Special InTAX: September 2020 Issue 1 | Volume 6
InTAX is an official publication of R.G. Manabat & Co.'s Tax Group
InTAX is an official publication of R.G. Manabat & Co.'s Tax Group
Republic Act (RA) No. 11494 or the “Bayanihan to Recover as One Act”
On 11 September 2020, President Rodrigo Roa Duterte signed into law the Bayanihan to Recover as One Act, providing for the COVID-19 response and recovery interventions and providing mechanisms to accelerate the recovery and bolster the resiliency of the Philippine economy, providing funds therefore, and for other purposes.
The salient points of the RA are as follows:
1. Affirmation of the existence of a continued state of national emergency over the Philippines due to COVID-19.
2. Provision of a “COVID-19 Special Risk Allowance”, exempt from income tax, by the national government for all public and private health workers directly catering to or in contact with COVID-19 patients for every month that they are serving during the state of national emergency.
3. Provision of compensation to public and private health workers, exempt from applicable taxes, who have contracted COVID-19 in the line of duty with retroactive application to 1 February 2020.
4. Provision of financial relief to Agrarian Reform Beneficiaries in the form of condonation of payment of interests, penalties, and surcharges of loans used for land acquisition to any and all GOCCs including the Land Bank of the Philippines (LBP) and the restructuring of the remaining original principal value without interest.
5. Provision of Actual Hazard Pay, exempt from income tax, to all engaged Human Resources for Health. This Actual Hazard Pay shall be in addition to the Hazard Pay granted under RA No. 7305 and the COVID-19 Special Risk Allowance.
6. Liberalization of the grant of incentives for the manufacturing or importation of critical or needed equipment or supplies or essential goods, including healthcare equipment and supplies: Exemption from import duties, taxes, and other fees for the manufacturing or importation of critical equipment or essential goods shall be determined by the BOC and the BIR (effective since 25 June 2020).
7. Extension of assistance to critically impacted businesses in the transportation industry via provision of cash or loans or grants which may include removal of applicable local taxes and fees and charges imposed by any regulatory agency and Local Government Unit (LGU).
8. Moving of statutory deadlines and timelines for the filing and submission of any document, the payment of taxes, fees, and other charges required by law, and the grant of any benefit, in order to ease the burden on individuals under Community Quarantine.
9. Directing all banks, quasi-banks, financing companies, lending companies, real estate developers, insurance companies providing life insurance policies, pre-need companies, entities providing in-house financing for goods and properties purchased, asset and liabilities management companies and other financial institutions, public and private, including the Government Service Insurance System (GSIS), the Social Security System (SSS) and Home Development Mutual Fund (Pag-IBIG Fund), to implement a one-time sixty (60)-day grace period to be granted for the payment of all existing, current and outstanding loans falling due, or any part thereof, on or before 31 December 2020, including, but not limited to, salary, personal, housing, commercial, and motor vehicle loans, amortizations, financial lease payments and premium payments, as well as credit card payments, without incurring interest on interests, penalties, fees, or other charges and thereby extending the maturity of the said loans. Provided that this shall not apply to interbank loan and bank borrowings and that any loan term extension or restructuring under this provision shall be exempt from Documentary Stamp Tax (DST).
10. Encouraging the Bangko Sentral ng Pilipinas (BSP) to allow private banks and financial institutions to: (1) reallocate any unutilized loanable funds to housing loans; and (2) to grant subsidy to the home loan borrowers at the rate equivalent to the gross receipt tax imposed on banks and financial institutions on their interest income.
11. Provision of regulatory relief to the critically impacted creative sector by tasking the Department of Trade and Industry (DTI) and the Department of Interior and Local Government (DILG) to review the imposition of the amusement tax. The President shall have the power to suspend, reduce or waive the imposition of the fees and charges as recommended by the DTI and DILG for a period of six (6) months;
12. In order to address delays in the implementation and immediately stimulate economic activity and generate employment during the state of national emergency as declared by the President, notwithstanding any law to the contrary, permits, licenses, certificates, clearances, consents, authorizations or resolutions by national government agencies, except those relating to taxes, duties, border control and environmental laws and regulations, may be waived for private projects that are nationally significant or those with high economic returns or high employment potential as may be determined by a committee to be chaired by the Secretary of Department of Finance (DOF), with the Secretary of DTI and Secretary of Department of Environment and Natural Resources (DENR) as members and the secretariat of the committee shall be the DOF: Provided that this authority shall be valid during the state of national emergency as declared by the President and the economic rehabilitation period or until the last day of June 2022, whichever is later: Provided, finally, that no court, except the Supreme Court, shall issue any temporary restraining order, preliminary injunction or preliminary mandatory injunction against the committee and the completion or operation of the project granted regulatory relief;
13. Provision of regulatory relief during the effectivity of this Act for business entities by directing the Securities and Exchange Commission (SEC) and other regulatory agencies to desist from imposing fines and other monetary penalties for non-filing, late filing, failure to comply with compulsory notification and other reportorial requirements relating to business activities and transactions that promote continuity and capacity-building in all sectors of the economy.
14. Exemption of personal computers, laptops, tablets, or similar equipment appropriate for use in schools, donated for distribution to public schools regardless of level, including State Universities and Colleges (SUCs) and vocational institutions under Technical Education and Skills Development Authority (TESDA), from import duties and taxes, including donor's tax;
15. Notwithstanding the provision of existing laws to the contrary, the net operating loss of the business or enterprise for taxable years 2020 and 2021 shall be carried over as a deduction from gross income for the next five (5) consecutive taxable years immediately following the year of such loss.
16. Retirement benefits received by officials and employees of private firms, whether individual or corporate, from 5 June 2020 until 31 December 2020 shall be excluded from gross income and shall be exempt from taxation.
17. Tax on Sale, Barter or Exchange of Shares of Stock Listed and Traded Through Initial Public Offering. - Section 127(B) of the National Internal Revenue Code of 1997, as amended, is repealed.
Attached is the full text of the Republic Act.
(RGM & Co. Note: The RR was published in the Official Gazette on 14 September 2020.)
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.