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Kaspersky expects more fake news as elections draw near

FILIPINOS might get bombarded with more fake information as the Philippines prepares for the national elections in 2022, global cybersecurity company Kaspersky Lab said.

“The whole region is quite ripe for potential disinformation campaigns,” the company said in  an e-mailed statement on Monday.

It added that such tactics would be increasingly used by various stakeholders as some countries hold elections this year and onward.

The increasing number of social media and mobile device users means that disinformation campaigns would have a “larger effect on opinions than was ever seen previously,” Kaspersky said.

The Philippines will elect new leaders from president and vice president to lawmakers and local government officials next year.

Vietnam also plans to hold its general elections this year, while Malaysian Prime Minister Muhyiddin Yassin said the country would hold its general elections once the coronavirus pandemic is over.

Last year, the personal information of more than two million Indonesian voters were leaked online. Kaspersky said similar attempts at data intrusion could be made in other Southeast Asian countries.

Wider use of technology last year increased the potential for more data breaches, Kaspersky Asia Pacific Security Researcher Muhammad Umair said.

“Those who have been quick to come on board this transformation must also be just as vigilant to protect themselves,” he said.

“As always, social engineering remains to be one of the most effective attack vectors and just as much as technology, a strong focus on education and awareness is needed more than ever,” he added.

Kaspersky said Southeast Asia is one of the worst-hit regions for attacks on industrial control systems, or computer-based systems used in manufacturing. — Jenina P. Ibañez

Nationwide round-up (01/04/21)

House health panel to prioritize proposals on PhilHealth contribution hike deferment

THE HOUSE of Representatives committee on health will prioritize proposals to defer the scheduled hike in member contributions to the Philippine Health Insurance Corp. (PhilHealth), the panel’s chairperson said on Monday.

Quezon Rep. Angelina Helen D. Tan, committee chair, assured that the proposals to defer the increase in premium contributions would be given “utmost priority and cautious consideration.”

Republic Act No. 11223, or the Universal Health Care Act, mandates a 0.5% increase in premium contributions every year, starting 2021 until it reaches the 5% limit in 2025.

The premium rate for this year will increase to 3.5% of members’ monthly basic salary from 3% last year, raising minimum contribution to P350 from the current P300.

“The increase in premiums will without doubt be an added burden to the public, many of whom are still reeling from the devastating effects of COVID-19 (coronavirus disease 2019) to their finances and livelihood,” Ms. Tan said in a statement.

On the other hand, she said, the proposed deferment will definitely spell a great setback in the government’s efforts “to bring health care to all Filipinos” through the implementation of the universal health care program.

“Membership contributions for 2021 should be thoroughly studied right away in light of the pros and cons of the matter.”

Another House member is urging the state insurer to consider a six-month suspension of the increase in premium contributions.

Party-list Rep. Michael T. Defensor said PhilHealth members deserve a temporary reprieve from the increase amid a “fortuitous event” such as the coronavirus pandemic.

“We are in the middle of a once-in-a-century pandemic. Even private pre-need companies are declaring a ‘fortuitous event’ to justify delays in the payment of their contractual obligations to thousands of planholders,” Mr. Defensor, who co-chairs the House committee on health, said in a statement.

Congress, if needed, should pass a joint resolution calling for the six-month deferment of the increase in premium contributions, he added.

Mr. Defensor noted that PhilHealth’s reserve fund stood at P110 billion as of March 2020.

“In an extreme situation wherein claims and administrative expenses might exceed contribution collections due to the pandemic, PhilHealth can always dip into its Investment Reserve Fund and the earnings thereof,” Mr. Defensor said.

PhilHealth has been tarnished with corruption allegations. Its former president and chief executive officer, Ricardo C. Morales, along with other officials are now facing graft charges before the Office of the Ombudsman over the alleged anomalous release of P2.7 billion worth of Interim Reimbursement Mechanism funds. — Kyle Aristophere T. Atienza

2 Chinese pharmaceutical firms to apply for vaccine emergency use

TWO Chinese pharmaceutical firms will apply for an emergency use approval of their respective coronavirus disease 2019 (COVID-19) vaccines from the local Food and Drug Administration (FDA) this week, according to the Philippine envoy to China.

Ambassador Jose Santiago L. Sta. Romana, in a briefing on Monday, said the companies — China National Pharmaceutical Group Corp. (Sinopharm) and Sinovac Biotech (Sinovac) — are currently in talks with the national COVID-19 task force regarding the vaccine emergency use authorization (EUA).

