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PhilHealth executives admit lying under oath to Senate body

PHILIPPINE HEALTH Insurance Corp. officials on Tuesday admitted lying about the agency’s anomalous IT procurement program to avoid Senate detention for contempt.

During a Senate hearing on Tuesday, Senator Panfilo M. Lacson moved to cite PhilHealth Senior Vice-President Jovita V. Aragona and Acting Senior Manager Calixto I. Gabuya, Jr. for lying under oath.

He withdrew the motion after the officials admitted that they lied at the first hearing, where lawmakers found that PhilHealth officials tried to buy obsolete network switches that were five times the price of newer models last year.

The agency nearly bought 15 units of an older model of a Cisco device used to manage computers in a local area network for P420,000 when a newer model costs only P62,000 each, Etrobal Laborte, who resigned as head executive assistant of PhilHealth President Ricardo Morales said.

“Do you admit that you did not tell us the whole truth before?” Mr. Lacson asked. Both Ms. Aragona and Mr. Gabuya answered yes.

At the same hearing, a dialysis center was allegedly used to make about P811 million in claims from PhilHealth to cover “impossible” dialysis sessions.

Mr. Lacson again questioned the advance payment made to health facilities under the so-called interim reimbursement mechanism. 

Health Secretary Francisco T. Duque III, who attended the hearing for the first time on Tuesday, said the program was not exclusive to coronavirus facilities. He denied that some hospitals had been favored by the scheme. Mr. Duque is the PhilHealth chairman.

Senator Ralph G. Recto questioned the request to allocate P10 billion under a bill seeking to give President Rodrigo R. Duterte special powers in the battle against the pandemic for coronavirus testing. 

PhilHealth has about P200 billion in financial assets, Mr. Recto said, citing Deputy Treasurer Sharon P. Almanza.

“There seems to be a request from the palace that we use taxpayers money to give PhilHealth P10 billion to pay for testing,” Mr. Recto said. “Why should we give it P10 billion if it has P200 billion?” he said at the hearing in Filipino.

Mr. Duterte earlier vowed to “finish off” PhilHealth officials involved in irregularities at the agency even if he had no plan to fire its chief.

Top officials of the state insurance company are under investigation by the Senate. The Presidential Anti-Corruption Commission (PACC) is also conducting a separate probe.

Mr. Duterte has also created a task force headed by the Department of Justice that will investigate PhilHealth, including doing lifestyle checks and audits of its officials and employees.

The President has also ordered the Office of the Special Assistant to the President Undersecretary Jesus Melchor Quitain to conduct a separate probe.

Mr. Morales earlier filed to take a medical leave after he was diagnosed with cancer in February.

The agency allegedly bought overpriced items and gave financial aid to ineligible health facilities.

The PACC last week said it had recommended the filing of charges against three dozen PhilHealth officials, which the Senate may adopt in its committee report.

Mr. Morales earlier said some officials have been trying to discredit the agency’s computerization program because it would be easier to discover anomalies.

Former PhilHealth anti-fraud legal officer Thorsson Keith earlier told senators the agency’s top officials had pocketed P15 billion through fraudulent programs.

PhilHealth has denied the allegations. — Charmaine A. Tadalan

Nationwide round-up

Duterte admits vaccines from China, Russia will not be free

PRESIDENT RODRIGO R. Duterte has backtracked on his earlier pronouncements that vaccines for the coronavirus disease 2019 (COVID-19), particularly those from China and Russia, will come free once these are fully certified. “I will ask my friend (Russian) President (Vladimir) Putin and (Chinese) President Xi Jinping to give us… a credit line, but we will pay not in one payment but by installments,” Mr. Duterte said in a televised talk late Monday evening. He said last week that Russia offered its vaccines for free. The Philippines will take part in the phase 3 trials in October of the Sputnik V vaccine being developed by the Moscow-based Gamaleya Institute. Finance Secretary Carlos G. Dominguez III said in July the government is planning to allocate up to P20 billion to buy vaccines against COVID-19. — Gillian M. Cortez

Human rights lawyers, activists seek TRO vs anti-terrorism law

HUMAN RIGHTS lawyers and activists are challenging before the Supreme Court the validity of the Anti-Terrorism Act, which expanded the definition of terror crimes in the country. In a 77-page petition, the petitioners — composed of the Philippine Alliance of Human Rights Advocates, Ateneo Legal Services Center, and human rights defenders — asked the court  to issue a temporary restraining order and prohibit law enforcers from implementing provisions of the Anti-Terrorism Act. They argued that the creation of the Anti-Terrorism Council and the powers granted to it violate the principle of separation of powers. They also said Section 12 in relation to Section 3(e), which makes any person providing “material support” to terrorists liable to terrorist acts, is “overbroad.” The Supreme Court previously announced that it will hold oral arguments “on the 3rd week of September, at the earliest” on the more than 20 petitions filed against the Anti-Terrorism Act, which took effect last July 18. — Vann Marlo M. Villegas

Mayors urged to make contact tracing a priority

THE NATIONAL task force handling the coronavirus disease 2019 (COVID-19) response on Tuesday called on local officials to prioritize contact tracing in their areas, a key component in mitigating community transmissions of the virus. Baguio City Mayor Benjamin B. Magalong, appointed to head the contact tracing program, said while they have seen a significant improvement in tracing activities, local government leaders should make a conscious effort to put this at the forefront of response measures. “Sana yung (I hope) mayors will be directly involved sa contact tracing,” he said in a briefing on Tuesday. At the same time, he acknowledged that there are local government units that do not have the resources for sufficient and skilled contact tracers. A training program on contact tracing for local government teams is ongoing, done through online instruction or on-site lectures. — Gillian M. Cortez

Airlines, airports to push COVID-19 testing as quarantines hurt traffic

MONTREAL/SYDNEY — Airlines and airports will ask a UN-led task force meeting on Tuesday to recommend countries accept a negative COVID-19 (coronavirus disease 2019) test within 48 hours of travel as an alternative to quarantines that have decimated demand for travel, according to a document seen by Reuters.

