RR No. 29-2020: Implements the provisions of RA No. 11494 (Bayanihan to Recover as One Act) relative to the tax exemption of certain income payments

Key points

1. Retirement benefits. Retirement benefits of private-firm officials and employees received from June 5, 2020 to December 31, 2020 are excluded from gross income, if paid under a BIR-registered retirement plan. Re-employment in the same firm or related parties within twelve (12) months counts as proof of non-retirement, and the Regulations do not cover employees under Section 2.78.1(B)(1) of RR No. 02-98, as amended.
2. Re-employment tax treatment. If re-employment happens in 2020, the employer includes the benefits in 2020 gross income. If it happens in 2021 within the twelve-month period, the employee pays the tax within thirty (30) days from re-employment or on the second installment due date for 2020 Income Tax, whichever is later, without penalties.
3. Health worker payments. Also excluded are the COVID-19 Special Risk Allowance, Actual Hazard Duty Pay for Human Resources for Health, and compensation to health workers who contracted COVID-19 in the line of duty or died fighting it. The amounts are ₱1,000,000.00 for death, ₱100,000.00 for severe or critical sickness, and ₱15,000.00 for mild or moderate sickness.
4. Conditions on compensation. The compensation applies to amounts given from February 1, 2020 during the national emergency, paid to beneficiaries not later than three (3) months after confinement or death, with supporting documents. The death compensation is also excluded from the gross estate.
5. Lists to submit. The payments go in the annual Alphabetical List of Employees/Payees. A one-time list of recipients is due not later than January 15, 2021 to the RDO or Large Taxpayers Service office. Employers also submit a quarterly list of re-employed retirees within thirty (30) days from the close of each quarter in 2021 only.
6. Refund of tax withheld. Tax withheld from the retirement benefits must be refunded to employees. Tax withheld from health worker payments is refunded after the year-end adjustment, and any excess is applied against succeeding Withholding Tax remittances.

Who is affected

• Officials and employees of private firms who retired
• Public and private health workers
• Human Resources for Health (HRH)
• Employers and implementing government agencies

Deadlines and effectivity

• Retirement benefits received June 5, 2020 to December 31, 2020
• Health worker compensation given from February 1, 2020
• One-time list of recipients due not later than January 15, 2021
• Quarterly lists within 30 days from close of each quarter in 2021