“Apparently, their plan right now, according to them is that they hope to file in the next few days sometime this week. They will file their EUA application with the FDA in the Philippines,” he said.

Last week, the FDA said American firm Pfizer, Inc. applied for an EUA.

With an EUA, the approval period of a COVID-19 treatment drug or vaccine will be reduced to 21 to 28 days from the usual six months. — Gillian M. Cortez

Senate hearing on vaccine to focus on immunization program

THE SENATE committee of the whole hearing next week will zero in on the government’s immunization program against the coronavirus disease 2019 (COVID-19), rather than issues on the “smuggled” vaccines, a senate leader said.

“The original question of the hearing is ‘Bakit wala pa tayong Vaccine? Kailan at paanong idi-distribute at paano storage?’ (Why don’t we have vaccines yet, and how will the distribution and storage be handled),” Senate President Vicente C. Sotto III told reporters over phone message on Monday.

The controversy over allegedly smuggled vaccines injected to members of the Presidential Security Group (PSG) might be taken up another time, he said.

Mr. Sotto also said he will first consult the other senators on whether to invite PSG Commander Jesus P. Durante III to the hearing set for Jan. 11.

Mr. Durante had admitted procuring the unregistered vaccines for COVID-19 that was inoculated to PSG personnel and some Cabinet officials.

The local Food and Drug Administration (FDA) has yet to authorize any COVID-19 vaccine for use in the country.

The government has allocated P2.5 billion for vaccines under the Department of Health’s 2021 budget and P70 billion more in unprogrammed funds.

There is also some P10-billion standby fund provided by the Bayanihan to Recover as One Act (Bayanihan II) under Republic Act No. 11494. This may be tapped if the President signs into law the bill extending the Bayanihan II, which expired on Dec. 19. — Charmaine A. Tadalan

Solon calls for stimulus on private sector investment in natural gas terminals

A LAWMAKER on Monday said the government must find ways to encourage private companies to build liquified natural gas (LNG) terminals, which will serve as replacement to the Malampaya deep water gas-to-power project with its reserves expected to start declining in three years.

“The output of the (Malampaya project’s) gas will start going down by 2024. The direction of the Department of Energy (DoE) is to encourage the private sector to build receiving terminals for imported liquefied natural gas,” Senator Sherwin T. Gatchalian, who chairs the Senate committee on energy, said in a press release.

Mr. Gatchalian said while the country has yet to discover new sources of gas, it “would have to resort” to importing LNG to ensure the operations of the five gas-fired plants that generate over 3,200 megawatts (MW) of power in Luzon, the senator said.

BusinessWorld sought DoE for comment but has yet to receive a reply as of press time.   

The Senate is scheduled on Tuesday to deliberate on Senate Bill No. 1819 or the Midstream Natural Gas Industry Development Act, which aims to develop the sector.

Based on DoE’s 2019 data, the Malampaya project fuels the five gas-fired power plants that take up 20% of Luzon grid’s installed capacity. The offshore project also served more than half of utility giant Manila Electric Co.’s (Meralco’s) power demand.

Four years ago, the Energy agency issued a circular that outlined the rules for players in the downstream natural gas industry.

But Mr. Gatchalian said this issuance needs a complementary law that will cover all aspects of the midstream natural gas industry, including transport, transmission, storage, and marketing of natural gas in its original or liquefied form. — Angelica Y. Yang

NBI to investigate selling of sexual photos and videos by students to raise funds

THE DEPARTMENT of Justice (DoJ) ordered the National Bureau of Investigation (NBI) to probe the reported selling of sexual photos and videos by students purportedly to raise money for online classes.

Under Department Order No. 001 dated Jan. 4, Justice Secretary Menardo I. Guevarra directed the state agents to investigate the “alleged proliferation of trafficking in persons and online sexual exploitation of children,” particularly the selling done by students.

The NBI was also told to file charges against all persons involved if evidence warrants.

Senator Sherwin T. Gatchalian, in a statement on Sunday, urged the Justice department’s Office of Cybercrime and the police Anti-Cybercrime Group to probe the reports on “Christmas sale” of sensual photos and videos to pay for expenses relating to distance learning.

Mr. Gatchalian said he has filed Senate Bill No. 1794, which proposes that regional trial courts can authorize law enforcers to conduct surveillance and record communications and information of persons charged or suspected involved in child trafficking.

