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State of emergency may be extended, palace says

THE PRESIDENTIAL palace on Monday said it would probably extend the effectivity of a proclamation putting the country in a state of emergency amid a coronavirus pandemic.

President Rodrigo R. Duterte might release another order for the extension, his spokesman Harry L. Roque told an online news briefing on Monday. The proclamation will lapse on Sept. 16.

“Most likely, while there is no COVID-19 vaccine yet, the state of health emergency will continue,” he said in Filipino.

Mr. Duterte signed Proclamation 929 on March 16 declaring a state of calamity in the Philippines due to the COVID-19 crisis.

The Department of Budget and Management this week said the local disaster agency had endorsed an extension to the President.

Budget officials earlier ordered local governments to use COVID-19 funds by Sept.16 unless the President releases a new proclamation extending the state of national emergency.

The President locked down the entire Luzon island in mid-March, suspending work, classes and public transportation to contain the pandemic. The Philippine has one of the longest lockdowns in the world. People should stay home except to buy food and other basic goods, he said. 

Regional Updates (09/14/20)

Metro Manila mayors recommend closure of cemeteries during traditional visiting days

THE METRO Manila Council, composed of the 17 mayors in the country’s capital, has recommended the closure of all public and private cemeteries during the traditional visiting period of November 1 and 2. The recommendation will be presented to the national task force that issues policies and measures on the coronavirus response. In a press conference Monday, Metropolitan Manila Development Authority (MMDA) General Manager Jose Arturo S. Garcia, Jr. said the mayors of the 16 cities and one municipality also agreed to let the task force decide on the closure period, which they initially proposed to be for one week from October 28 to Nov. 4. “We will let the IATF (Inter-agency Task Force) decide on their preferred date of closure of cemeteries during the All Saints Day holidays,” Mr. Garcia said.

EARLIER ORDERS
Last week, the mayor of Manila City, Francisco M. Domagoso, was the first to issue an order closing cemeteries within his jurisdiction from Oct. 31 to Nov. 3 to avoid the usual large crowds during the observance of All Saints’ and All Souls’ Day. San Juan City Mayor Francisco Javier M. Zamora followed suit. There are at least 15 major public and private cemeteries in Metro Manila. Several other local government chiefs outside Metro Manila have issued similar closure orders, including Angeles City Mayor Carmelo G. Lazatin, Jr. and Cebu City Mayor Edgardo C. Labella.

Nationwide round-up

13 hospitals approved for WHO solidarity trials on coronavirus treatment

THIRTEEN HOSPITALS have been given final approval for participation in the World Health Organization’s (WHO) solidarity trial on treatments for coronavirus disease 2019 (COVID-19). Science and Technology Secretary Fortunato T. de la Peña, in a briefing on Monday, announced the list composed of nine medical institutions in Metro Manila, two in Cebu City, and one each in the cities of Cavite and Davao. These are: University of the Philippines-Philippine General Hospital (UP-PGH), Manila Doctors Hospital, San Lazaro Hospital, Lung Center of the Philippines, St. Luke’s Medical Center-QC, Research Institute for Tropical Medicine, Makati Medical Center, The Medical City, St. Luke’s Medical Center-BGC, Vicente Sotto Memorial Medical Center combined with Chong Hua Hospital, De La Salle Health Sciences Institute, and Southern Philippines Medical Center. Government-run UP-PGH will be the main implementer of the trials, which is set to start later this year. Mr. de la Peña said they are waiting for the WHO List of Protocols which could be released in October. The WHO solidarity trials, with more than 100 countries participating, will test the safety and effectiveness of four possible therapies in treating COVID-19. — Gillian M. Cortez 

Scholarships for med students bill approved on 3rd reading

THE SENATE on Monday approved the measure granting scholarships to medical students on third and final reading. With 22 affirmative votes and no negative vote, Senate Bill No. 1502, the Doktor Para sa Bayan bill, hurdled the chamber. It was among the priorities of Senate President Vicente C. Sotto III for the 18th Congress. “My vision for this measure, which is now called the ‘Doktor para sa Bayan’ Act, is to help financially-challenged but deserving students to pursue their dreams of becoming medical doctors to serve our country and our countrymen,” Mr. Sotto told reporters over phone message on Monday. “This measure comes at the most opportune time as our country continues to battle against the devastating health impacts of the coronavirus disease.” In its last version, the bill proposes to establish a Medical Scholarship and Return Service Program for Filipino students in state universities and colleges. It will cover tuition fees, allowances for books, school supplies, uniform, and boarding house accommodation among others. Scholars who eventually secure their license are mandated to serve the government public health office or at a state-owned hospital within one year after passing the licensure exam. —  Charmaine A. Tadalan 

