Special InTAX: October 2020 Issue 1 | Volume 2

Department of Finance

 

The Department of Finance (DOF) issued the following:

Revenue Regulations (RR) No. 26-2020, 06 October 2020, providing for tax incentives for donations of personal computers, laptops, tablets, or similar equipment for use in public schools starting from the effectivity of Republic Act (RA) No. 11494, otherwise known as the “Bayanihan to Recover As One Act (BRAO)”, on 15 September 2020 up to 19 December 2020.

Donors of identified equipment during the abovementioned period shall be entitled to the following tax incentives:

• Deduction from gross income of the amount of donation (subject to limitations under Section 34H of the Tax Code, as amended and compliance to conditions set forth in the RR);
• Exemption from donor’s tax pursuant to Sections 101(A)(2) and (B)(2) of the Tax Code, as amended;
• In case of foreign donations, the importation thereof shall be exempt from Value-Added Tax (VAT); provided that the importer/consignee is other than the Department of Education (DepEd), Commission on Higher Education (CHED) or the Technical Education and Skill Development Authority (TESDA), the importer should present a Deed of Donation duly accepted by the abovementioned agencies in order for the imported articles to be exempted from VAT;
• The above importations shall also not be subject to the issuance of Authority to Release Imported Goods (ATRIG) under Revenue Memorandum Order (RMO) No. 35-2002, as amended, and may be released by the Bureau of Customs (BOC) without the ATRIG. The release of goods from BOC custody without ATRIG may be subject to post audit investigation by the Bureau of Internal Revenue (BIR); and
• In case of local donations where the equipment is originally intended for sale or use by the donor in the ordinary course of business, the same shall not be treated as transaction deemed sale subject to VAT under Section 106(B)(1) of the Tax Code, as amended. Any input tax attributable to the purchase of the donated equipment not previously claimed shall be creditable against any output tax. These rules shall also apply to donations by ECOZONE locators to the abovementioned agencies.
• The amount of donation shall be the actual acquisition cost of the equipment donated. If the equipment had already been used prior to such donation, its depreciated value shall be taken into consideration.
   

The RR shall be effective immediately after publication in the Official Gazette or in a newspaper of general circulation, whichever comes first.

RR No. 27-2020, 06 October 2020, suspending the deadline for filing VAT refund claims and the ninety (90) – day processing thereof pursuant to Section 4(tt) of the BRAO.

The due dates for filing claims for VAT refund whose prescriptions fall during the effectivity of the BRAO shall be suspended until the next adjournment of the 18^th Congress on 19 December 2020. However, to prevent the influx of numerous filers, the deadlines are extended to the following dates:

Taxable Quarter	Deadline
Calendar quarter (CQ) ending 30 September 2018	31 December 2020
Fiscal quarter (FQ) ending 31 October 2018	15 January 2021
FQ ending 30 November 2018	31 January 2021
CQ ending 31 December 2018	15 February 2021

 

The 90-day processing of VAT-refund claims is also suspended during the effectivity of the BRAO or until the next adjournment of the 18^th Congress.

For areas where the Enhanced Community Quarantine (ECQ) or Modified ECQ (MECQ) is in force beyond the effectivity of the BRAO, the following shall be observed:

1. If the filing deadline for the VAT refund claim falls within the ECQ or MECQ period, filing of the claim shall be extended for thirty (30) days after the lifting of the ECQ or MECQ.

2. The 90-day processing period is suspended upon the declaration of ECQ or MECQ in the area and shall resume thirty (30) days after the same has been lifted.

3. In cases where the processing office requires temporary closure in view of COVID-19 cases and to prevent further spread at the affected office, the 90-day processing of VAT refund claims shall be suspended until the last day of the quarantine period for the affected processing office.
 

The RR shall be effective immediately and shall be in full force and effect only until the next adjournment of the 18^th Congress on 19 December 2020, except for Section 5 which shall continue to take effect until the declaration of national emergency on COVID-19 has been lifted by the President.

(RGM & Co. Note:  The RRs were published in Malaya Business Insight on 08 October 2020.)

 

Attached are the full texts of the issuances.

RR_2020-27_SuspendingDeadlinesforVATRefunds

RR_2020-26_DonationsofEquipmentforPublicSchools