The proposed law also mandates internet service providers to block and filter any access to child pornography.

Mr. Guevarra on Sunday said he welcomes the enactment of a law that would “strengthen the legal framework for the government’s campaign against human trafficking in cyberspace, particularly online sexual exploitation of children and minors.”

“As we await the passage of this legislation, the DoJ, through its Office of Cybercrime, and the NBI’s cybercrime division, will intensify its efforts to crack down on cybercrimes and all forms of human trafficking through the internet, which are expected to rise during these times of limited physical movement and interaction,” he told reporters via Viber.

The DoJ earlier said reported online exploitation of children from March to May 2020 rose to 279,166 cases, a 264.63% rise from the same period the previous year. — Vann Marlo M. Villegas

Regional Updates (01/04/21)

9 Sulu cops to face murder charges over shooting of 4 soldiers

PROSECUTORS have been directed to immediately file the resolution finding probable cause to charge nine policemen for murder and planting of evidence over the killing of four soldiers in Jolo, Sulu in June last year. Justice Secretary Menardo I. Guevarra said he ordered Prosecutor General Benedicto A. Malcontento to immediately file the information with the court, and secure arrest warrants against the nine cops. “I understand that the accused police officers have been dismissed from the service, so the court should immediately obtain jurisdiction over their person, lest they be able to flee,” he told reporters via Viber message on Monday. The prosecutors, in a statement, said the victims were “unarmed, unsuspecting and were not in the position to defend themselves when they were shot.” They also said a firearm was planted near the left hand” of one of the victims who was right-handed. On the other hand, the prosecutors dismissed the charge of neglect of duty under Executive Order (EO) No. 226 against the three superiors of the policemen. It said that under the EO, violators “shall be held administratively accountable,” which means the case does not fall under the Department of Justice’s jurisdiction. — Vann Marlo M. Villegas

Makati aims for 100% coverage as it allocates P1B for COVID-19 vaccines

THE MAKATI City government has allocated P1 billion to buy coronavirus disease 2019 (COVID-19) vaccines, which will be given to residents for free. “This is our number one priority for 2021. I want each and every Makatizen to receive both doses of the coronavirus vaccine for free to protect them and their families against the virus,” Makati Mayor Abigail Binay-Campos said in a statement on Monday. Ms. Binay said she will ask the city council to pass a supplemental budget for the vaccination program after the national task force on COVID-19 gives its go signal. The local government is currently coordinating with Secretary Carlito G. Galvez, Jr., designated vaccine czar, for the vaccine purchase and distribution. “We’ve seen the damage it can do both to human lives and our economy… we will do whatever it takes to protect our residents, employees, and our business community,” the mayor said. “We will exhaust all means to get the much-needed vaccines early and have all Makatizens vaccinated. The city will also assist companies and businesses that would like to buy vaccines for their employees and workers. We are aiming for 100 percent vaccination in Makati,” she added. The city government is preparing an online registration system for the inoculation. Several other local government units (LGUs) have taken a similar initiative of planning for a localized vaccination program.

House probe sought on death of 9 indigenous group members

A RESOLUTION seeking to investigate the killings of nine members of indigenous peoples under the group Tumandok and the arrest of 17 others in synchronized police operations in the hinterlands of Panay Island on Dec. 30 has been filed in the House of Representatives. Members of the six-man Makabayan bloc filed House Resolution No. 1149, which calls on the lower chamber to conduct a probe on the incident, which involved a simultaneous serving of search warrants against suspected communist rebels in several Panay provinces. Tumandok is an alliance of indigenous communities in Tapaz and Jamindan towns in Capiz, and Calinog in Iloilo. The organization has been known for resisting “destructive” development projects, the lawmakers said. Among those killed was Roy Giganto, a former village chief and an incumbent barangay councilor. The lawmakers said those killed in the operations were well-known indigenous leaders in their respective barangays and were consistent in opposing militarization and rights violations in their communities. — Kyle Aristophere T. Atienza

Agri prospects seen fragile due to pandemic, calamities

By Revin Mikhael D. Ochave, Reporter

PROSPECTS for growth in agriculture remain tenuous due to the ongoing impact of the pandemic, with natural disasters holding the potential to inflict setbacks, and the worst-case scenario estimated in the negative single-digit range, a professor at Pampanga State Agricultural University said.

Roy S. Kempis said in an e-mail interview the calamities can “easily” wipe out any progress made in growing agricultural output in 2021.