Petitioners oppose gov’t move to cancel oral arguments on anti-terror law

PETITIONERS AGAINST THE Anti-Terrorism Act opposed the move of the government’s counsel to cancel oral arguments. In a joint motion to the Supreme Court, petitioners led by Bagong Alyansang Makabayan and veteran activists as well as by youth leaders said cancelling the oral arguments “will be a disservice to the overwhelming interest in these cases.” They said the public has the right to examine how the Office of the Solicitor General will defend the assailed law.  “The oral arguments are vital not only for hearing the parties on their respective positions, but also for the Honorable Court to fully ascertain the issues at hand,” the motion read. They also said that the court is capable of holding the oral arguments, noting the adjustments it already implemented amid quarantine restrictions such as videoconferencing for court hearings. The law, which took effect July 18, is being questioned in at least 30 petitions before the high court. — Vann Marlo M. Villegas

Solons move to increase vice president’s budget

LAWMAKERS ASSURED Vice President Maria Leonor G. Robredo of augmenting her office’s 2021 budget, which stands at P679 million under the proposed government expenditure program for next year. The 2021 allocation is also 41% lower than this year’s P708 million. Members of the House of Representatives appropriations committee cited the efforts of Ms. Robredo’s office in emergency response, social services, and livelihood development.  Negros Oriental 1st District Rep. Joceylyn Sy-Limkaichong, the committee’s vice chair, called on her colleagues to “fill in the gaps” and increase the budget of the Office of the Vice President (OVP). Cagayan De Oro City Rep. Rufus B. Rodriguez moved to give the OVP an additional P130 million, while Bayan Muna Rep. Ferdinand R. Gaite proposed to give it at least P1 billion. Meanwhile, the Office of the President’s P8.238 billion budget was approved based on the customary “inter-parliamentary courtesy,” but not before its intelligence and confidential funds was questioned by several lawmakers. Davao City 3rd District Rep. Isidro T. Ungab moved to terminate the hearing, saying that an inter-parliamentary courtesy must be accorded to the President’s office as practiced in past budget hearings. Those who scrutinized the budget are members of the Makabayan bloc in the House of Representatives. Deputy Executive Secretary for Internal Audit Alberto A. Bernardo defended the intelligence fund, citing that it is necessary to combat terrorism, especially amid the pandemic. — Kyle Aristophere T. Atienza

Filipinos would cycle to work if there were safer bike lanes — DoLE study

PHILSTAR/MICHAEL VARCAS

MOST WORKING Filipinos want safer bike lanes and if such road systems were available, they would cycle to their job site even if there were other public transport options available, according to a study conducted by the Labor department. In a statement on Monday, the Institute for Labor Studies (ILS), the research arm of the Department of Labor and Employment (DoLE) said,  “Majority of the workers are in favor of having more bike lanes on paved roads, bike paths, and more secured bike parking. The presence of bike lanes and their safety on road are also among the foremost concerns of bike riders.” The ILS study had 1,119 respondents, mostly from Metro Manila. Of the total respondents, 78% said they will still use bicycles going to work even if there are other modes of mass transportation available, with 85% counting health benefits as the main reason for cycling. The ILS also reported that out of the 813 respondents who used a bicycle within the past six months, 58% did so  going to and from work. The ILS research is part of the Bike-to-Work Project of the Labor department, wherein it will distribute bicycles. — Gillian M. Cortez 

BSP rate cuts totaling 75 bps seen likely in fourth quarter — Nomura

THE Bangko Sentral ng Pilipinas (BSP) will likely reduce rates by a further 75 basis points (bps) cut in the fourth quarter to provide support to the economy, amid constraints on the fiscal side of the economic stimulus program, Nomura Global said.

“We still expect an additional 75 bps in rate cuts in Q4 due to a weak recovery, the risk of a fiscal cliff and inflation well within the target due to the negative output gap persisting,” Nomura Global said in a note issued Monday.

