P&A Grant Thornton uses cookies to monitor the performance of this website and improve user experience

To find out more about cookies, what they are and how we use them, please see our privacy notice, which also provides information on how to delete cookies from your hard drive.

Global site
  • Global site
  • Africa
  • Americas
  • Asia Pacific
  • Europe
  • Middle East
Grant Thorton Logo
Grant Thornton Logo Grant Thornton Logo
  • Skip to content
  • Skip to navigation
Contact us
Close Global search
  • Insights
  • Services
  • Alerts and Publications
  • P&A Foundation, Inc.
  • About us
  • Industries
  • Audit and Assurance
  • Tax Advisory and Compliance
  • Advisory Services
  • Outsourcing and Managed Services
  • Japan Desk
Audit and Assurance Home
  • Audit approach overview
  • Annual and short period audit
  • Review engagement
  • Other Related Services
Tax Advisory and Compliance Home
  • Tax advisory
  • Tax compliance
  • Corporate services
  • Tax education and advocacy
Advisory Services Home
  • Business risk services
  • Business consulting services
  • Transaction services
  • Forensic advisory
  • Cyber advisory
  • ProActive Hotline
Outsourcing and Managed Services Home
  • Accounting services
  • Staff augmentation services
  • Payroll Processing
  • About
  • P&AUSE
  • Board of Trustees
  • P&AUSE Officers
  • Contact Us
  • Industries Home
  • Consumer products
  • Education
  • Energy and natural resources
  • Financial services
  • Not for profit
  • Outsourcing
  • Public sector
  • Real estate and construction
  • Technology, media and communications
  • Travel, tourism and leisure
  • Retail industry
    • EN
    • Contact us
    1. Home
    2. Alerts and Publications
    3. Technical Alerts
    4. Tax Alerts
    5. 2020
    6. Relaxed rules on tax residency and creation of permanent establishment due to effects of COVID-19 measures

    Tax Alert

    24 Aug 2020

    Tax Alerts

    • 2023
    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2012
    • 2013
    • 2014
    • 2016
    • 2015

    Relaxed rules on tax residency and creation of permanent establishment due to effects of COVID-19 measures

    (Revenue Memorandum Circular No. 83-2020 issued on August 17, 2020)

    This Tax Alert is issued to inform all concerned on the effects of travel restrictions and other measures undertaken by the government to prevent the spread of COVID-19 on a taxpayer’s residency status and creation of permanent establishment in relation to the application of relevant tax treaty provisions.

    In cases where restrictions imposed by COVID-19 affect the applicability of Philippine tax laws and tax treaties on taxpayer’s tax position, the following rules shall be considered:

    Tax Residency

    • Individuals prevented from leaving the Philippines on their scheduled day of departure because of the travel restrictions imposed by the government will not be regarded as being present in the Philippines for the period after the scheduled day of departure until his actual departure. The said individuals should leave the Philippines as soon as the travel restrictions and/or quarantine measures have been lifted.
    • Individuals who are supposed to be in the Philippines under a contract but were not able to travel to the Philippines due to travel restrictions will be subject to tax in the Philippines. The BIR will consider the circumstances that would have occurred absent such travel restrictions.

    Creation of permanent establishments (PE)

    • Employees of foreign enterprise who are working from home in the Philippines in compliance with government’s home quarantine measures would not create a PE of the foreign enterprise in the Philippines. However, if an employee’s home is used as continuous basis for carrying business activities of the foreign enterprise even after COVID-19, it may be considered a PE of the foreign enterprise.
    • Temporary interruptions of construction activities due to COVID-19 should be included in computing the duration of a site in determining whether such construction site constitutes a PE.
    • Where an employee, partner or agent of a foreign enterprise, who are not habitually concluding contracts on behalf of a foreign enterprise before the COVID-19 crisis, continue to be present in the Philippines due to travel restrictions related to COV1D-19, such presence in the Philippines shall also be disregarded in counting the period of stay or presence of the foreign enterprise in the Philippines.

    In order to prove that extended presence in the Philippines was due to COVID-19-related travel restrictions, records shall be maintained outlining the circumstances and submitted to the BIR in support of the taxpayer's application for relief from double taxation.

    .

    RMC No. 83-2020

    Download PDF []
    rich text with download pdf
    Download PDF []
    Download PDF []
    • Follow us on YouTube
    • Follow us on Facebook
    • Follow us on LinkedIn
    • Follow us on Instagram
    CONNECT
    • Meet Our People
    • Contact us
    • Our heritage
    • Locations
    ABOUT
    • About us
    • Careers
    • News Centre
    • ProActive Hotline
    LEGAL
    • Privacy
    • Cookie policy
    • Disclaimer
    • Site map

    © 2023 Punongbayan & Araullo - All rights reserved. “Grant Thornton” refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Punongbayan & Araullo (P&A) is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions.