Pay from longer maternity leave is tax-free – BIR

Robie de Guzman   •   October 17, 2019   •   964

Filipino mothers breastfeed their newborn babies at a maternity ward of the Fabella Memorial Hospital in Manila, Philippines, 10 July 2008. EPA/AKIRA LIWANAG

MANILA, Philippines – Working women and expectant mothers in the private sector can now enjoy their 105-day maternity leave as the salary differential provision in the law is not subject to tax.

The Bureau of Internal Revenue (BIR) has clarified that the expanded maternity leave for female workers is considered as a benefit, which means it should be exempted from withholding or income taxation.

The BIR made the clarification in its memorandum circular 105-2019 posted on its website last week.

“The maternity benefit of the female worker has been expanded from the previous 100% of the average daily salary credit to a full pay or salary which includes now the salary differential as its component, aside from the added duration of the maternity leave. Accordingly, it is therefore clear that salary differential is considered as a benefit,” reads the circular signed by BIR Commissioner Caesar Dulay.

The BIR said it took into account the law’s provisions and implementing rules, as well as issuances from the Department of Labor and Employment (DOLE) and the Social Security System (SSS).

The Expanded Maternity Leave Act, signed by President Rodrigo Duterte in February, grants working mothers in private and public sectors – regardless of civil status –105 days of paid maternity leave with option to extend for 30 days without pay.

Solo mothers can get additional 15 days of leave.

The measure also allows the mother to transfer seven days of her 105-day maternity leave to the father to extend his paternity leave.

Senator Risa Hontiveros, the law’s author and principal sponsor, welcomed the BIR clarification calling it good news to all working mothers and their families.

“This is welcome news indeed. Now mothers and their families will not only be able to enjoy the biological benefits of the EML law, but their financial welfare is also looked after, particularly those who earn just enough to meet basic needs and still feel the pinch in times of economic strain. This is truly an early Christmas gift to all working mothers and their families,” Hontiveros said in a statement.

Resolution urging BIR to suspend tax memo on online sellers filed at Senate

Robie de Guzman   •   June 23, 2020

MANILA, Philippines – Senator Risa Hontiveros on Tuesday said she has filed a resolution seeking for the suspension of the Bureau of Internal Revenue (BIR) memo that mandates online sellers to register and pay taxes amid struggles of finding alternative means to earn money during the coronavirus disease (COVID-19) pandemic.

In a statement, Hontiveros said she recently filed Senate Resolution No. 453 which urges the BIR to suspend the memo’s implementation “until the end of the year.”

The resolution also sought for a Senate investigation into the agency’s efforts to subject online sellers to taxation and registration requirements, which was criticized by many for being “ill-timed and insensitive.”

“Kung hahabulin ng pamahalaan ang malalaking digital entrepreneurs, dapat siguraduhing hindi nito pahihirapan ang maliliit na online seller na dumidiskarte ngayon para kumita. Our revenue policies should be sensitive to the struggles of Filipinos trying to make ends meet in these difficult times,” Hontiveros said.

Malacañang earlier clarified that not all online sellers will need to pay taxes but should still register their business and update their tax records. The Palace also stressed that those earning less than P250,000 annually are tax exempt, referring to a provision of the Tax Reform Acceleration and Inclusion (TRAIN) Law which states that only income above P250,000 is subject to taxes.

The Department of Trade and Industry also backed BIR’s move, saying the registration requirement only aims to build a registry of online sellers.

While Hontiveros noted Malacañang’s clarification, she said the registration requirement may still cost online sellers thousands of pesos in fees.

“It is best for everybody’s interests if the BIR suspends the implementation of the memo until December 31, 2020, while government agencies review and craft better policy guidelines on how online entrepreneurs should register or pay taxes,” she said.

The senator also pushed for a digital platform for BIR registration instead of requiring applicants to physically troop to its offices.

“Magkaroon muna ng digital platform for registration. Requiring people to congregate at the BIR’s offices likewise exposes them to the health risks associated with COVID-19 and might also lead to further spreading the disease and prolonging the pandemic,” she said.

She also reiterated her earlier call for the government to prioritize the collection of tax duties of Philippine Offshore Gaming Operators (POGO) rather than individuals who are making temporarily living via social media channels to weather the economic effects of the pandemic.

“It is only proper for the BIR to ensure that big digital businesses earning millions in profits – such as Philippine Online Gaming Operators (POGOs) – are paying proper taxes as required by law. Pero sana, huwag na pahirapan ang mga kababayan nating dumidiskarte para makakain,” Hontiveros said.

Gov’t urged to grant incentives, not taxes to online sellers

Robie de Guzman   •   June 22, 2020

MANILA, Philippines – Senator Sherwin Gatchalian on Monday called on the government to extend fresh capital and other financial assistance, instead of implementing “untimely” new taxes to online entrepreneurs amid the novel coronavirus disease (COVID-19) pandemic.

In a statement, Gatchalian said online sellers should be covered by the microfinancing program of the Small Business Corporation (SB Corp.) under the Department of Trade and Industry to help them grow their business and recover from the economic effects of the pandemic.

The senator noted that DTI’s SB Corp. has a P1 billion Enterprise Rehabilitation Financing facility under the Pondo sa Pagbabago at Pag-asenso (Covid19 P3-ERF) to support micro and small businesses affected by the COVID-19 crisis.

The microfinancing program offers a minimal interest rate of not more than 2.5% per month with no collateral requirement.

