Tax Exemption for AFP Allowances and Benefits

Section 2 declares that Section 5, Article XVI of the 1987 Constitution makes professionalism and adequate remuneration and benefits for members of the Armed Forces a prime concern of the State.
Section 2 directs the government to provide adequate support and incentives to members of the Armed Forces of the Philippines (AFP).
Section 2 grants tax exemption on AFP personnel’s longevity pay, mandatory allowances, collateral pay and collateral allowances, and other benefits as provided for by law.

Section 3 provides that the listed pay and allowances of AFP personnel shall not be included in gross income and are exempt from taxation under Title II of Republic Act No. 8424.
Section 3 exempts longevity pay from gross income inclusion and taxation.
Section 3 exempts mandatory allowances, specifically: (1) Cost of Living Allowance; (2) Personnel Economic Relief Allowance; and (3) Hazardous Allowance.
Section 3 exempts collateral pay, specifically: (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.
Section 3 exempts collateral allowances, specifically: (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 exempts benefits received from and enjoyed under the Armed Forces of the Philippines Retirement and Separation Benefits System (AFP-RSBS).
Section 4 ties AFP-RSBS benefits to the provisions of Presidential Decree No. 361, as amended by Presidential Decree No. 1909.
Section 4 exempts death and disability benefits enjoyed by AFP personnel as provided by law.
Section 4 provides that these benefits are exempt from any tax of whatever nature.

Section 5 provides that all benefits, pay and allowances mentioned in Republic Act No. 9040 are not subject to attachment, levy and execution.

Section 6 authorizes the Secretary of Finance, in consultation with the Commissioner of Internal Revenue, to promulgate rules and regulations necessary to implement Republic Act No. 9040.

Section 7 repeals, modifies, supersedes, or amends laws, decrees, executive orders, letters of instruction, letter of implementation, rules and regulations, and other issuances inconsistent with Republic Act No. 9040.
Section 8 provides separability: if any provision or its application is held invalid, the remainder of the Act or its application to other persons or circumstances is not affected.