“My conservative estimate for the value of production of the sector in 2021 ranges from minus 0.70% to growth of 1%,” Mr. Kempis said, adding that his pessimistic scenario is between a contraction of 1% and growth of 0.8%.

Mr. Kempis said the last quarter of 2020 was not helpful to the sector with a series of typhoons causing widespread flooding and erosion.

“Whatever happens up in the skies… basically wipes out any gain through human effort to find and develop better plant varieties and animal or fish breeds to feed the growing population,” Mr. Kempis said.

Typhoon Vicky, the last typhoon to hit the Philippines in 2020, caused farm damage valued at P129.8 million, according to the Department of Agriculture (DA).

Separately, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) Director Glenn B. Gregorio said the agricultural sector is expected to turn in negative output growth in the first quarter.

“For the first quarter of 2021, we are projecting that the overall growth rate of the volume of production in agriculture is minus 1.21%,” Mr. Gregorio said in an e-mail interview.

He expects fisheries to grow 3.05% during the quarter, offset by contractions in crops, livestock, and poultry  of 1.17%, 6.33%, and 3.99%, respectively.

He said farmers need more resilient agricultural farming systems to deal with natural hazards, such as typhoons and the pandemic, to production.

“These include improved access to climatic and weather data, stress-tolerant crop varieties, good agricultural practices, crop insurance, extension services, modern technological support, and innovative financial services,” Mr. Gregorio said.

Despite the negative estimate for the quarter, Mr. Gregorio projected growth for the rest of the year due to stronger interventions from the government and the private sector.

“We remain hopeful that 2021 is a year when the agriculture sector will significantly grow, and truly become an instrument for socio-economic transformation that centers on the well-being of the farmers and their families,” Mr. Gregorio said.

The DA is estimating a positive finish for 2020, and is adopting a much more optimistic outlook for 2021.

“In 2020, we expect modest growth of 1%. For 2021, we target a conservative 2.5% growth,” Agriculture Secretary William D. Dar said in the DA’s year-end report.

“The COVID-19 pandemic wreaked havoc on the global and national economy. But no matter what happens, people must eat,” he added.

The DA’s original growth target for the farm sector in 2020 was 2%, before being adjusted to 1.5%, and then finally to 1%. In 2019, the sector posted growth of 0.7%.

In the third quarter of 2020, the agriculture sector’s performance as measured by value of production returned an increase of 0.7%, according to the Philippine Statistics Authority.

“We must empower our farmers and fishers through collective action so they will have the opportunity to partner with the various actors in the industry. Leaving them alone will not accelerate the development of the sector,” Mr. Dar said.

In December, the DA announced an initial target for output of palay, or unmilled rice, of 20.48 million metric tons (MT) for 2021, against the 19.32 million MT target for last year.

Raul Q. Montemayor, national manager of the Federation of Free Farmers, said the agriculture sector will continue to move forward in 2021 despite the lack of optimism by most forecasters.

“People will still need to eat and farmers will continue to plant and produce food for the country even in the face of COVID, natural calamities, and other challenges,” Mr. Montemayor said in a mobile phone message.

Cashless payment system eyed for entire public transport sector

THE Department of Transportation (DoTr) said it will be rolling out a cashless transit card payment system this year for use in all modes of public transportation nationwide.

The DoTr said it is also working on national standards for transit cards and transit card readers for the system.

“This effort aims to improve Philippine public transport services by providing convenient payment options to the riding public,” the DoTr said in a statement Monday.

“The use of this technology in the transit system promises a more secure payment system, improved passenger convenience, and helps eliminate card-issue and management costs for transit operators.”

The DoTr said that it staged pilot tests of the transit card readers on three public utility vehicle routes in December.

The payments system was co-developed with the Land Bank of the Philippines. — Jenina P. Ibañez

Remittances seen bouncing back from lows but overseas job market remains weak

REUTERS

By Luz Wendy T. Noble, Reporter

REMITTANCE flows in 2021 will recover from their lows in 2020, but the prospects for overseas workers will remain clouded, with some signs of resiliency and relief that the worst may have passed, money-transfer industry executives said.

“We are still foreseeing major challenges ahead, like the still relatively weak jobs market in many of the host countries, and slow recovery from heavily affected industries because of the pandemic,” Earl Allan E. Melivo, country director at WorldRemit, said in an e-mail to BusinessWorld.

