RMC No. 91-2026 Digest

RMC No. 91-2026 clarifies the base amount for the twenty percent (20%) Early Withdrawal Penalty (EWP) on unqualified early withdrawals of PERA assets and amends certain provisions of RMC No. 4-2023. The EWP consists of 20% of the Gross Income Earned attributable to the PERA assets actually withdrawn (measured from the date the account or sub-account was opened or created up to the date of withdrawal) plus recovery of any five percent (5%) tax credit previously availed on the withdrawn assets. Gross Income Earned that remains invested, reinvested, or retained within the PERA, including unrealized gains and sale, redemption or liquidation proceeds held under PERA custody, is excluded from the base, and losses in other PERA accounts or sub-accounts are not deductible against the income on withdrawn assets. The EWP is a statutory penalty, not a final withholding tax or income tax. PERA tax exemptions apply strictly to assets and income that remain within the PERA; taxes outside those exemptions (percentage taxes, VAT, stock transaction tax, and documentary stamp tax) continue to apply. The PERA Administrator must compute and withhold the EWP from the contributor's proceeds and report and remit it to the BIR pursuant to RR No. 2-2022 and RMC No. 45-2022.