Saturday, August 1, 2009

Visa Avert: The Special Resident Retiree's Visa (SRRV)

By Siesta-friendly

The Philippine Retirement Authority (PRA) exists by virtue of E.O. 1037 (issued July 4, 1985) which was meant to create the Philippine Retirement Park System. In the EO, the following was declared a national policy:

“[t]he development and promotion of the Philippines as a retirement haven as a means of accelerating the social and economic development of the country, strengthening its foreign exchange position at the same time providing further best quality of life to the targetted [sic] retirees in a most attractive package”. [emphasis supplied]

The PRA thus came up with the Special Resident Retiree's Visa (SRRV). However, looking at the benefits granted to SRRV holders, the aim of providing a “retirement haven” and the “best quality of life” to retirees “in a most attractive package” seems to have been missed.

We can’t know the motives behind the PRA’s policies but we can show you why we believe the SRRV benefits are not pursuant to the declared national policy. The information below may be obtained form the PRA website.

The Deposit

First, it’s important to know that a crucial consideration in availing of the SRRV is the locked-in deposit required as follows:

1. If the applicant is a pensioner and at least 50 years old – a time deposit of USD10,000.00 plus a monthly pension of USD800.00 for a single applicant and USD1,000.00 for a married couple.

2. If the applicant has no pension and is:

a) 35 to 49 years old – USD50,000.00 time deposit,

b) 50 years old and above – USD20,000.00 time deposit,

c) A former Filipino citizen and at least 35 years old, regardless of the number of dependents – USD1,500.00, or

d) Foreign ambassadors who served and retired in the Philippines, or a current and former staff member of an international organizations including the Asian Development Bank and at least 50 years old - USD1,500.00

The applicant can bring with him, without additional deposit, his spouse and an unmarried child below 21 years old or, if the spouse is not joining, 2 unmarried children under 21 years of age. Additional children with the same qualifications may also be allowed to join provided there is an additional deposit of USD15,000.00 per child. Former Filipino citizens are exempt from this requirement.

The retiree is not allowed to withdraw the deposit while he is an SRRV holder and the depository bank will not allow the withdrawal except upon written approval by the PRA (when the holder is ending the SRRV or in the 3 instances listed below). Think of it as a visa-and-hold-over-departure-order-(against the deposit)–in-one. As consolation, the interest from the time deposit may be withdrawn without PRA clearance.

Annual Fees

It doesn’t stop there. The annual fees are something else too. There’s the:

1. Investment Management Fee of: a) USD750 per year for the $50,000.00 Deposit, b) USD500 per year for the USD20,000.00, USD10,000.00 and USD1,500.00 Deposits;

2. A visitorial fee of 0.5 – 1% of the total amount withdrawn per year; and

3. A USD15 per year Harmonization Management Fee of 1.5% of the withdrawn amount of deposit per year.

Allowable Withdrawals

Now, let’s check out the only 3 allowed withdrawals from the time deposit. Meaning, your precious locked-in savings can only be spent in the following ways:

a. Purchase, acquisition and ownership of a condominium unit,

b. Long-term lease of house and lot, condominium or townhouse for not less than 20 years, and

c. Purchase, acquisition and ownership of golf or country club shares

However, former Filipinos can purchase a lot not exceeding 5,000 square meters in urban areas or 3 hectares in rural areas for business use or other purposes.

So, is it worth it? Let’s say your time deposit is USD50,0000, you can’t use a cent of that to invest in any business. You can’t even buy a car with it or anything else for that matter (beyond the 3 ways allowed).

So with that in mind, let’s see if the SRRV benefits are worth the deposit.

SRRV benefits

Let’s go through the benefits:

1. Option to Retire Permanently, i.e., to live, work and study in the Philippines.

2. Multiple Entry Privileges, i.e., being allowed to travel in and out of the anytime.

Last time we checked, a foreigner doesn’t need an SRRV to avail of the above 2 benefits. Let’s move on.

3. Exemptions from:

a) Income tax over pension and annuities;

b) Exit and re-entry permits of the Bureau of Immigration (BI);

c) Annual registration requirement of the BI;

d) Customs duties and taxes on the importation of household goods and personal effects up to USD7,000.00;

e) Travel tax, for a Philippine stay of less than 1 year from last entry date; and

f) The I-Card which evidences the alien’s registration with the Bureau of Immigration. The I-Card also serves as the Emigration Clearance Certificate (ECC), Re-entry Permit (RP) and Special Return Certificate (SRC) which are the exit and re-entry permits under 3 b).

So, how valuable are these exemptions?

3 a) does not exempt the SRRV holder from his own country’s income tax on pension and annuities.

3 b) is redundant as we’ve already pointed out.

3 c) and e) only take a couple of hours to accomplish, each year. Annual registration only costs PhP310.00 while issuance of the I-Card costs USD50 and USD20 per annual renewal. Plus, there’s a PRA ID card anyway for which retiree pays USD10 a year.

Truth be told, the Customs duties and taxes can be considerable. And travel taxes can amount to a few thousand pesos especially if you have dependents.

Now, knowing all that we have mentioned and if, for some reason you still find that getting the SRRV is worth it, then let us discourage, er, advice you further on what you will need to do.

SRRV Requirements

The application requirements (apart from the application form, valid passport and ID photos) are as follows:

  1. Medical Examination Clearance which can be secured a) abroad (with English translation) duly authenticated by the Philippine Embassy/Consular Office, or b) in the Philippines.

  1. Police Clearance and National Bureau of Investigation (NBI) Clearance

a) Only the Police Clearance is needed if the applicant has stayed in the Philippines 30 days or less from date of last entry. It must be secured from the applicant’s country of origin (with English translation) duly authenticated by the Philippine Embassy or Consular Office.

b) Police Clearance (from the applicant’s country of origin) and NBI Clearance are needed if the applicant has stayed in the Philippines more than 30 days from date of last entry.

  1. Bank Certificate of Time Deposit Inwardly Remitted to any PRA Accredited Banks.

  1. If a pensioner, the applicant must submit i) Certification of Retirement Benefits issued by the concerned government and/or private entity which clearly states identity, date of effectivity of the payment of pension and the amount of monthly pension; and ii) Proof of monthly pension remitted to the Philippines.

  1. If married, the certificate of marriage and children’s birth certificate (or family register) must be submitted.

  1. Non-refundable Application Fees of USD1,400.00 or equivalent Philippine Peso for the principal holder, USD300 for each of the spouse and minor dependent.

There are other ways (i.e, other visas) allowing for stay in the Philippines without obtaining the SRRV. There are study, work and investment visas. It’s up to the applicant to figure out which way is worth it.


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