Mr. Melivo said the sectors which are expected to be hardest hit are cruise lines, general tourism, restaurants, and the oil industry.

Meanwhile, UniTeller Philippines President Noel C. Cristal is looking at selected markets which may serve as bright spots for overseas employment.

“Singapore is for IT (information technology) workers, Taiwan is for the factory, Japan is opening up for the healthcare industry because their population is really getting old and then you have the guest workers in New Zealand. Once everything is okay, I think these ones will flourish,” Mr. Cristal said in a Zoom interview.

The Bangko Sentral ng Pilipinas expects cash remittances to grow by 4% this year following an expected 2% contraction for 2020.

“Compared to other countries, the Philippines as a receiving country, remains among those which continue to defy initial estimated declines, similar to Asian neighbors, Pakistan and Bangladesh,” Mr. Melivo said.

The central bank said October inflows rose 2.9% year on year to $2.747 billion. In the first 10 months, cash remittances slipped 0.9% to $24.633 billion.

More than 327,000 overseas Filipino workers were repatriated in 2020, according to the Department of Foreign Affairs.

Developments on the vaccine front and improving job prospects will boost remittance flows going forward, Mr. Cristal said.

“We’re very positive for the next two years. We’re very bullish about it and we’ve gone through the worst and I think it’s going to be much better in 2021 and 2022,” he said.

Cabinet committee to reject higher tariffs on MDM chicken, turkey imports

THE Cabinet-level committee on tariffs plans to oppose an increase in duties on imported chicken and turkey in mechanically deboned meat (MDM) form, Trade Secretary Ramon M. Lopez said.

The committee is considering a proposal to raise the tariff to 40% from 5% on these MDM products, used mainly by food processors.

An executive order (EO) keeping the tariff at 5% expired on Dec. 31. The expiry means the duty reverts to 40% unless President Rodrigo R. Duterte signs a new order.

Mr. Lopez said that the Cabinet-level Committee on Tariff and Related Matters will submit a recommendation to the President to issue a new order retaining the 5% tariff, in the interest of keeping consumer prices in check.

“There is no need to increase the tariff to 40% because there (are) no local producers to protect,” he told reporters in a mobile message Monday.

MDM is used in canned and processed meat products which form a significant part of the consumer basket, many of which are subject to price controls.

“(Higher tariffs) will only increase (the) cost and prices of most canned meat products that are also part of basic goods in the SRP or suggested retail price system,” Mr. Lopez said.

Members of the committee, he said, will complete their official endorsement today, noting that all members have informally expressed their support for the retention of 5% duties.

The President’s Spokesman Herminio L. Roque, in a briefing Monday, said that the Office of the Executive Secretary is awaiting the formal recommendation of the committee.

Customs Assistant Commissioner and Spokesman Vincent Philip C. Maronilla said in the absence of an executive order, the Bureau of Customs will for the moment implement the 40% tariff.

“A memorandum to that effect will be issued. However, this does not prevent importers from availing of the remedy of payment under protest or to seek refunds if and when an EO is issued with retroactive application,” he said in a mobile message. — Jenina P. Ibañez

Coal share of power mix seen at 59% by 2029 despite moratorium

COAL-FIRED POWER is expected to account for 59% of the country’s generation mix by 2029 after production at the Philippines’ sole gas field winds down, according to Fitch Solutions Country Risk & Industry Research.

The loss of supply from the Malampaya gas field will increase the Philippines’ overall reliance on coal as a cost-effective power source, outweighing the moratorium on new coal-plant construction declared by the government last year, Fitch Solutions said in a report.

According to the Department of Energy, coal-based power accounted for 44.5% of the generation mix in 2015. In 2020, 86.51% of the Philippines’ coal consumption was taken up by the power industry.

Fitch Solutions said coal remains the cheap and reliable option to power the country’s growth and help it achieve its 100% electrification goal by 2022.

In light of the depletion of Malampaya’s reserves, “we expect the Philippines’ power mix to remain dominated by coal over the coming decade, with the share of coal reaching approximately 59% by 2029, with considerable downside risks,” Fitch Solutions said.

Fitch Solutions said that power supply mix in 2029 is expected to consist of 22% natural gas, 2% oil, 7% hydropower and 10% non-hydropower renewables.

Fitch Solutions said growth in coal generation is expected to be slowed by the moratorium on new build, which will create a ripple effect down the line because of the five-year timetable for building such plants.

“We now forecast coal-fired power generation to increase by an annual average of 5.2% between 2020 and 2029, amounting to approximately 93.6 TWh (terawatt-hours) by 2029,” Fitch Solutions said.

It did not give comparative growth rates.

The main risks to growth in coal power generation are “very strong and increasing public opposition” from religious and other organizations. Increasing momentum behind climate solutions as well as the adoption of nuclear power could also be factors, it said.

In September, Fitch Solutions downgraded its forecast for the Philippines’ power consumption to a decline of 5.9% in the use of power from all sources and a decline of 14% from coal. — Angelica Y. Yang

Senate bill seeks to suspend SSS contribution hike

A BILL seeking to suspend the scheduled increase in member contributions to the Social Security System (SSS) due to the pandemic has been filed in the Senate.

Senate Bill No. 1965 proposes to amend the Social Security Act of 2018, or Republic Act (RA) No. 11199, by stipulating that the rate increases be postponed by a year, counting from the end of the pandemic.

“Given the current employment situation of the country as a result of the COVID-19 (coronavirus disease 2019) pandemic, there is a need to ensure that workers and companies are able to fully recover and have enough resources to do so,” Senator Emmanuel Joel J. Villanueva said in the bill’s explanatory note.

“This bill seeks to achieve this by providing a reprieve to our battle-weary workers and employers through the suspension of the mandated increase in social security contribution rate.”

Mr. Villanueva, who chairs the labor committee, cited the 8.7% unemployment rate reported in the October 2020 Labor Force Survey.

This is equivalent to 3.8 million unemployed workers and is much higher than the 4.6% rate recorded in October 2019.

RA 11199 provides for an SSS contribution rate increase to 13% of the value of a worker’s salary, not to exceed P25,000, starting January 2021. The rate was 12% in 2020. The new contribution rate will be shared by the employer, which will shoulder 8.5%, with the employee paying 4.5%.

“This respite from increased expenses, arising from higher social security contributions, will provide businesses and employees much-needed income to survive and recover during (the) pandemic,” he said.

Detained Senator Leila M. de Lima also pushed for the suspension of the scheduled increase of the SSS rate as well as the hike in the monthly contribution to the Philippine Health Insurance Corp. (PhilHealth).

“Increasing SSS and PhilHealth contributions will not only result in reduced employment due to increased costs but also in possible delinquencies of members who cannot afford the additional payments required,” she said in a separate statement.

She also noted that the corruption allegations against PhilHealth have not yet been settled. — Charmaine A. Tadalan

The serious repercussions of not withholding tax

New years are a good time to reflect, which is a useful exercise for evaluating how we responded to past situations, and which experiences will serve us well going forward moving forward. This helps us gain a better understanding of ourselves and draw up more realistic life goals.

Similarly, in tax practice, I believe it is advantageous for taxpayers to revisit their past experiences in responding to the Bureau of Internal Revenue’s (BIR) issuances and court decisions. A taxpayer engaged in such study can evaluate the impact of developments like these on their compliance with the tax rules, particularly measures that helped them avoid undue tax exposure and costs.

Before 2020 ended, the Court of Tax Appeals (CTA) ruled en bank in Case No. 2084 on a tax assessment case involving deficiency withholding taxes. In that case, the BIR issued a Formal Letter of Demand against a taxpayer which included a finding of withholding tax deficiencies and income tax deficiency related to the corresponding non-deductibility of expenses due to the alleged non-withholding of tax. The taxpayer filed a protest letter, and received a Final Decision on Disputed Assessment (FDDA) from the BIR denying the protest. The taxpayer petitioned the CTA to review the BIR’s ruling.

The taxpayer had paid the deficiency withholding taxes after the issuance of the FDDA. On this basis, the taxpayer claimed that since the assessed deficiency withholding taxes were paid, the assessment item of disallowed expenses due to non-withholding should have been deleted. However, the CTA did not agree with this contention, ruling that the taxpayer may not claim the deduction, since it only paid the deficiency withholding taxes after the FDDA, and not at the time of the audit investigation or reinvestigation/reconsideration.

The CTA disagreed with the taxpayer’s position that the phrase “at the time of the audit investigation or reinvestigation/reconsideration” should be interpreted to cover the period given to the taxpayer within which to agree with the assessment and pay the same, prior to the filing of a Petition for Review with the CTA. Thus, the CTA retained the tax assessment on non-deductibility of expenses due to non-withholding against the taxpayer.