The Monetary Board has three meetings left this year, all falling within the fourth quarter — on Oct. 1, Nov. 19, and Dec. 17.

In its previous policy review on Aug. 20, the Monetary Board decided to keep policy rates steady to allow time for the financial system to fully digest the prior 175 bps worth of rate easing earlier this year to support the economy during the pandemic.

With August inflation at 2.4% and the overnight reverse repurchase currently at a record low of 2.25%, the Philippines has crossed over into negative real interests. Lending and deposit facilities are also at record lows of 2.75% and 1.75%, respectively.

Because the fiscal stimulus is small relative to the size of the economy, Nomura Global said it is pricing in the 75 bps rate cut in the coming quarter.

On Friday, President Rodrigo R. Duterte signed the P165.5-billion Bayanihan II bill which will fund the government’s response to the coronavirus crisis.

“The total size is just 0.9% of GDP and does not meaningfully raise spending on key items such as capital expenditure, which were catalysts of private investment spending in the recent past,” Nomura Global said.

Nomura Global added that the Federal Reserve will continue to keep short-term interest rates on hold as long as inflation does not go beyond 2%. This in turn will likely cause Asian central banks to gauge their policy frameworks as well as assess the possible spillover effects from the Fed’s decisions, it said.

“Central banks are reluctant partly because it is early and they may prefer to monitor the impact of the Fed’s changes from the sidelines. Financial imbalances caused by too-low rates accelerating credit/asset price cycles are also likely on their minds,” Nomura Global said, noting the BSP with its strict inflation targeting role is “unlikely to follow Fed initially.”

In its August policy meeting, the BSP raised its average inflation forecast for 2020 to 2.6% from the 2.3% it issued in June. The 2021 outlook was also increased to 3% from 2.6%. All updated forecasts are still within the 2-4% target set by the central bank. — Luz Wendy T. Noble

Procurement board planning rules to close vendor eligibility loopholes

THE Government Procurement Policy Board (GPPB) will clarify its rules on ineligible vendors after the Department of Budget and Management (DBM) nearly procured medical supplies from a blacklisted entity.

“We are looking into refining again the blacklisting rules to make sure that no gray area will be left in so far as blacklisting is concerned,” GPPB-Technical Support Office Executive Director Rowena Candice M. Ruiz told Senators Monday.

DBM Undersecretary Lloyd Christopher A. Lao said a contract was awarded to Ferjan Health Link, Inc., which was a separate firm from the Ferjan Health Link Enterprise based on its initial review.

He said, however, that the Securities and Exchange Commission confirmed that one of the stockholders of Ferjan Health Link, Inc. is the sole proprietor of the blacklisted company, Ferjan Health Link Enterprise.

“What happened in the case of the procurement service is that the blacklisted sole proprietor created a new corporation. That was not covered in the existing rules,” Ms. Ruiz said.

“What we did was coordinate with the Procurement Service (PS) to give them the options available and the option taken by the PS is to cancel or terminate the contracts.”

Mr. Lao said the contract, worth P727.5 million, was canceled Friday. He added that no advance payment was made to Ferjan.

The officials were at a Finance committee hearing on the proposed P1.908-billion budget of the DBM for 2021, which is 18.15% lower than its 2020 budget.

Mr. Lao said the GPPB will consider the inclusion of corporations in the blacklist should it have officials who are blacklisted sole proprietors.

“The GPPB is making some changes on the rules to include the application of sole proprietorship blacklisting, and carrying over the blacklisting to the corporation, which has ownership of at least one stockholder whose sole proprietor business is blacklisted,” Mr. Lao said.

Senate Minority Leader Franklin M. Drilon had noted that contracts for the procurement of medical supplies, such as testing kits and personal protective equipment, were awarded to blacklisted companies.

“We suggest strongly that you amend because we will know that you should not be able to hide behind a corporate structure to skirt the disqualification as an individual, joint partnership or joint venture,” Mr. Drilon said. — Charmaine A. Tadalan

Bill proposed to deter ‘cartel’ behavior in downstream fuel industry

A LEGISLATOR said he is proposing a bill to thwart the formation of a monopoly in the downstream oil industry.

