Corporate - Significant developments

Last reviewed - 29 December 2020

Enacting the Bayanihan to Recover as One Act

In view of the continuing national emergency due to the COVID-19 pandemic and the expiration of the Bayanihan to Heal as One Act (Republic Act No. 11469) as of 25 June 2020, the Philippine President approved the Bayanihan to Recover as One Act (Republic Act No. 11494), which provides for the following fiscal and non-fiscal provisions:

Fiscal provisions

  • Net operating losses suffered in taxable years 2020 and 2021 shall be carried over for the next five consecutive taxable years. Taxable years 2020 and 2021 include corporations with fiscal years ending on or before 30 June 2021 and 30 June 2022, respectively.
  • Repeal of percentage tax imposed on sale, barter, or exchange of shares of stock listed and traded through initial public offering (IPO) tax under Section 127(B) of the Tax Code. Given the nature of a repeal, said percentage tax will not be reinstated after 19 December 2020, the expiration date of RA No. 11494.
  • Tax exemption on retirement benefits received by officials and employees of private firms, whether individual or corporate, from 5 June 2020 until 31 December 2020. Any re-employment in the same employer within the succeeding 12-month period shall be considered proof of non-retirement, which will subject the retirement benefits to tax.
  • Liberalisation of the grant of incentives for the manufacture or importation of critical or needed healthcare equipment or supplies or essential goods.
  • Exemption from import duties and taxes, including donor’s tax, of personal computers, laptops, tablets, or similar equipment appropriate for use in schools, donated for distribution to public schools regardless of level, including state universities and colleges and vocational institutions under the Technical Education and Skills Development Authority.
  • Moving of statutory deadlines and timelines for the filing and submission of any document and the payment of taxes, fees, and other charges required by law.
  • No additional documentary stamp tax (DST) (including those imposed on debt instruments, mortgages, pledges, and deeds of trust, and on assignments and renewals of certain instruments) on term extensions and credit restructuring, micro-lending, including those obtained from pawnshops, and extensions thereof granted by covered institutions for loans falling due, or any part thereof, on or before 31 December 2020.
  • Income tax exemption on the COVID-19 special risk allowance provided by the national government to both public and private health workers directly catering to or in contact with COVID-19 patients.
  • Tax exemption of compensation paid to public and private health workers who have contracted COVID-19 in the line of duty.
  • Income tax exemption on active hazard duty pay received by temporary Human Resources for Health (HRH) serving in the front line during the state of national emergency.

Non-fiscal provisions

  • Emergency subsidy of 5,000 to 8,000 Philippine pesos (PHP) to affected low income households in areas under granular lockdown and to households with recently returned Overseas Filipino Workers (OFWs).
  • Unemployment or involuntary separation assistance of PHP 5,000 to PHP 8,000 for displaced employees or workers due to COVID-19, including probationary, project, seasonal, contractual, and casual employees in certain sectors.
  • Monthly COVID-19 special risk allowance for all public and private health workers directly catering to or in contact with COVID-19 patients.
  • Assumption of all medical expenses of public and private health workers exposed to COVID-19 or in case of work-related injury or disease during the state of national emergency.
  • Implementation of a one-time 60-day grace period for the payment of all existing, current, and outstanding loans falling due on or before 31 December 2020, including loans, amortisations, financial lease payments, and premium payments, as well as credit card payments without incurring interest on interest, penalties, and other charges and thereby extending the maturity of said loans. This applies not only to banks, quasi banks, financing, and lending institutions but also to real estate developers, insurance companies, and pre-need companies.
  • Minimum 30-day grace period on residential and commercial rents, falling due within the community quarantine (CQ) period, of lessees not permitted to work and micro, small, and medium enterprises (MSMEs) and cooperatives ordered to temporarily cease operations. This will be reckoned from the date of lifting of the enhanced community quarantine (ECQ) or modified enhanced community quarantine (MECQ). There should be no increase in rent during the CQ.
  • Non-discrimination against persons confirmed, suspected, probable, exposed, or recovered of the COVID-19 virus, returning OFWs, health workers, front liners, other service workers or indigent which result in unjust distinction, exclusion, restriction, physical, psychological harm or suffering, intimidation, harassment, damage to property, public ridicule or humiliation, verbal abuse, arbitrary ejectment from dwelling, or unlawful deprivation of liberty.