In effect, the CTA held that, on the issue of non-withholding of tax, the taxpayer was hit with two types of tax deficiencies — on withholding tax, and at the same time, on income tax.

WHAT ARE THE TAKEAWAYS FROM THIS CASE FOR TAXPAYERS?
A taxpayer undergoing a BIR audit should be conscious of the timing of the payment of deficiency withholding taxes. As discussed by the CTA, the timing should be during the audit investigation or reinvestigation/reconsideration, and not after the FDDA. Otherwise, the taxpayer might be hit with a double whammy, in which both the deficiency on the withholding taxes and the deficiency in income tax due to disallowed expenses could be imposed against the taxpayer. Let’s take as an example an income payment to contractors of P10 million, which was not subjected to 2% expanded withholding tax. This would generate a basic deficiency of P200,000 for expanded withholding tax, and another P3 million for income tax (using a 30% corporate income tax rate), if the payment of deficiency withholding taxes is not properly timed.  However, the larger consequence is the disallowance of expenses due to non-withholding, for income tax purposes.

Another takeaway is that a taxpayer should not wait for a BIR audit to discover its withholding tax deficiencies, to avoid altogether the situation described in the CTA case. A taxpayer should take care to ensure that the corresponding withholding taxes are made on day-to-day operations. Remember that the penalties for late withholding of taxes are a 25% surcharge and 12% interest per annum.

In addition, a supplemental subsequent periodic review of transactions can also be helpful to determine whether there were transactions that were not properly subjected to withholding tax, and could require a possible amendment to withholding tax returns. Taking these measures, at least the 12% interest penalty might be avoided.

Having been made aware of the repercussions of non-withholding of tax, the taxpayer must know the transactions covered by the withholding tax rules.  It would be prudent to implement effective controls to monitor these transactions and to ensure withholding tax compliance.

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.

 

Richard R. Ibarra is a senior manager of the Tax Advisory & Compliance division of P&A Grant Thornton, the Philippine member firm of Grant Thornton International Ltd.

pagrantthornton@ph.gt.com

Sports going the ‘bubble’ way

By Michael Angelo S. Murillo, Senior Reporter

ONE of the hardest hit by the coronavirus pandemic, the local sporting community is slowly picking up the pieces and making its way back. And one of the ways it is going about it is holding a “bubble,” be it for training or tournament proper.

Under a bubble setup, activities are done in a very defined and exclusive setup to guard against the spread of the coronavirus, while also allowing close contact among participants.

The Philippine Basketball Association (PBA) successfully held their tournament bubble from October till early December after suspending its Season 45 for seven months, with the Barangay Ginebra San Miguel Kings crowned as Philippine Cup champions.

Also holding its bubble was the Chooks-to-Go 3×3 Pilipinas at the INSPIRE Sports Academy in Calamba, Laguna, which went well with zero reported positive cases of the virus.

The Philippines Football League (PFL), too, successfully held a two-week tournament at the Philippine Football Federation National Training Center in Carmona, Cavite, which had United City Football Club emerging on top.

The bubble scene is set to pick further this year with national athletes set to be trained under such a setup as they prepare and vie for spots in the rescheduled Tokyo Olympics and Southeast Asian Games, and other leagues gearing up to play their tournaments through a bubble setting.

Local sports stakeholders said considering how still unpredictable the situation is with the pandemic, doing a bubble may be the safer way to go about things at this point.

“A bubble setup makes sense,” said sports marketer Rely San Agustin in an interview with BusinessWorld. “Seclusion is needed. You really have to control movement in and out of the venues.”

For Games and Amusement Board Chairman Baham Mitra, while news of vaccines being developed for the coronavirus and could be made available soon is welcome development, “playing outside of the bubble remains risky” and utmost precaution is needed.

Both Messrs. San Agustin and Mitra, however, admitted that going the bubble way does not come cheap, but if organizers are willing to shell out the needed amount, then they should go for it.

The PBA bubble, which had participants holed up at Clark City in Angeles City, Pampanga, for the duration of the tournament reportedly cost the league P70 million, while that of the PFL had a price tag of around P6 million.

In doing a bubble, organizers, too, have to make sure proper procedures and setup are followed to make it successful.

“We are navigating in uncertain times, but if done properly, a bubble can be effective,” said Martin Aguda, Jr., a safety, resilience and crisis management consultant.

