalid, other parts or provision hereof not affected thereby shall continue to be in full force and
effect.

SEC.6. Effectivity.- This Act shall take effect fifteen (15) days after publication in two
(2) national newspaper of general circulation.

Approved,