The alleged “lack of transparency” in the pricing mechanisms of the Philippines’ oil majors raises the possibility of potential collusion, according to Senator Sherwin T. Gatchalian.

The legislator, who also leads the Senate energy committee, said he is “planning to file a bill that will give more teeth to existing laws in the downstream oil industry.”

His office is also “studying ways to strengthen the anti-trust safeguards in the Republic Act No. 8479 (Downstream Oil Industry Deregulation Act) and how it can interact with the Philippine Competition Act.”

The Supreme Court recently barred a Manila court from ordering a review of the books of accounts of Petron Corp., Pilipinas Shell Petroleum Corp., and Chevron Philippines, Inc.

In 2009, a Manila Regional Trial Court ordered the Bureau of Customs, Bureau of Internal Revenue, and Commission on Audit to examine the companies’ accounts for any evidence of collusion. The agencies declined, saying that such examinations exceed their mandates.

The Supreme Court said the proper agency to conduct the examination was a joint task force of the Energy and Justice departments, to look into any breaches of the Oil Industry Deregulation law. The task force subsequently found no antitrust violations.

Stiff competition within the oil industry should have led to lower pump prices, but this is “simply not happening,” said Mr. Gatchalian.

“The promise of the law is to provide reasonable prices, encourage competition and investments,” he said.

The pricing of petroleum products mirrors that of the movement of the Mean of Platts Singapore benchmark, according to the Department of Energy.

In 2019, the three oil companies controlled about half of the market for petroleum products, according to the DoE-Oil Industry Management Bureau. Petron had a 24.59% market share, followed by Pilipinas Shell with 18.49% and Chevron Philippines, which markets Caltex products, with 7.57%. — Adam J. Ang

Gov’t Aug. cash utilization 83% year to date, still lagging 2019 pace

CASH UTILIZATION by government agencies was 83% in the eight months to August, remaining weak due to spending constraints imposed by the pandemic, the Department of Budget and Management (DBM) said.

Cash utilization rates are based on Notice of Cash Allocations (NCAs), an authorization issued to agencies of funds available for disbursement. The DBM said P2.245 trillion worth of NCAs were issued out of the P2.693 trillion released in the eight months.

NCA utilization rates have been declining year on year since April, when much of the country was under strict lockdown. Restrictions have been eased since June.

Line agencies had used P1.555 trillion worth of NCAs by the end of August, for a utilization rate of 80%.

The Commission on Elections had the highest utilization rate at 91%, followed by the Commission on Human Rights with 90% and the Department of National Defense 88%.

Other budgetary items were utilized at a rate of 92% during the period, with P689.927 billion disbursed out of the P746.723 billion released.

This includes P143.55 billion for budgetary support to government-owned and -controlled corporations, with a 97% usage rate; and P546.38 billion from the allotment to local government units, which had a 91% utilization rate.

The DBM has released P3.9 trillion or 95.6% of this year’s P4.1-trillion budget in the eight months to August. — Beatrice M. Laforga

Farmers blame low palay prices on ‘unpredictable’ rice imports

THE ‘unpredictable’ pattern of rice imports has depressed farmgate prices of palay, or unmilled rice, according to an organization of farmers.

In a statement, Federation of Free Farmers (FFF) National Manager Raul Q. Montemayor said rice traders are offering low prices for palay out of fear that imports will flood the market in the coming months.

According to the FFF, rice imports for the first eight months of the year fell 25% year on year to 1.66 million metric tons (MT), with the national rice inventory as of Aug. 1 also posting a 16% decline year on year.

“The decline in farmgate prices is surprising considering the lower imports. Palay buying prices usually go up in September because of the scarce supply of palay and then go down only during the peak harvest season in October and November,” the FFF said.

Based on the group’s field reports, the buying price of palay in September has declined to as little as P16 per kilogram on a dry basis, and from P11 to P13 per kilogram for wet palay.

FFF also said that palay prices averaged P18.39 per kilogram in late August, citing data from the Philippine Statistics Authority.

“Last year, traders bought palay from farmers during the first half of the year at relatively high prices and were caught flat footed by the massive inflow of imports in the second half of the year. Many of them could not unload their stocks at a profit and some had to suspend their operations,” Mr. Montemayor said.

Mr. Montemayor said that despite three million tons of excess imports in 2019, the Bureau of Plant Industry still issued sanitary and phytosanitary import clearances for 3.75 million tons of rice imports between January and September this year.

