Whether the Personnel Economic Relief Allowance (PERA) is Taxable or Not

September 16, 1992 BIR RULING NO. 265-92 21 (a) 71 164-92 265-92 Provincial Agricultural Officer Department of Agriculture Masbate, Masbate S i r : This refers to your telegram requesting information as to whether the Personnel Economic Relief Allowance (PERA) is taxable or not. In reply, please be informed that in pursuance of former President Aquino's Directive in her Memorandum Circular No. 145 government offices, agencies and instrumentalities including government-owned and controlled corporations should now stop deducting or withholding any income tax on PERA for 1992. However, pending resolution of our request for reconsideration of the Opinion of Secretary of Justice Franklin M. Drilon stating that PERA, like RATA should not be subject to the mandatory withholding tax, the concerned employees may file in writing with the BIR, Attn.: Appellate Division, their individual claims for refund of the withholding tax on PERA for 1991 or those already paid to them, within two (2) years, after the payment of the tax pursuant to Section 204 of the Tax Code, as amended. Appropriate action on the claim for refund will accordingly be taken as soon as a reply to said request for reconsideration is received from the Office of the President. It should be understood however, that should our request for reconsideration be upheld, the deduction and remittance of the withholding tax on PERA for 1992 and thereafter will be resumed. Corresponding deduction shall likewise be made from employees to cover PERA already paid to them which have not been subjected to withholding. aisadc Very truly yours, JOSE U. ONG Commissioner of Internal Revenue