Let’s Talk Tax

It has been a week since the government imposed the enhanced community quarantine (ECQ) and stringent social distancing measures on Luzon. This has resulted in the suspension of classes, public transportation, and travel by land, air, and sea. Strict home quarantine is being imposed and public gatherings are prohibited. Most business establishments, except for those that provide basic necessities, such as public markets, supermarkets, hospitals, pharmacies, banks and public utilities (e.g., power, water and telecommunications facilities) companies, remain open. To ensure the continuity of government services, work from home and minimal staffing arrangements are being implemented in the executive branch, except for the PNP, AFP, PCG, and health and emergency frontline services, border control and other critical services.

In compliance with the government’s directive, our firm has, likewise, adopted a work-from-home policy.

As a tax practitioner, I am concerned about the incoming deadline for filing not only of the returns (income, value-added tax, and withholding), but also the replies, protest letters, and additional documents related to assessment cases. Fortunately, the Bureau of Internal Revenue (BIR) has issued Revenue Memorandum Circular (RMC) Nos. 27-2020, 28-2020, and 29-2020, all of which extend the deadlines for submitting tax returns and other filings.

RMC No. 27-2020 extends to April 30 the deadline for filing value-added tax (VAT) refund applications covering the quarter ending March 2018. RMC No. 27-2020 also suspends the counting of the 90-day period for processing: (1) those claims that are currently being evaluated; and (2) those that may be received from March 16 to April 14, 2020. The counting of the number of processing days will resume after the lifting of the community quarantine.

On another hand, RMC No. 28-2020, which amends RMC No. 25-2020, provides that the deadline for filing and submission of the 2019 annual income tax return (AITR) has been extended from 15 April 2020 to 15 May 2020 without the imposition of penalties to taxpayers. RMC No. 28-2020 also allows taxpayers to file and pay taxes due to any Authorized Agent Banks (ABB) nearest to the location of the taxpayer or to any Revenue Collection Officer under the Revenue District Office. It should be noted however, that RMC No. 28-2020 is silent on whether the required attachments (e.g., Audited Financial Statements, Statement of Management Responsibility) may also be filed until 15 June 2020 without penalties.

Lastly, RMC No. 29-2020 extends the deadlines for the filing and payment of certain returns (e.g., BIR Form No. 1702Q for the fiscal quarter ending January, BIR Form No. 2000 and 200-OT for March 2020, and BIR Form No. 1601C for March 2020) by 30 from the due date. Visit our website for details on the deadlines. In addition, all ONETT (One-Time Transaction) transactions (BIR Form Nos. 1706, 1707, 1800, 1801, and 1606) for which the due date of payment falls within the enhanced quarantine period shall be extended by 30 calendar days from the said due date.

However, there seems to be an oversight on the deadlines provided under RMC No. 29-2020 for BIR Form Nos. 1601C (withholding tax on compensation), 0619E (expanded withholding tax), and 0619F (final withholding tax) for February 2020, since the dates for filing pertains to the deadline for the monthly VAT returns.

While the recently issued RMCs resolved the issues on the filing and payment of tax returns, what about the filing of protest letters and the submission of documents the due date of which would fall within the enhanced community quarantine? Will there also be an extension for the filing of protest letters and submission of documents?

Filing protests, reconciliations, and/or supporting documents is very crucial, as this may result in significant tax liabilities. As much as taxpayers would like to comply, there are various challenges that hinder them in doing so, especially since the quarantine was unplanned.

For example, Company A, which is registered in RDO in Makati City, received a Preliminary Assessment Notice (PAN) on 10 March 2020 will have to submit its letter reply and related attachments by 25 March 2020. The documents are with Company A’s personnel who lives in Ortigas Center.

In another example, Company B, classified as a Large Taxpayer located in CALABARZON area already submitted its protest letter — request for reinvestigation will be submitting additional documents which is due on 30 March 2020 in relation to its Final Assessment Notice (FAN).

In both examples, the deadlines fall within the quarantine period. With public transportation at a halt, how can the personnel of Company A file the letter reply in Makati City? Or even if the personnel of Company A have his own private vehicle, can he be allowed to cross city borders? Can Company B be also allowed to cross regional and city borders? Assuming both can reach a BIR office, there is no assurance that a BIR staff member is available to receive the filing, as they may also have difficulties in reporting to work. Lastly, taxpayers may not have their documents available with the sudden announcement of the ECQ. The ECQ, which was announced late in the evening of 16 March 2020, took effect at 12 midnight of 17 March 2020.

While taxpayers are willing to comply, challenges may hinder them in meeting the deadline, significantly affecting its ongoing assessment cases. If taxpayers wait for the suspension of the ECQ to file or submit documents, their filings may be considered late or, in a worst-case scenario, may not be considered at all. This will burden taxpayers, as late filing will incur additional interest and penalties. As of this writing, there is no issuance yet on the extension of filings in relation to assessment cases. (Hopefully, before this is published, the BIR will issue a circular on this matter.)

Nevertheless, I hope the BIR would consider extending the submission of letter replies, protest letters, and supporting documents the due dates of which fall within the ECQ. An extension is something taxpayers would greatly appreciate, and this will also ensure the health and safety of both taxpayers and BIR personnel. The BIR should provide clearer guidelines on filings that would be due during the ECQ period and should clarify the issues in extending deadlines as they draw near. More importantly, I hope and pray that everyone will take the ECQ seriously to finally put an end to this pandemic.

(Note that the BIR issued on 23 March 2020 RMC No. 31-2020 which extends that period of submission/filing of documents and correspondences related to assessment cases)

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 competent professional advice.


Anthony Joseph A. Cometa is a manager of Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.