Guidelines ready for Pera edict

10/22/2009

Financial regulators, tax authorities and government officials signed a memorandum of agreement to implement the guidelines for the Personal Equity and Retirement Account (Pera) Law which provides incentives on small investments and savings such as waiving taxes on a maximum of P100,000 that is not withdrawn for at least five years.

The law encourages Filipinos to save or invest money.

“The Pera Law provides an organized framework for cultivating retail saving and offering the means to transform the resource of saving into the opportunities of long-term investment,” BSP Gov. Amando Tetangco Jr. said.

With Pera, there is now a “coordinated national framework” that deliberately pays a heavy premium to those who opt to invest or save for the long haul, Tetangco said.

Tetangco said the law took 10 years to be crafted but was finally enacted in August last year.

Finance Secretary Margarito Teves had misgivings about the financial benefits of the law, particularly the part that waived the applicable tax because of its impact on the fiscal state.

Teves, however, indicated approval for the law when it limited the tax-exempt amount to P100,000 and double this amount or P200,000 for overseas Filipino workers.

“It took a lot of effort to get to where we are today,” Tetangco said of Pera that he considers a work in progress. “Much still remains ahead of us,” he said.

Countries like Singapore and South Korea have saving rates well in excess of 50 percent of gross domestic product against the Philippines average of 26 percent, the Department of Finance said.

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