Micro enterprises with asset size of not more than PhP3 million may borrow PhP10,000 up to PhP200,000 while small enterprises with asset size of not more than PhP10 million may borrow a higher loan amount but will not exceed PhP500,000.

“Ang DTI ay dapat magbigay pa nga ng puhunan sa mga Pilipino na nawalan ng trabaho at gustong makaahon sa kahirapan sa pamamagitan ng pagnenegosyo sa online. Sa ganitong panahon ng pandemya, mas magandang nasa tahanan lang sila at nag-nenegosyo. Nabibigyan pa nila ng trabaho ang mga delivery service riders.” Gatchalian said.

“Hindi lang basta ayuda ang hinihingi ng mga negosyanteng ito. Ang hinihingi nila ay malaya silang bigyan ng oportunidad na makapag-negosyo para may kita sila,” he added.

Gatchalian, vice chairman of the Senate committee on economic affairs, issued the statement following Bureau of Internal Revenue’s (BIR) move to require online sellers to register their business until July 31, and pay taxes if they are earning higher than P250,000 a year.

The lawmaker believes that registering businesses with the BIR is ineffective since its system requires an applicant’s physical presence at this time when people are still being restricted from leaving their homes.

“Nakita ko na hindi rin handa ang ating pamahalaan na buwisan ang ating mga maliliit na negosyante dahil yung ultimong pagre-rehistro ay hindi pa sila handa kaya huwag na nating ipilit sa ganitong panahon ng pandemya, dahil hindi lang marami ang naghihirap kundi marami rin ang natatakot na lumabas ng kanilang bahay,” he stressed.

Aside from providing capital, Gatchalian also urged the DTI to make use of the Philippine Innovation Law to enhance the competitiveness of these online sellers.

The law aims to harness innovation efforts to help the poor, the marginalized, and MSMEs to be a part of the domestic and global supply chain.

BIR urged to review, re-write memo on online seller registration

Robie de Guzman   •   June 17, 2020

MANILA, Philippines – Senator Risa Hontiveros on Wednesday urged the Bureau of Internal Revenue (BIR) to ‘withdraw, review, and re-write’ its memorandum circular on the registration and taxing of online sellers.

“Naging magulo para sa mga online sellers ang memo mula sa BIR. Mabuti pang bawiin, i-review, at i-rewrite muna ng ahensiya ang guidelines na nilabas nila,” Hontiveros said in a statement.

The senator said BIR’s memorandum circular 60-2020 released early this month, alarmed small online sellers and was criticized by some lawmakers as “ill-timed” and “insensitive.”

BIR’s circular notified all persons doing business and earning income through the use of any electronic platforms and media, and other digital means to register their businesses pursuant to Section 236 of the National Internal Revenue Code (NIRC) by July 31, 2020.

“As of today, RMC 60-2020 is still enforceable. Strictly speaking, its text still mandates all, including small online sellers, to register with the BIR,” she said.

“Kung may deadline man, sana ay i-urong muna dahil nasa panahon tayo ng matinding krisis,” she added, stressing that any clarifications about the said memorandum should be put in writing.

Hontiveros’ remarks came after the Department of Trade and Industry clarified that small online sellers or those who earn P250,000 and below annually are exempted from paying taxes with the BIR.

“Dapat maging malinaw sa BIR circular ang mga exemptions para sa mga small online sellers at para sa mga nag-o-online selling bilang pantawid ngayong marami ang nawalan ng trabaho at kita,” Hontiveros said.

The senator also stated that the enforcement of the BIR circular may force small online sellers to shell out hefty amount of money to register and avoid penalties.

She noted that although small online sellers may be exempt from paying income taxes, the said circular requires them to not only physically troop to BIR offices, but also spend around P2,260 to fully comply with all documentary requirements and at least P1,500 for the printing of receipts.

“If the circular is still enforced and if we are to strictly follow government policy, online sellers will have to shell out at least PhP 2,260 pesos each just to register,” Hontiveros said.

“DTI certification, BIR’s own registration fee, and payment for printing of receipts will cost roughly 2,260 pesos in total,” she added.

“May dagdag-gastos din na at least 1,500 pesos kung magpapa-imprenta ulit ng resibo. May pwedeng dagdag-gastos din sa pag-file ng financial report quarterly. Mahirap yan para sa isang small-time online seller na dapat ay may proper documentation na ang kita niya ay less than 250,000 pesos annually.”

She noted that the COVID-19 pandemic has left a record number of Filipinos jobless, with the Philippine Statistics Authority reporting 7.3 million unemployed adults in April.

“The country’s economic recession due to the COVID-19 pandemic is driving millions into unemployment. Many Filipinos are turning to online selling to make ends meet. We should not punish them with confusing guidelines and hefty fees,” she said.

Instead of imposing new obligations that may discourage online sellers, Hontiveros said the government should promote and protect online selling as a safe and efficient means of earning income for Filipinos.

It should also address emerging issues like online fraud, ‘joy-dibbing’ and other abusive trade practices of sellers or customers alike.

Hontiveros also reiterated her call to the government to intensify its efforts of collecting unpaid taxes from the Philippine Offshore Gaming Operators instead of taxing online sellers.

“Unahin nilang singilin ang 50 billion pesos na reported na utang na taxes ng mga POGO, bago nila pagtuunan ng pansin ang kakarampot na kita ng mga online seller,” she said.

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