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Republic Act
Approved March 22, 2001

Republic Act No. 9040

An act exempting from tax certain allowances and benefits granted to the members of the armed forces of the philippines

An Act Exempting from Tax Certain Allowances and Benefits Granted to the Members of the Armed Forces of the Philippines

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In plain language

This Act provides tax exemptions for various allowances, benefits, and pay of AFP personnel, including longevity pay, mandatory allowances, collateral pay and allowances, as well as retirement and disability benefits, and authorizes the Secretary of Finance and Commissioner of Internal Revenue to promulgate implementing rules.

  • Exemption of AFP personnel’s longevity pay from income tax.
  • Exemption of mandatory allowances such as cost of living, personnel economic relief, and hazardous allowances.
  • Exemption of collateral pay including specialist, combat, flying, air mechanic, sea duty, hazardous duty, instructor’s duty, parachutist, and hardship pay.
  • Exemption of collateral allowances such as special clothing, cold winter’s clothing, winter clothing, initial enlistment and reenlistment, and laundry allowances.
  • Exemption of retirement, pension, death, and disability benefits under AFP-RSBS.
  • Prohibition of attachment, levy, or execution of exempt benefits.
  • Authority granted to the Secretary of Finance and Commissioner of Internal Revenue to promulgate implementing rules and regulations.
tax law
armed forces
AFP
allowances
benefits
exemption

Eleventh Congress

REPUBLIC ACT NO. 9040 March 22, 2001

AN ACT EXEMPTING FROM TAX CERTAIN ALLOWANCES AND BENEFITS GRANTED TO THE MEMBERS OF THE ARMED FORCES OF THE PHILIPPINES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title

This Act shall be referred to as "The AFP Tax Exemption for Pay and Allowances Act of 2001."

Section 2. Statement of Policy

(a)Section 5, Article XVI of the 1987 Constitution provides that "Professionalism in the Armed Forces of the Philippines and adequate remuneration and benefits of its members shall be a prime concern of the State." The government shall provide adequate support and incentives to the members of the Armed Forces. (b)Tax exemption shall be granted on AFP personnel's longevity pay, mandatory allowances, collateral pay and collateral allowances, as well as other benefits as provided for by law.

Section 3. Exclusions from Gross Income

The following pay and allowances of AFP personnel shall not be included in gross income and shall be exempt from taxation under Title II of Republic Act No. 8424, otherwise known as the "Tax Reform Act of 1997."

(a)Longevity pay; (b)Mandatory allowances, namely (1) Cost of Living Allowance;
(2)Personnel Economic Relief Allowance; and (3) Hazardous Allowance; (c)Collateral Pay, namely (1) Specialist Pay;
(2)Combat Pay;
(3)Flying Pay;
(4)Air Mechanic's Pay;
(5)Sea Duty Pay;
(6)Hazardous Duty Pay;
(7)Instructor's Duty Pay;
(8)Parachutist's Pay; and (9) Hardship Pay; and (d)Collateral Allowances, namely (1) Special Clothing Allowance;
(2)Cold Winter's Clothing Allowance and Cold Weather Clothing Maintenance Allowance;
(3)Winter Clothing Allowance;
(4)Initial Enlistment and Reenlistment Allowance; and (5) Laundry Allowance.

Section 4. Retirement Benefits, Pensions, Death and Disability Benefits

Benefits received from and enjoyed under the Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS) in accordance with the provisions of Presidential Decree No. 361, as amended by Presidential Decree No. 1909, as well as death and disability benefits enjoyed by AFP personnel as provided by law, shall likewise be exempted from any tax of whatever nature.

Section 5. Exemption from Attachment, Levy, and Execution

All benefits, pay and allowances mentioned herein shall likewise not be subject to attachment, levy and execution.

Section 6. Rules and Regulations

The Secretary of Finance in consultation with the Commissioner of Internal Revenue is hereby authorized to promulgate such rules and regulations as may be necessary to implement the provisions of this Act.

Section 7. Repealing Clause

All laws, decrees, executive orders, letters of instruction, letter of implementation, rules and regulations and other issuances inconsistent with any provisions of this Act are hereby repealed, modified, superseded or amended accordingly.

Section 8. Separability Clause

If any provision of this Act or the application of such provision to any person or circumstances is held invalid for any reason, the remainder of this Act or the application of such provisions to other persons or circumstances shall not be affected thereby.

Section 9. Effectivity

The effectivity of this Act shall retroact to January 1,2001.

Approved,

| (Sgd.) AQUILINO Q. PIMENTEL JR. President of the Senate | (Sgd.) FELICIANO BELMONTE JR. Speaker of the House of Representatives |

This Act which originated in the House of Representatives was finally passed by the House of Representatives and the Senate on April 27, 1999 and November 15, 2000, respectively.

LUTGARDO B. BARBO

Secretary of Senate

ROBERTO P. NAZARENO

Secretary General House of Representatives

Approved: March 22, 2001

GLORIA MACAPAGAL-ARROYO

President of the Philippines

For information and research only, and not legal advice. This text may not reflect later amendments. For certified copies, refer to the Official Gazette or the issuing agency.