Special InTAX: October 2020 Issue 1 | Volume 1

Department of Finance

 

The Department of Finance (DOF) issued the following:

Revenue Regulation (“RR”) No. 23-2020, 14 September 2020, to implement Section 6 of Republic Act (“RA”) No. 11494, also known as the “Bayanihan to Recover as One Act”. RA No. 11494, repealed under Section 127 (B) of the National Internal Revenue Code (“NIRC”) of 1997, as amended, pertains to the tax on the Initial Public Offering (“IPO”) of shares of stocks. As such,  every sale, barter, exchange or other disposition through IPO of shares of stock in closely held corporations shall no longer be subject to tax.

RR No. 23-2020 shall be effective immediately.

RR No. 24-2020, 14 September 2020, to implement Section 4(uu) of RA No. 11494, on the exemption from Documentary Stamp Tax (“DST”) of loans extended or credits restructured.

RR No. 24-2020 shall cover all extensions of payments and/or maturity periods of all loans including, but not limited to, salary, personal housing, commercial and motor vehicle loans, amortizations, payments of financial lease, premiums, and credit cards, falling due, or any part thereof, on or before 31 December 2020, including the extension of maturity periods that may result from the grant of grace periods for these payments, whether or not such maturity period originally fall due on or before 31 December 2020. Further, the regulation also covers credit restructuring, micro-lending, including those obtained from pawnshops, and extensions thereof made on or before 31 December 2020.

As such, the above transactions are no longer subject to DST under Section 179, 195 and 198 of the NIRC, as amended.

However, interbank loans and bank borrowings shall be subject to the DST imposed under Section 179, 195 and 198 of the NIRC, as amended.

RR No. 24-2020 shall take effect upon publication of the same in the Official Gazette or in a newspaper of general circulation.

RR No. 25-2020, 30 September 2020, to implement Section 4 (bbbb) of RA No. 11494, relative to Net Operating Loss Carry-Over (“NOLCO”) under Section 34 (D)(3) of the NIRC, as amended.

Section 4 of RR No. 25-2020 provides that businesses or enterprises which incurred net operating loss for taxable years 2020 and 2021 shall be allowed to carry over the same as a deduction from gross income for the next five (5) consecutive taxable years, immediately following the year of such loss, unless otherwise disqualified. The net operating loss for the said taxable years may be carried over as a deduction even after the expiration of RA No. 11494, provided that the same is claimed within the next five (5) consecutive taxable years following the year such loss was incurred.

Further, the NOLCO shall be separately shown in the taxpayer’s Income Tax Return (“ITR”) as well as in the Reconciliation Section of the ITR. On the other hand, the unused NOLCO shall be presented in the Notes to the Financial Statements (“FS”), showing, in detail, the taxable year in which the net operating loss was sustained or incurred, and any amount thereof claimed as NOLCO deduction within the five (5) consecutive years immediately following the year of such loss. The NOLCO for taxable years 2020 and 2021 shall be presented in the Notes to the FS separately from the NOLCO for other taxable years. Lastly, failure to comply with the said requirements shall disqualify the taxpayer from claiming the NOLCO.

RR No. 25-2020 shall be effective immediately.

(RGM & Co. Note: The RRs were published in Malaya Business Insight on 2 October 2020.)

 

RR No. 23-2020

RR No. 24-2020

RR No. 25-2020