Annual Funding Valuation for Tax Savings

Annual Funding Valuation for Tax Savings* According to the National Internal Revenue Code of 1997, commonly known as the Tax Code of the Philippines, a company may deduct a portion of its retirement fund contribution from its taxable gross income. Section 34 (under Chapter 7: Allowable Deductions, H. Pension Trust) states that a contribution to a retirement trust can be deducted up to a maximum of: (a) normal pension cost, plus (b) 1/10th of the unfunded pension liability. This amount is determined by an Actuary through an Annual Funding Valuation for Tax Savings. What differentiates Annual Funding Valuation and PAS19 Valuation? Both Annual Funding Valuation and PAS19 Valuation determine a company's retirement liability. While PAS19 uses market discount rates in accordance with Philippines Financial Reporting Standards, Annual Funding Valuation is based on the prospective long-term investment yield rate of the company's current investment portfolio. Other Benefits of Annual Funding Valuation Your company can also utilize the Annual Funding Valuation to establish best-practice processes such as: 1. Systematic funding for better cash flow management; 2. Maintaining adequate funding level for better benefit security to your employees. Talk to your Actuary. The Annual Funding Valuation for Tax Savings can be a separate exercise or can be added to your PAS19 Valuation. Contact mike.garcia@MAi-Asia.com or +639176570855.