“However, less than half of the allowed volume has entered the country so far, mainly due to the increase in international prices of rice in response to the coronavirus disease 2019 (COVID-19) pandemic and weather disturbances in the region,” Mr. Montemayor said.

Mr. Montemayor added the Department of Agriculture (DA) has repeatedly assured that the country has ample rice supply, but did not say that the surplus rice inventory is due to imports.

“The problem now is that we already have a surplus at present, the main harvest is coming in, and the importers might still bring in more stocks in the coming months. The anticipated surplus is what is driving palay prices down,” Mr. Montemayor said.

The DA was asked to comment but had not replied at deadline time. — Revin Mikhael D. Ochave

Legislator files rent relief and eviction moratorium bill in House

A BILL has been filed in the House of Representatives creating a loan program run by government banks to finance rent payments.

Representative Jose Ma. Clemente S. Salceda of the second district of Albay, who chairs the House Ways and Means committee, filed House Bill No. 7665, or the proposed Rent Relief Act of 2020, which also seeks to impose an eviction moratorium.

The measure hopes to provide financing for about 2 million renters.

In its 2015 Census of Population and Housing, The Philippine Statistics Authority estimated that around 2.7 million households occupy rented housing.

“We estimate the number to have increased to 3.1 million in 2020. Our analysis of the newly unemployed shows that up to 3% of these households, or some 93,000 households, may be in danger of eviction due to nonpayment of rents even with the Bayanihan measures to provide rent relief,” Mr. Salceda said in a statement Monday.

HB 7665 requires the Social Security System, the Government Service Insurance System, and the Pag-IBIG Fund to offer rent financing to their members “at favorable rates,” while also directing the Land Bank of the Philippines (LANDBANK) and the Development Bank of the Philippines (DBP) to offer rent loans “at rates not higher than their lowest-yielding loans.”

The scheme calls for banks to pay the rent for a pre-determined period, while allowing the tenant a longer repayment period.

Citing the effects of the pandemic on the livelihood and incomes of families, HB7665 also allows government institutions to discount promissory notes issued by the renter in exchange for non-eviction, while providing a three-month window for renters to find new jobs.

The bill also tasks the Department of Human Settlements and Urban Development with establishing rental assistance centers to help tenants and lessors negotiate terms of lease and find other assistance programs to stave off eviction.

Asked to clarify if the bill might be revised in the future to include private banks, Mr. Salceda told BusinessWorld that it is only possible under consultation with government agencies. He said if private banks are included in the measure, it “will probably be to co-share the risks or costs with them instead of requiring them to take up loans that might not align with their risk appetite, without some burden-sharing on government’s part.”

“We do not want to significantly compromise asset quality of banks during a crisis. That could have some unintended consequences for the rest of the economy,” he said. — Kyle Aristiophere T. Atienza

‘Second wave’ to bring more pain to developing economies via reduced remittances — IMF

FURTHER outbreaks in countries hosting migrant workers could deepen the economic downturns there, threatening wages, jobs, and ultimately remittances, according to the International Monetary Fund (IMF).

“A second outbreak of the coronavirus in the later part of the year in host economies, for example, could jeopardize remittance flows further,” it said in a blog post.

Migrant workers may not be able to sustain supporting their families by tapping savings if recessions in host countries deepen further, the IMF said.

Remittances to the Philippines dropped 4.2% year on year to $14.019 billion in the first half due to the pandemic. The Bangko Sentral ng Pilipinas expects cash remittances to decline by 5% this year due to the crisis.

In June, cash remittances rose 7.7% year on year to $2.465 billion.

Cash remittances in the six months to June from Europe declined 15.6% and fell 15.3% from the Middle East, according to UnionBank Chief Economist Ruben Carlo O. Asuncion. These areas account for 12.2% and 18.2% of total remittances to the Philippines.

Inflows from the Americas and Asia, which make up 44.3% and 22.3% of the total, grew 3.1% and 2.4% in the year to date, Mr. Asuncion said.

Mr. Asuncion said signs of a recovery are emerging in Hong Kong, Japan, Singapore, the UK, Germany, Qatar, Saudi Arabia, and the United Arab Emirates, based on purchasing manager indices, a forward indicator of economic activity.

