COVID-19 Client Advisory Key Issuances on Tax Filings as of 15 April 2020

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BIR ISSUANCES

Revenue Regulation No. 8-2020 (RR 8-2020), in relation to Revenue Memorandum Circular No. 36-2020 The BIR issued RR 8-2020 covering the waiver of additional documentary stamp taxes (DST) on credit extensions, credit restructuring, micro-lending, including those obtained from pawnshops and extensions thereof during the period of Enhanced Community Quarantine (ECQ). This was issued pursuant to Section 4 (aa) of Republic Act No. 11469, otherwise known as “Bayanihan to Heal as One Act”, wherein all banks, quasi-banks, financing companies, lending companies, and other financial institutions are directed to extend a thirty (30) day grace period for the payment of all loans falling due within the ECQ period without incurring interest, penalties, fees, or other charges. The waiver is subject to the following guidelines as clarified in Revenue Memorandum Circular No. 36-2020: Credit Extensions

1. Those pertaining to pre-existing loans that fall due during the ECQ period where the interest is paid but the principal is converted into a new loan with a new maturity date. The said new loan principal and the renewal or extension of the loan’s mortgage, pledge, or deed of trust (collateral documentation) shall be exempt from DST.

2. Those pertaining to pre-existing loans that fall due during the ECQ period where interest is paid but the principal is rolled-over or renewed as a new loan principal in accordance with a pre-agreed roll-over arrangement and collateral documentation thereof prior to the COVID-19 situation shall remain subject to DST.

Credit restructuring

1. Those pertaining to pre-existing loans that fall due during the ECQ period where both the principal and interests are not paid but are consolidated and converted into a new loan principal with a new maturity date and the renewal or extension of the loan’s mortgage, pledge, or deed of trust (collateral documentation) shall be exempt from DST.

2. Those pre-existing loans that fall due during the ECQ period where there is payment of interest and partial payment of principal on maturity while the remaining unpaid principal is converted into a new loan principal with a new maturity date and the renewal or extension of the loan’s mortgage, pledge, or deed of trust (collateral documentation) shall likewise be exempt from DST

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However, fresh loan availments, top-up to existing loans and new loan drawdowns during the ECQ period and its collateral documentation remain subject to DST.

Revenue Regulation No. 9-2020 On 6 April 2020, the BIR issued RR No. 9-2020, allowing full deductibility against the gross income of the taxpayer, the following donations/gifts given for the sole and exclusive purpose of combatting COVID-19 during the period of national emergency under RA 11469:

1. Cash Donations; 2. Donations of critical or needed healthcare equipment or supplies; 3. Relief goods such as, but not limited to, food packs (rice, canned

goods, noodles, etc.) and water; and 4. Use of Property, whether real or personal (shuttle service, use of

lots/buildings)

In order to be fully deductible and allowable as an expense against the gross income of the donor, the donation should be made to any of the following donees and supported by the corresponding documents:

Donee Supporting Documents

Donee Donor

National Government, or to any political subdivision including fully-owned government corporations

Deed of Donation

Accredited non-stock, non-profit educational and/or charitable, religious, cultural, or social welfare corporation, institution foundation, non-government organization, trust or philanthropic organization, and/or research institution or organization.

Certificate of Donation (BIR Form No. 2322)

Non-stock, non-profit educational and/or charitable, religious, cultural, or social welfare corporation, institution foundation, non-

Liquidation Report (Annex A of RR 9-2020)

1. Sworn Certification (Annex B of RR 9-2020) stating the name of the donee, date, of donation, and the value of the donation;

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Donee Supporting Documents

Donee Donor

government organization (even if non-accredited), to include those organized and operated exclusively for health purposes such as private hospitals, trust or philanthropic organization and/or research institution or organization.

2. BIR-registered Acknowledgment Receipt or the template for an Acknowledgment Receipt (Annex C of RR 9-2020)

Local Private Corporations or international organizations/institutions who partner to serve as conduit with accredited NGOs and/or national government or any entity created by any of its agencies which is not conducted for profit, or to any political subdivision of the Government.

1. Liquidation Report (Annex A of RR 9-2020);

2. Certificate of Donation (BIR Form 2322) or Deed of Donation

1. Certificate of Donation (BIR Form 2322) or Deed of Donation duly issued by the accredited NGO or government institution, respectively in the name of the donor-corporation/individual.

2. Proof of purchase; and 3. BIR-registered

Acknowledgment Receipt or the template for an Acknowledgment Receipt (Annex C of RR 9-2020)

In addition, donations of critical or needed healthcare equipment or supplies, relief goods, and water shall not be treated as a deemed sale transaction for VAT purposes. Any input VAT attributable to such purchase of goods shall be creditable against any other output tax.

Revenue Regulation No. 10-2020 (RR 10-2020) As an amendment to Section 2 of Revenue Regulations (RR) No. 7-2020, BIR issued RR 10-2020 on 9 April 2020 extending the deadline to submit, file and/or pay the necessary documents and/or taxes required under the Tax Code, as amended, as well as in the existing revenue regulations, pursuant to the Bayanihan to Heal As One Act. The filing of the Annual Income Tax Return (AITR) for calendar year 2019 is further extended from the original due date of 15 April 2020 to 30 May 2020. A copy of RR 10-2020 on the extended deadlines for the submission and/or filing of the documents and/or returns, as well as the payment of the corresponding taxes can be accessed at this link.

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If the new extended due dates fall on a holiday or non-working day, then the submission and/or filing shall be made on the next working day. If the ECQ period will be extended further, the filing of the returns and payment of the corresponding taxes due thereon, and submission of reports and attachments falling within the ECQ extended period shall be extended for 30 calendar days from lifting of the ECQ (Sections 2 and 3, RR 10-2020). Taxpayers who will file their tax returns within the original deadline or prior to the extended deadline can amend their tax returns at any time on or before the extended due date. An amendment that will result in additional tax to be paid can still be paid without the imposition of corresponding penalties (surcharge, interest and compromise penalties) if the same shall be done not later than the extended deadline as provided under existing rules and regulations (Section 4, RR 10-2020). Disclaimer and Limitations — This advisory is intended to provide general guidance to

clients of PJS Law only, based on laws and issuances as of the date stated above. Please confirm with our lawyers for possible updates or contact pjs@pjslaw.com if you have clarifications or other concerns.