Mr. Aguda, who is affiliated with The Safety Project PH and helped Chooks-to-Go 3×3 Pilipinas in reviewing its protocols for its successful tournament, said a bubble needs the three Cs — Compliance with all government regulations; Consistency in the implementation of the protocols; and Concern for the health and safety of the people inside it.

DETERMINED
Among those set to go through a bubble this year as part of their preparation are the national athletes for athletics, whose local federation expressed determination to succeed in doing so.

The country’s track and field team is set to enter their bubble at the New Clark City in Capas, Tarlac, in the middle of this month with the end view of getting its conditioning and training going as they vie for spots for various tournaments, including the Philippine Athletics Championships in March, which is being angled to be an Olympic qualifier.

The Philippine Athletics Track and Field Association said it is in the process of finalizing the requirements of its athletes and coaches before they enter the bubble and that it is closely coordinating with pertinent government agencies, including the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF-EID) and Bases Conversion and Development Authority, which has authority over the facilities at New Clark City.

Also set to go through their own bubble are the combat sports athletes — taekwondo, karate, and boxing — beginning later this week at INSPIRE Sports Academy.

The Philippine SuperLiga and Premier Volleyball League, meanwhile, are looking at staging bubble tournaments in the first quarter this year.

Playoff pairings set for NFL’s wild card weekend

WITH the Green Bay Packers (13-3) and Kansas City Chiefs (14-2) earning the top seeds and first-round byes in the NFC and AFC playoffs, respectively, the other 12 teams that made the playoffs have learned where they’ll be headed for wild card weekend.

In an unprecedented move for the National Football League (NFL), seven teams made the postseason from each conference, with only the top seed receiving a first-round bye. In previous years, each conference sent six teams to the postseason and the top two seeds received first-round byes.

There will be three games on Saturday and three more on Sunday, starting at 1:05 p.m., 4:40 p.m. and 8:15 p.m. All times are EST.

In the National Football Conference (NFC), the second-seeded and NFC South champion New Orleans Saints (12-4) will host the seventh-seeded Chicago Bears (8-8), who backed into the playoffs when the Arizona Cardinals lost to the Los Angeles Rams. The Saints and Bears will meet on Sunday at 4:40 p.m.

Third-seeded and NFC West champion Seattle (12-4) will host the sixth-seeded Los Angeles Rams (10-6), who punched their playoff ticket for the third time in four years with a win over the Cardinals on Sunday.

Seattle and the Rams will meet on Saturday at 4:40 p.m. The teams split a pair of regular-season games, with each winning on its home field, most recently the Seahawks’ 20-9 win in Week 16 that secured the division title.

The NFC East champion, either Washington (6-9) or New York Giants (6-10) pending the outcome of the Washington-Philadelphia Eagles, will host fifth-seeded Tampa Bay (11-5) on Saturday at 8:15 p.m., as Buccaneers quarterback Tom Brady is three wins away from his seventh Super Bowl title.

Either the Giants or Washington will be just the second team to make the playoffs with a losing record — aside from the 1982 strike-shortened season — joining the 2010 Seahawks, who went 7-9 en route to winning the NFC West title. That year, Seattle defeated New Orleans in the first round before falling a week later in the divisional round at Chicago.

In the American Football League (AFC), the second-seeded and AFC East champion Buffalo Bills (13-3) will host the seventh-seeded Indianapolis Colts (11-5) on Saturday at 1 p.m.

Colts coach Frank Reich is a Buffalo legend, as he quarterbacked the Bills to the biggest comeback in playoff history, rallying Buffalo from a 32-point deficit against the Houston Oilers to win in overtime, 41-38, on Jan. 3, 1993.

The third-seeded and AFC North champion Pittsburgh Steelers (12-4) will host sixth-seeded Cleveland (11-5), which is making its first postseason appearance since 2002, in the opening weekend finisher on Sunday at 8:15 p.m.

The AFC North teams split a pair of meetings, with each team winning on its home field. Cleveland defeated Pittsburgh, 24-22, in Week 17 in a game in which the Steelers rested several of their best players, including quarterback Ben Roethlisberger.

Fourth-seeded and AFC South champion Tennessee (12-4) will host the fifth-seeded Baltimore Ravens (11-5) on Sunday at 1 p.m.

The Titans knocked the then-top-seeded Ravens out of the playoffs last year in the divisional round before falling to the eventual-Super Bowl champion Kansas City Chiefs in the AFC title game. — Reuters

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