“I found that except for Hong Kong, all countries have experienced improving PMIs between the months of June to August this year, suggesting a positive economic recovery trend for these particular economies,” he said.

More than 164,000 overseas Filipino workers (OFWs) have been repatriated as of Sept. 5 due to the crisis. Further repatriations are difficult to predict due to the altered dynamics of labor markets, according to Asian Institute of Management economist John Paolo R. Rivera.

“(Some) work functions will cease to exist. Will new work functions also demand OFWs?,” Mr. Rivera said in a text message.

The government should focus on ensuring displaced OFWs have jobs at home, which will be difficult, Mr. Asuncion said.

“The only way that the government can help is to create job opportunities here. The main reason why these kababayans left, in the first place, is because of the lack of opportunities here,” Mr. Asuncion said.

The unemployment rate in July eased to 10% from the record 17.7% in April. The July rate is equivalent to 4.571 million jobless workers. — Luz Wendy T. Noble

Helping our nation through voluntary tax compliance

The world we are living in right now is very different from the one we were used to. Whenever I hear news about the rising number of COVID-19 cases, employees losing their jobs, and businesses shutting down their operations, which were all brought about by the COVID-19 pandemic, I find myself helpless.

Thankfully, my mood is lifted by random acts of kindness, such as stories about helping those in need, even in their own little way. These stories always give me hope that if we work together, we can get past this crisis.

We, as a nation, should be helping each other out.

In an effort to help ease the suffering of our countrymen and to respond to the needs of those gravely impacted industries heavily affected by the pandemic, the government has given its taxpayers an opportunity to help defray its expenses by letting its taxpayers avail of the Voluntary Assessment and Payment Program (VAPP).

To implement this, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 21-2020, which sets down the policies and procedures for VAPP, which applies to all internal revenue taxes covering the taxable year ending Dec. 31, 2018, and the fiscal year 2018 ending on the last day of the months of July 2018 to June 2019. Qualified taxpayers can avail of the benefits of the VAPP starting from Sept. 21 until the end of this year unless extended by the Secretary of Finance.

Any taxpayers, who inadvertently or otherwise, erroneously paid their internal revenue tax liabilities or failed to file tax returns/pay taxes, may avail of the benefits under the VAPP, except for the following:

• Taxpayers who have already been issued a Final Assessment Notice (FAN) that have become final and executory, on or before the effectivity of this RR;

• Persons under investigation as a result of verified information filed by a Tax Informer under Section 282 of the NIRC of 1997, as amended, with respect to the deficiency taxes that may be due out of such verified information;

• Those with cases involving tax fraud filed and pending in the Department of Justice or in the courts; and

• Those with pending cases involving tax evasion and other criminal offenses under Chapter II of Title X of the NIRC of 1997, as amended.

Considering the adverse effects of the COVID-19 on the business operations of taxpayers, what is in it for them should they avail of the VAPP?

1. Exemption from tax audit

Qualified taxpayers who were able to comply with the conditions set forth in the RR, which is a requirement for the application to be considered valid for the availment of the VAPP and be entitled to its privilege, shall have the benefit of having their books exempted from audit of the BIR for the taxable year 2018.

If in case the taxpayer has already an on-going assessment for the taxable year 2018, the audit being conducted shall be suspended. The issued Letter of Authority, Tax Verification Notice, Discrepancy Notice, Notice of Informal Conference, Preliminary Assessment Notice, Final Assessment Notice for pending cases covering the taxable year 2018 shall be withdrawn and canceled.

2. Limited contact between the taxpayer and the BIR

Since the taxpayer will no longer be subject to a regular audit of the BIR for that taxable year, it will limit the face-to-face interaction between the taxpayers and the BIR personnel as compared to if the taxpayers undergo the normal tax audit process.

This will also lessen the risk of possible transmission of the COVID-19 virus between the taxpayer and BIR’s personnel, while at the same time, complying with the Inter-Agency Task Force’s (IATF) health and safety protocols.

But before availing of the program, taxpayers should perform a tax compliance check with the existing tax rules and regulations. The taxpayer should compare the amount of tax exposure, among others, based on its tax compliance review against the amount of tax to be paid for availment of VAPP.

