Tax Exemption of the Personnel Economic Relief Allowance

December 28, 1992 BIR RULING NO. 381-92 21 (a) 71 266-92 381-92 The Regional Director Cordillera Administrative Region New Agrix Bldg., corner Bokawan St. and Magsaysay Avenue Baguio City Gentlemen : This refers to the letter dated October 23, 1992 of confused taxpayers and BIR lowly employees to his Excellency, The President of the Philippines, Malacaang, Manila, requesting that the Personnel Economic Relief Allowance (PERA) be exempt from income tax and consequently from the withholding tax. In reply thereto, I have the honor to inform you that pursuant to former President Corazon C. 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 the Secretary of Justice 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 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. LibLex Very truly yours, JOSE U. ONG Commissioner of Internal Revenue