INCENTIVES AND BENEFITS GRANTED UNDER EXECUTIVE ORDER NO. 1037 (CREATING THE PHILIPPINE RETIREMENT PARK SYSTEM,

PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES) IN RELATION TO REPUBLIC ACT NO. 9225 (CITIZENSHIP RETENTION

AND RE-ACQUISITION ACT OF 2003)

I. Introduction

The Philippine Retirement Authority (PRA)1 is a government owned and controlled corporation which was created by virtue of Executive Order (EO) No. 1037, which was signed by then President Ferdinand E. Marcos, on 04 July 1985.2 During those times, the Philippine economy is at a slump. The country’s foreign exchange position is at its weakest. Inflation is sky-rocketing.

Motivated by the desire to accelerate the social and economic development of the country and strengthen its foreign exchange position, the government introduced the concept of retirement program in the Philippines.

Moreover, the establishment of retirement parks aims to generate employment opportunities, promote the country's image abroad, support the tourism industry and assist in making fully operational the idle assets of the government and the private sector such as hotels, resorts, etc.3

In sum, PRA is mandated to attract foreign nationals and former Filipino citizens to invest, reside and retire in the Philippines with the end-view of accelerating the socio-economic development of the country, contributing to the foreign currency reserve of the economy and by providing them the best quality of life in the most attractive package.

II. Incentives and Benefits under E.O. 10374

In order to entice targeted retirees (foreign nationals and overseas Filipinos) to participate in the development of retirement villages and other projects of the PRA, they are granted several incentives and benefits.

1 It was formerly known as Philippine Retirement Park System.2 See http://www.pra.gov.ph/main/about_pra?page=13 Whereas clause of EO 10374 Section 9, EO 1037

a. Entitlement to the tax exemptions provided by P.D. No. 12175 upon certification thereof by the PRA;

b. Guaranteed repatriation of any foreign exchange currency remitted to, brought in, or invested in, the PRA and/or development projects of the PRA;

c. Extension of all Balikbayan privileges and exceptions to Filipinos and former Filipinos overseas returning to the Philippines to take up permanent residency in the projects of the PRA;

d. Grant of permanent resident status to foreigners participating or taking up residency under the retirement programs or projects of the PRA through a minimum investment of 50,000 U.S. Dollars in the PRA via a Trust Fund, withdrawable only upon withdrawal from the retirement program of the PRA of the participant concerned. For this purpose, the spouse and unmarried children under 21 years of age, of the applicant may also be given permanent resident status, if accompanying or if following to join him after his admission into the Philippines as a permanent resident. This investment requirement may be increased or decreased by the Board of Trustees of PRA upon recommendation of its General Manager;

1. Special Resident Retiree’s Visa (SRRV): Simply the BEST

Touted as the best retirement Visa in the Asia-Pacific Region, over 27,000 foreign retirees from 107 countries have chosen, and lived in the Philippines through the SRRV.6

A principal foreign retiree who is a holder of the SSRV and who is at least 35 years old, enjoys a host of additional benefits and privileges.

5 Section 2. Domestic corporations, partnerships or landowners as defined above which invest funds in housing for low-income groups shall be allowed a reasonable margin of profit if lots and dwelling units are to be sold to the low-income groups on easy installments terms; or if the dwelling units be leased to the low-income groups on a monthly rental basis. Section 3. Pursuant to the above incentives, such domestic corporations and partnerships and landowners shall enjoy tax exemptions on: (a) Real estate taxes on the improvements which will be used for housing by low-income groups; (b) Taxes on income derived from the installment sales of houses to low income groups or income derived from rental thereof; and (c) Taxes on interest earned due to the financing of houses for the low-income groups.

6 See http://www.pra.gov.ph/main/retiree/active

According to PRA, the SSRV allows all its foreign retiree-members to retire and live in the Philippines for as long as they want.  A holder of the SSRV may come in and out of the country as often as he desires, and enjoy privileges such as exemption from securing the ACR I-Card (Alien Certificate of Registration Immigration Card) from the Bureau of Immigration. They are also granted exemptions from paying the travel tax at the Philippine Airports.

Their dependent-children are exempted from getting a Study Permit or Student’s Visa if they intend to pursue education in the Philippines.

PRA retiree-members may also use health cards issued abroad in Philippine hospitals/clinics accredited by selected health card companies.  They may also avail of the one-time tax-free importation of household goods/personal effects.

e. Exemption from customs duties and from other present or future import taxes, for one time only and up to the amount of seven thousand dollars (US$7,000.00) for the importation of their household furniture shall be granted;

f. Importation of one automotive vehicle for personal or family use, free of all importation, customs, sales, and economic stabilization taxes shall be allowed. Such vehicles may be sold or transferred to third parties, exempt from the aforementioned taxes, after seven years have elapsed from the date of entry of said vehicle into the country.

With prior authorization from the PRA, the beneficiaries of the PRA's projects/programs, may substitute their vehicle abroad, at any time, and shall continue to enjoy the same exemptions established in the paragraph.

The beneficiaries of the PRA's projects/programs may, however, at any time import vehicles with the same benefits herein specified, after prior payment of the taxes due on any vehicle has been previously imported tax-free.

In case of loss of said vehicle, by theft or total destruction by fire, collision or accident occurring within the period of five years from date of entry of said vehicle into the country, the beneficiary under this law may acquire another vehicle free of the taxes herein before specified;

It is worthy to note however, that should the beneficiary withdrew from the programs/projects of the PRA within 7 years, he must pay all the programs projects of the PRA taxes for which he has been exempted from paying by virtue of the provisions of this Section.

These incentives and benefits may be availed of by the targeted retirees over and above the entitlement, if applicable, of any enterprise invested in by said foreign nationals and overseas Filipinos, to the incentives and benefits under the Omnibus Investment Code (P.D. 1978), the Tourism Incentives Program of 1974 (P.D. 535) and the Investments Promotion Act in Less Developed Areas (B.P. 44).

III. Citizenship Retention and Re-acquisition Act of 2003 ( RA 9225)

RA 9225 provides that all Philippine citizens of another country shall be deemed not to have lost their Philippine citizenship upon taking the oath of allegiance to the Republic of the Philippines. It also provides for derivative citizenship wherein the unmarried child, whether legitimate, illegitimate or adopted, below eighteen (18) years of age, of those who re-acquire Philippine citizenship upon effectivity of this Act shall be deemed citizenship of the Philippines.

Those who retain or re-acquire Philippine citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant liabilities and responsibilities under existing laws of the Philippines and must comply with the following conditions laid down by this law on exercise of right to suffrage, appointment in a public office, running in an elective position and practice of profession.