The amount of voluntary payment, which should be paid in cash, shall depend on the tax type as follows:

a. For Income Tax (IT), Value-Added Tax (VAT), Percentage Tax (PT), Excise Tax (ET), and Documentary Stamp Tax (DST) other than DST on One-Time Transaction (ONETT);

b. For Final Withholding Taxes (on Compensation, Fringe Benefits, etc.) and Creditable Withholding Taxes (CWT) other than CWT on ONETT, the amount to be paid shall be 5% of the total basic withholding tax remittance for the taxable year 2018; and

c. For taxes on ONETT, such as Estate Tax, Donor’s Tax, CGT, ONETT-related CWT/Expanded Withholding Tax, and DST, the amount to be paid shall be the basic tax due of the unfiled tax return/unpaid tax due plus 5%.

Moreover, here are the other factors that taxpayers should pay attention should it avail of VAPP:

1. For items a and b of the preceding section, taxpayers must apply all registered taxes indicated therein for the privilege under VAPP be availed;

2. For taxpayers with claims for tax credit/refund, such excess input VAT and excess tax credit for income tax, the taxpayer’s right to apply such claim shall be waived, unless they exclude the specific tax type for which they are pursuing the claim for tax credit/refund; and

3. Taxpayers availing of the VAPP should faithfully comply with all the requirements, such as the submission of a complete set of documentary requirements, and the filing and voluntary payment of taxes in the proper venue, and all other conditions in the RR. Otherwise, the taxpayer shall not be entitled to the privilege under VAPP. In this case, the voluntary payments may be applied against any deficiency tax liability for the taxable year 2018, in case of audit/investigation.

To encourage the taxpayers to avail of the program, the BIR should be proactive in reviewing the applications and communicating with the taxpayers should they find any defects in the applications so that taxpayers can act on the additional requirements.

As provided under regulations, the Revenue Officer assigned should evaluate the documents submitted for application within 30 working days from receipt of the application, and endorse the same to the Assistant Chief, LT Office/Assistant Revenue District Officer (ARDO) for review, and to the Chief, LT Office/Revenue District Officer (RDO) for signature. However, the RR did not specify if the 30 days cover the whole review process up to the approval of the Chief/RDO.

What happens after the 30 days lapse? Can the taxpayers assume that their application is already approved? For the guidance of the taxpayers, the BIR should issue a clarification so that the taxpayers are not left in the dark.

On the other hand, a Certificate of Availment shall be issued by the LT Office/RDO within three working days once the application has been approved. The certificate shall serve as proof of the taxpayer’s availment of the VAPP, compliance with the requirements, and entitlement to the privilege granted under the RR.

While it is true that we should not expect anything in return for acts of kindness, it is good to know that our government appreciates the help and contributions of its taxpayers, and rewards them for it. I can really say that if we keep the spirit of Bayanihan alive in our hearts, 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 competent professional advice.

Christian Derick Villafranca is a senior in charge from the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Our new world demands a new breed of leaders

The year 2020 is probably the year we will all look back on with much trepidation. After all, it is the year when everything that could go wrong around the world, happened. Wildfires, volcanic eruptions, hail storm, flooding, earthquake, mass protests, explosions and, of course, COVID-19.

Filipinos continue to rise above these challenges as a nation. So it is no surprise that when we surveyed 161 CEOs and business leaders, 59% remain confident of the growth in their own organization in the next 12 months while 90% see this in the next three years.

COVID-19, no doubt, is the biggest disrupter of the century. No force in history has stopped the global economy on its tracks or has left global leaders and business executives so dumbfounded. When faced with the unfamiliar, leaders tend to fall back to doing things they are used to and return to business as usual. Yet, more than ever, this is the time when people look to their leaders for creative solutions under the business UNusual.

CEO survey respondents identified communication, agility, critical thinking, decisiveness and innovativeness as necessary skills that a leader must possess to navigate crisis situations.

Communication —  Effective communication during a crisis is critical. There is no such thing as over-communicating during a crisis. People expect leaders to communicate frequently and with a sense of urgency. Frequent communication provides the employees a sense of comfort and reassurance.

One leader who stood out is New Zealand Prime Minister Jacinda Arden. Not only did she use various channels to communicate to her constituents, she also connected with transparency and empathy. She provided regular updates based on factual and scientific information. She was brutally honest about the country’s situation and, at the same time, offered hope by presenting clear plans.

