Be updated on our latest insights

With Christmas just a few weeks away, most of us are preparing decorations and buying presents despite the quarantine. This year’s holiday season will be much different from the past celebrations. Most businesses, particularly the micro, small and medium enterprises, which used to get their fair share of consumer spending, were forced to temporarily close and retrench employees due to the pandemic.

In recent weeks, the Philippines, mainly Luzon, was ravaged by a series of typhoons that left the Bicol Region in ruins and submerged the Cagayan Valley in floods. Homes and livelihoods were lost because of these calamities.

Last week seemed like a bad case of déjà vu with parts of Metro Manila being under water again, some 11 years ago after the last serious flood. TV stations broadcast images of people trapped on their roofs waiting for rescue, pets being rescued by their humans, and government resources stretched to the limit in responding to the needs of those devastated by the typhoon.

Twenty years ago, RA 8792 (the Electronic Commerce Act) was signed into law. The government was preparing for the digital age as the world moved on to information and technology-based means of communication. It is safe to say that the progress towards using information technology for business did not escalate the way it was predicted. The cost involved in ensuring integrity of electronic documents has been one of the challenges of the business sector and the government in transforming to fully IT-based operation. Before the pandemic, the business sector relied on face-to-face interaction, including inquiries, follow-up and manual submission of reporting requirements to the government. The latter still uses traditional means of communication when sending notices to taxpayers as well. For signatures on reports submitted to the government, wet-ink signatures on documents have been consistently and strictly required.

The pandemic has dominated headlines for the past 10 months. Unfortunately, there are other challenges apart from this crisis. As I write this, super typhoon Goni (Philippine name: Rolly) is hammering southeastern Luzon with strong winds, high waves and floods. This is another blow to the already troubled economy.

Transfer pricing is the latest tax-related compliance issue in the Philippines after the Bureau of Internal Revenue (BIR) required all taxpayers with related-party transactions to file the Information Return on Related-Party Transactions (BIR Form 1709) alongside supporting documents including the transfer pricing documentation (TPD) as an attachment to the annual income tax return.

It has been around 217 days or close to seven months, yet the COVID-19 pandemic is still with us in the form of quarantines and lockdowns of varying levels on most people except essential workers. Consequently, we have seen how operations have been disrupted for many businesses — a growing number of companies with office-based work, including our firm, have continued with and strengthened work-from-home (WFH) arrangements to keep things business as usual in these unusual times.

The COVID-19 pandemic caused not only a global health crisis, but also economic slowdown and disrupted business operations. The adverse economic impact resulted in companies, if not going out of business, employing cost-reduction measures by reducing headcount using various means.