RMC No. 20-2021: Circularizes RA No. 11494 (An Act Providing for COVID-19 Response and Recovery Interventions and Providing Mechanisms to Accelerate the Recovery and Bolster the Resiliency of the Philippine Economy, Providing Funds Therefor, and for Other Purposes)

Key points

1. Grants and deadlines. Section 4(gg)(2) allows grants for regulatory fees to critically impacted transport businesses, for not more than six (6) months, chargeable against the fund created for it. Section 4(tt) provides for moving statutory deadlines for filings, payments and benefits for people under community quarantine.
2. Documentary Stamp Tax and donations. Loan term extensions or restructuring under Section 4(uu) are exempt from Documentary Stamp Taxes, except for interbank loans and bank borrowings. Computers, laptops, tablets or similar school equipment donated to public schools, including SUCs and TESDA vocational institutions, are exempt from import duties and taxes, including Donor’s Tax, under Section 4(zzz).
3. Net operating loss carry-over. The net operating loss for taxable years 2020 and 2021 is a deduction from gross income for the next five (5) consecutive taxable years. Section 4(bbbb) stays in effect after the Act expires.
4. Retirement benefits. Under Section 5, retirement benefits received by officials and employees of private firms from June 5, 2020 to December 31, 2020 are excluded from gross income and exempt. Re-employment in the same firm within twelve (12) months is proof of non-retirement and makes the benefits taxable, and willful evasion is penalized under Section 255 of RA No. 8424, as amended.
5. Repeal of share sale tax. Section 6 repeals the tax on sale, barter or exchange of shares of stock listed and traded through initial public offering under Section 127(B) of the NIRC of 1997, as amended.
6. Funding sources and offshore gaming. Under Section 11, BIR collections that fund the Act’s measures include excess and new revenue collections, the five percent (5%) Franchise Tax on offshore gaming licensees’ gross bets or turnovers, and income tax, VAT and other taxes on their non-gaming income. Taxes are computed on the peso equivalent at the prevailing official exchange rate at payment, and the BIR implements closure orders against those who fail to pay.

Who is affected

• Critically impacted transport businesses
• Private firm employees who received retirement benefits
• Offshore gaming licensees, operators, agents and service providers

Deadlines and effectivity

• Retirement benefits exempt if received from June 5, 2020 to December 31, 2020
• Net operating loss for taxable years 2020 and 2021 carried over for five (5) consecutive years
• Grant availment: not more than six (6) months