Physical exhaustion, sleepless nights, and anxiety are among the words that some might use to describe the experience of taxpayers and their accountants in this tax season just concluded, an ordeal heightened by the effects of the pandemic and lockdowns.
On March 31, 2021, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Order (RMO) 14-2021 which outlines the new procedures for availing of relief from double taxation under relevant tax treaties on all items of income derived by nonresident taxpayers from Philippine sources.
Without a doubt, globalization of businesses has been thriving. Multinational and domestic firms alike are often engaged in multiple transactions with and on behalf of each other in a bid to achieve cost efficiency due to readily available resources and administrative convenience or practical exigencies. These types of transactions are usually made without any intention to make profits.
And so, it came to pass. The Corporate Recovery and Tax Incentives for Enterprises (CREATE) Bill, though with vetoed provisions, was finally signed by the President on March 26 as Republic Act No. 11534. After years of waiting for the lowering of the corporate income tax and the rationalization of fiscal incentives, we now have the law just waiting to be published to be effective.
The sleepless nights of most accountants will end less than a month from now, as the last day of filing annual income tax returns (ITR) for corporations whose taxable year ended December 31, 2020 is on the 15th of April. However, most of these companies are hoping that this due date will still be extended because, starting this week, the National Capital Region, along with other nearby provinces, will be observing a strict form of community quarantine. On top of this, some taxpayers are still struggling to comply with new requirements on transfer pricing (TP) and the impact of the Corporate Recovery and Tax Incentives (CREATE) Bill which is expected to be signed or lapse into law soon.
The pandemic has highlighted the opportunity to pursue digitalization at all levels. From the point of view of employees working from home, digital transformation is not just relevant but also convenient. Electronic signing of contracts and letters, such as engagement letters, reports, and closure letters, to name a few, are some of the initiatives that P&A Grant Thornton has implemented as it adapts to the new normal in business practices.
The COVID-19 vaccine is just around the corner but the challenges of the first quarter must still hold our attention. The news is full of headlines on the Philippines’ budget deficit growing to a record P1.37 trillion and the debt-to-GDP ratio rising to 54.5% at the end of 2020. The increased need to address the burgeoning deficit and debt leaves the government scrambling to raise revenue.
Tax authorities and firms are now anticipating a more accessible and convenient mode of filing and payment of taxes in the new normal. This comes on the heels of an announcement made by the Bureau of Internal Revenue (BIR) that it is planning to offer 24/7 online tax services in a bid to ramp up its digital transformation initiatives.