Communication tops the CEOs’ list as the desirable characteristic of a crisis leader. Consistent with this, 69% of the CEOs said that they will prioritize investing in communication software in the next few months.

Agility — At times of great uncertainty, it is common for leaders to adopt the wait-and-see attitude until things become clearer. However, failure to quickly take action, even at times with limited information, can be disastrous to the organization.

We have seen how companies have to continually adapt to the disruptions caused by COVID-19. Business leaders have navigated themselves through the uncertainty by making quick decisions and making adjustments as needed. Decision-making that used to take months have been reduced to days. Leaders are embracing agility in their operations.

Take for instance Dyson and General Motors, which designed ventilators in a matter of days. At the local level, San Miguel Corp. produced alcohol sanitizers just days after the lockdown.

Garment manufacturers produced personal protective equipment (PPE) to address the shortage at that time. Retail companies started selling online to get their products to consumers.

In our CEO survey, more than two-thirds said that they will change their products and services to rebuild their respective revenue streams after the lockdown. The pandemic is just a reminder that we are constantly facing disruptions. Leaders should continue to be agile and flexible.

Critical thinking — The ability to think critically during times of extreme uncertainty is crucial. Situations change quickly and decisions have to be made on the fly. It is easier to follow what others are doing, instead of asking questions. The risk of herd mentality or groupthink increases during crises. As people become anxious about making the wrong decisions, doing it as a group seems to be the safer alternative. We expect our leaders to make bold decisions, through thoughtful considerations and asking the right questions.

Pre-COVID, many of us did not believe that we can work productively at home. And yet, circumstances forced us in this situation. Now, 73% of the CEOs see their organization implementing a work-from-home policy even after the pandemic. Forty percent of these CEOs also see a potential reduction in their office space in the next 12 months. Those who questioned the status quo and the traditional way of doing things came out more prepared to pivot when circumstances called them to.

Decisiveness — Many lauded Taiwan President Tsai Ing-wen’s decisiveness in curbing the coronavirus in her country. As early as February, Ing-wen recognized the threat of the virus, implemented border control and required the use of face masks. Leaders must have the confidence to make decisions amid the uncertainty.

The speed and magnitude of the crisis are daunting. It is easy to see why so many missed making decisive action on a timely basis. CEOs had to balance the decisions of continuing operations and the immediate safety of their employees. While 50% of the CEOs we surveyed believe that COVID-19 has the potential for having a significant impact on their business operations, the safety of their workers always came first.

Hard decisions have to be made, even if it means making it without a crystal-clear view of the future. Not making one, when needed, can be more devastating.

Innovativeness — Crisis can put innovation into overdrive. We have seen a lot of innovations during this pandemic — from changing the way we work to developing vaccines. Leaders who push innovation during this crisis are setting their companies up for success.

Statistics show that companies that focused on innovation during the SARS crisis outperformed the market average by over 30% after the crisis was over. Apple CEO Tim Cook’s philosophy, from the last global crisis up to now, has been to continue to invest and innovate even during downturns. Many of the major companies in the Fortune 500 were hatched during a downturn or a crisis. These include Apple, Microsoft and Netflix.

In our survey, 80% of the CEOs plan to increase their investments in technology or digital transformation. Majority of them said that they will invest in data platforms and contactless payment to cope with the current reality.

Many leaders have proven themselves capable to address the challenges of the pandemic and embrace the new world.

Those thinking that we can still go back to the way it was are missing out on what it can be. This crisis presents an opportunity for us to build a better world. We will continue to see disruptions, perhaps not in the magnitude presented to us by this pandemic, but we should not lose the lessons of this one.

As humans, it is natural for us to be scared of the unknown. As leaders, we should remain to be the beacons of hope and stability for it is on the darkest nights that stars shine the brightest.

For more details about the PwC – MAP CEO survey, visit www.pwc.com/ph/ceosurvey.

Join us today in critical conversations at the MAP International CEO Web Conference 2020 as we discover the new world and reignite the stalled global economy.

 

Mary Jade R. Divinagracia is a member of the MAP CEO Conference Committee and Managing Partner for Deals and Corporate Finance of PwC Philippines/Isla Lipana & Co.

map@map.org.ph

jade.roxas@pwc.com

http://map.org.ph

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