Let's Talk Tax

Certainty in uncertain times

As the number of novel coronavirus disease 2019 (COVID-19) cases rapidly increased over the past few weeks, we have developed an obsession with figures and statistics. How many new cases have been reported in our country? What is the mortality rate? How many have recovered? How can we flatten the infection curve? What are the measures do we need to follow to avoid being infected?

These questions are an indication of life’s uncertainties. The COVID-19 outbreak has changed our lives in ways we could have never imagined. Our work, activities, and even relationships with each other are greatly affected.

The Department of Health has announced that the number of confirmed COVID-19 cases will skyrocket this week considering that the country has received 100,000 testing kits and more are coming in. Uncertainties about the rate of infection and when it will taper off have produced anxiety, fear, worry, and doubt in us.

On top of worrying about COVID-19, taxpayers are also facing uncertainties on their tax liabilities and responsibilities. The government’s adoption of necessary measures to contain the virus has placed many taxpayers in limbo. The imposition of enhanced community quarantine (ECQ), for example, makes it difficult for taxpayers to comply with filing and reportorial requirements with various government agencies. Some taxpayers cannot obtain the necessary documents while others face challenges in filing due to restrictions on movement, transportation, or people going to work. Even when the ECQ is lifted, delays will continue as a result of the growing backlog of unattended work, as many employees are working from home.

Fortunately, the government has listened to the clamor of the taxpayers. Many government agencies are issuing orders, guidelines, and memoranda extending reporting deadlines and easing the filing process.

Last week, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circulars extending the deadlines for submitting tax returns, availing of the tax amnesty for delinquencies, and submitting or filing documents and correspondence related to assessment cases, among other related filings.

The BIR also issued Bank Bulletin No. 2020-03 to all Authorized Agent Banks (AAB) on the acceptance of annual income tax returns for 2019 and other tax returns whose due dates fall within the ECQ period. AABs are now required to accept all tax payments, including out-of-district returns. Traditionally, taxpayers paid only through the AABs under the jurisdiction of the Revenue District Office (RDO) where the taxpayer is registered.

Taxpayers have long been requesting the ability to file and pay out of district. With advancements in technology, it is difficult to understand why taxpayers are required to pay only at certain banks within their RDOs. Hopefully, with the BIR allowing out-of-district payment during this ECQ period, they can also study how taxpayers can adopt this practice beyond the ECQ.

The Securities and Exchange Commission (SEC), on the other hand, issued SEC Memorandum Circular No. 10, prescribing guidelines on submitting through email the General Information Sheet (GIS), Audited Financial Statement (AFS), forms and documents required under existing laws, rules and regulations, and the recognition of electronic signature.

SEC Memorandum Circular No. 10 allows concerned corporations to file the required documents through email during the state of public health emergency while the country has been placed under ECQ, provided that all of the following required specifications are complied with:

(1) The submitted documents should be in portable document format (PDF), preferably with a Text Layer; (2) The submitted documents should contain an electronic signature; (3) The submitted documents should be sent as Multipurpose Internet Mail Extensions (MIME) attachments to an email from a valid company email account or email address of an authorized representative; (4) The documents that need to be executed and submitted under oath may be submitted unnotarized; however, the person(s) whose signature appears in the documents submitted shall be held accountable under the appropriate provisions of the Revised Corporation Code; (5) The body of the email should contain a statement declaring the authenticity of the submitted documents, a commitment to submit physical versions of the same documents to the SEC once the state of public health emergency is lifted, and the full name, corporate address, and mobile number of the authorized representative submitting the documents; and (6) The sender should request a Return Receipt and a Delivery Status Notification to ensure that the email has been sent and has also been received by the SEC.

It is commendable that the SEC finally adopted these rules in accordance with Republic Act No. 8792 or the Electronic Commerce Act of 2000. Under this law, for evidentiary purposes, an electronic document shall be the functional equivalent of a written document. Though it has taken a long time to be adopted, it is, nonetheless, a good development. I hope that the SEC will continue to allow the submission of electronic documents in the future, and not just during this period of ECQ.

Some of our Local Government Units (LGUs) are also passing ordinances extending payment of business and realty taxes.

Some cities in Metro Manila, such as Caloocan, Las Piñas, Makati, Manila, Mandaluyong, Muntinlupa, Navotas, Parañaque, Pasay, Pasig, San Juan, Quezon City, and Valenzuela, have extended their deadlines for paying for Q2 business taxes and Q1 real property taxes (RPT). Some of the announcements are based on duly enacted city ordinances while others are just posted on their social media accounts or published in newspapers. As soon as the ECQ is lifted, taxpayers will be busy verifying the extensions and coordinating with the cities and municipalities.

The City of Caloocan has extended the payment of RPT and LBT to June 30 through City Ordinance No.851 and 852. Las Piñas’ extended deadline for RPT is May 15 and for LBT is May 20. Makati’s extended deadline for RPT and LBT is April 30 through City Ordinance No. 2020-75. Manila’s extended deadline for RPT and LBT is June 30. Mandaluyong’s extended deadline for RPT and LBT is May 20 through City Ordinance No. 764. series of 2020. Muntinlupa’s extended deadline for RPT is May 31 through City Ordinance No. 2020-078 and for LBT is July 20 through City Ordinance No. 2020-073. Navotas’ extended deadline for RPT and LBT is May 31 through City Ordinance No. 2020-07. Pasay City and Quezon City have extended their deadline for RPT and LBT to April 30. Parañaque’s extended deadline for RPT is June 30 through Resolution No. 256 and for LBT is July 20 through Resolution No. 257. Pasig City has extended the deadline for two months from due date of RPT and LBT. San Juan City’s extended deadline for RPT is April 20 and for LBT is May 20. Valenzuela’s extended the deadline for RPT to April 30 through City Ordinance No. 677-2020.

Marikina City has announced that it will not impose interest on RPT for property owners who are unable to settle their RPT dues on the original March 31 deadline. However, there is no definite date or length of extension yet.

I hope that other LGUs will consider extending their deadlines for RPT and LBT, especially since this outbreak is affecting the entire country.

While the COVID-19 pandemic is a period of uncertainty, one thing is certain: we will get through this together. Once again, the resilience of the Filipino spirit is being tested. Through the collaborative efforts of the government, international community, private sector, civil society, and ordinary citizens, together we will heal as one.

Let’s Talk Tax is a weekly newspaper column of P&A Grant Thornton that aims to keep the public informed of various developments in taxation. This article is not intended to be a substitute for professional advice.

 

Neptali G. Maroto is a Tax Associate of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

 

As published in BusinessWorld, dated 31 March 2020