DOF asks Congress to extend tax relief for small businesses affected by COVID-19 crisis
Robie de Guzman • April 27, 2020 • 521
MANILA, Philippines – The Department of Finance (DOF) on Monday said it has asked Congress to approve a measure which will allow the government to absorb the losses of small businesses from economic fallout triggered by the novel coronavirus disease (COVID-19) crisis.
In a statement, Finance Secretary Carlos Dominguez III said the DOF has proposed to Congress the extend the net operating loss carryover (NOLCO) for small businesses to five years for losses incurred in 2020.
“This means that a small business’ losses this year may be deducted from their income for up to the next five years for tax purposes,” he said.
“The purpose of extending NOLCO is to give them more time to recoup their losses arising from implementation of the enhanced community quarantine (ECQ) and other measures to contain the spread of COVID-19,” he added.
Under the National Internal Revenue Code (NIRC), NOLCO applies to only three taxable years. The amendment to add two more years, would require congressional approval.
Dominguez said that based on DOF estimates, financial losses of small businesses will amount to P465.3 billion as a result of the ECQ and other containment measures that have forced them to temporarily close shop or to continue operating but with only a skeleton force.
Those operating in malls and other retail outlets are likely to incur losses of about P461 billion while those that have remained open but on skeleton force capacity will lose around P4.3 billion, the DOF said.
Based on the existing provisions of the NIRC, net operating losses, which had not been previously offset as a deduction, shall be carried over as a deduction from gross income for the next three taxable years immediately following the year of such loss.
If Congress agrees to the proposal to prolong NOLCO coverage, Dominguez said the government would be able to absorb up to P139.6 billion in forgone tax revenue from 2021 to 2025.
Dominguez said the proposal forms part of its program to help small businesses and their workers survive the economic repercussions of the COVID-19 pandemic.
He said the enhanced NOLCO for small enterprises to cover losses in 2020 is similar to the tax relief measures being adopted in the United States and China to provide relief to their respective business sectors.
MANILA, Philippines – The Bureau of Customs (BOC) is ramping up its campaign against rice smuggling even amid the novel coronavirus disease (COVID-19) pandemic by conducting raids on warehouses suspected of storing illegally imported grains following reports from concerned citizens, the Department of Finance (DOF) said.
In a statement on Tuesday, the DOF said that Customs Commissioner Rey Leonardo Guerrero has assured Finance Secretary Carlos Dominguez III that rice stocks imported by private traders during the pandemic would still be subject to “post-modification and post audit.”
This system will ensure that undervalued shipments are properly assessed and subsequently paid with the correct amount of duties and taxes.
Guerrero also said he had informed the Federation of Free Farmers (FFF) that because rice is considered a “critical” commodity, traders were allowed to avail of the Provisional Goods Declaration in processing their shipments at this time of the coronavirus pandemic.
The FFF earlier questioned the BOC’s assessment and valuation system on the entry of rice imports.
“The BOC has found the valuation of several rice shipments with provisional goods declaration to be quite low compared to the prevailing market prices,” Guerrero said in his report to Dominguez.
“But those are subject to post-modification and post-audit. And in the meantime, we are still conducting the post-modification, verifying the payments of rice because some of them are clearly undervalued. So we will catch up in the post modification and post-audit,” he added.
Under Customs Memorandum Order (CMO) No. 07-2020, if the Customs district/sub-port collector accepts a provisional goods declaration, the duty and tax treatment of the goods under provisional declaration will not be different from that of goods with complete declaration.
For the release of shipments under tentative assessment, the importer will be required to post the required security, whether in the form of surety bond or cash bond.
Guerrero said the customs bureau has also responded to reports by concerned citizens regarding warehouses suspected of storing smuggled rice stocks by immediately issuing letters of authority to enable BOC officers to inspect such warehouses and seize goods without the requisite importation permits.
“We actually raided them and we found out that many of these warehouses were operating legally and their stocks are covered by proper documents,” Guerrero said.
MANILA, Philippines – The Philippines and Japan signed an agreement for a 50 billion yen (around P23.3 billion) standby loan which aims to quickly disburse funding support for the government’s response to national calamities or health emergency, the Department of Finance (DOF) said.
In a statement, the DOF said Finance Secretary Carlos Dominguez III and Japan International Cooperation Agency (JICA) Chief Representative Eigo Azukizawa signed the deal Tuesday on the second phase of the post-disaster standby loan (PDSL).
Under this agreement, the DOF said the disbursement of the standby loan to the Philippines will be triggered by either of the following circumstances: the declaration of a state of calamity; or the declaration of a state of public health emergency.
In the case of the current COVID-19 pandemic or any other public health emergencies, the imposition of an enhanced community quarantine (ECQ) or its equivalent in the National Capital Region (NCR) or in any other highly urbanized area in the country will also trigger the disbursement of the loan, it added.
“The ongoing pandemic underscores the need to further improve our policy and institutional framework for disaster risk reduction and management. It likewise emphasizes the need to build our financial resilience against disasters and similar emergencies,” Dominguez said during the ceremonial signing of the loan deal at the DOF office in Manila.
The loan will be available for quick disbursement in tranches within three years once it is declared effective. It may be extended for an additional three-year period for up to four times.
The financing package under PDSL carries a fixed interest rate of 0.01 percent with a maturity of 40 years, inclusive of a 10-year grace period.
Japanese Ambassador to the Philippines Koji Haneda welcomed the agreement, saying that “as a calamity prone country like the Philippines, Japan fully understands the value of safeguarding lives, infrastructure and livelihood.”
The signing of this loan accord comes after a separate 50-billion yen loan inked by both countries in July for the COVID-19 Crisis Response Emergency Support Loan, which aims to assist the Philippine government’s efforts to contain the spread of the coronavirus disease and aid Filipinos most affected by the pandemic.
MANILA, Philippines – Taxpayers who have yet to pay their liabilities will now be able to settle them without an audit, the Department of Finance (DOF) said Monday.
In a statement, the DOF said it has issued Revenue Regulations No. 21-2020 for the implementation of the Voluntary Assessment and Payment Program (VAPP) for the taxable year 2018.
“The VAPP allows taxpayers to voluntarily pay their unpaid internal revenue tax liabilities–with or without an ongoing audit of or investigation into their finances– and those who do so will no longer be audited or investigated for 2018 for the tax types availed,” it said.
The finance department said the VAAP program covers all internal revenue taxes due for the taxable year ending December 31, 2018, and for fiscal year 2018 ending on the last day of July 2018 to June 2019.
It likewise covers one-time transactions (ONETT) such as the payment of estate taxes, donor’s taxes and capital gains taxes (CGT), as well as ONETT-related creditable withholding taxes (CWT) or expanded withholding taxes and documentary stamp taxes (DST), it added.
The DOF, however, said that taxpayers who wish to avail of the VAPP must generally pay the higher of a certain percentage of 2018 gross sales or 2018 taxable net income, based on the increase or decrease in total taxes paid from taxable years 2017 to 2018, subject to minimum amounts based on subscribed capital.
The department expressed hope that the program will increase its tax collections while providing taxpayers an easy and affordable way to settle their unpaid tax deficiencies.
The program will run until December 31, 2020, the DOF said.
UNTV is a major TV broadcast network with 24-hour programming. An Ultra High Frequency station with strong brand content that appeal to everyone, UNTV is one of the most trusted and successful Philippine networks that guarantees wholesome and quality viewing experience.