The industry wants the task force to make the recommendation for passengers traveling from countries with high COVID-19 infection rates when it meets on Tuesday to review guidelines for international travel amid the pandemic.

“A test prior to departure could reduce the risk of importation by up to 90%, enabling air travel to be opened up between a large number of countries without a quarantine requirement,” said the proposal from Airports Council International (ACI) and airline trade group International Air Transport Association (IATA).

The push for testing comes as the industry’s hopes for a recovery were dealt a blow last week when Britain reintroduced quarantines on travelers from France and the Netherlands.

Airlines are forecasting a 55% decline in 2020 air traffic, according to IATA, which reported 85% of surveyed travelers expressed concerns about quarantine.

“We don’t support across-the-board mandatory testing,” IATA medical adviser Dr. David Powell told Reuters. “But if there are situations where there is a higher risk in the country of origin and it can avoid the need for quarantine, then we certainly support that and advocate for that concept.”

The proposal calls for the use of PCR (Polymerase chain reaction) tests conducted outside of airports.

The task force did not raise testing as an alternative to quarantines in May when it recommended a uniform approach toward reviving flights, but it could do so after Tuesday’s meeting.

The International Civil Aviation Organization (ICAO) was not immediately available to comment.

Mr. Powell said the 48-hour period recommended by IATA and ACI was up for discussion and said it could make sense for some travelers to take a second test upon arrival at their destination.

While task force recommendations are voluntary, ICAO guidelines are typically adopted by its 193-member countries.

Requiring testing raises cost issues for travelers, given airlines are unlikely to bear the approximate $200 expense. The sector faces up to $314 billion in lost revenue in 2020, according to ICAO forecasts. — Reuters

Michelle Obama takes fight to Trump as convention opens

DEMOCRATS unleashed sharp attacks on President Donald Trump as the party opened its virtual convention on Monday with a range of speakers including four moderate Republicans and Bernie Sanders, who urged voters to join them in supporting Joe Biden for president.

The most-anticipated moment of the convention’s first night was a video address from former first lady Michelle Obama that delivered a personal endorsement of Mr. Biden, who served for eight years as her husband’s vice-president.

“Donald Trump is the wrong president for our country,” she said. “He has had more than enough time to prove that he can do the job, but he is clearly in over his head. He cannot meet this moment. He simply cannot be who we need him to be for us.”

“It is what it is,” she added, a clear reference to Mr. Trump’s reaction when confronted in an interview with the country’s high death toll from the coronavirus.

Democrats attacked Mr. Trump on the pandemic, racial justice and the shattered economy. Mr. Sanders, the democratic socialist who was Mr. Biden’s closest challenger for the presidential nomination, said “at its most basic, this election is about preserving democracy.”

“In the midst of all of this, we have a president who is not only incapable of addressing these crises, but is leading us down the path of authoritarianism,” Mr. Sanders of Vermont said.

Mr. Biden, who will accept his party’s presidential nomination on Thursday, appeared in video snippets from earlier campaign appearances.

“I may be kidding myself, but I think people are ready,” Mr. Biden said of police reform in one such comment. “But we can’t let up.”

The Democrats abandoned plans for a live convention in Milwaukee due to the coronavirus, and the challenge of putting on an event solely through video and speeches without a live audience quickly became apparent, as the affair lacked the drama and emotion of a raucous arena.

But there were powerful moments — and sharp attacks on the Republican president. One speaker, Kristin Urquiza, spoke about her father, who died after contracting COVID-19.

“My father was a healthy 65-year-old,” she said. “His only preexisting condition was trusting Donald Trump, and for that, he paid with his life.”

Most of the Republicans featured Monday have criticized Mr. Trump in the past.

“We’re being taken down the wrong road by a president who has pitted one against the other,” former Ohio Governor John Kasich said. “I’m a lifelong Republican, but that attachment holds second place to my responsibility to my country. That’s why I’ve chosen to appear at this convention.”

Earlier on Monday, anticipating Mr. Kasich’s appearance, Mr. Trump criticized him. “He was a loser as a Republican and he’ll be a loser as a Democrat,” the President told reporters on Air Force One, mistakenly suggesting Mr. Kasich was changing parties.

The evening began with a montage of diverse voices singing “The National Anthem” and a video message from the family of George Floyd, whose death at the hands of Minneapolis police galvanized the “Black Lives Matter” movement.

Like other convention speakers, New York Governor Andrew Cuomo used the opportunity to tear into Mr. Trump’s handling of the coronavirus. Mr. Biden, who has called for masks to be required in public, has said Mr. Trump “waved the white flag and left the battlefield” in fighting the pandemic.

“Only a strong body can fight off the virus, and America’s divisions weakened it,” Mr. Cuomo said. “Donald Trump didn’t create the initial division. The division created Trump; he only made it worse.” — Bloomberg

More infectious coronavirus mutation may be ‘a good thing,’ says disease expert

SINGAPORE — An increasingly common mutation of the novel coronavirus found in Europe, North America and parts of Asia may be more infectious but appears less deadly, according to a prominent infectious diseases doctor.

Paul Tambyah, senior consultant at the National University of Singapore and president-elect of the International Society of Infectious Diseases, said evidence suggests the proliferation of the D614G mutation in some parts of the world has coincided with a drop in death rates, suggesting it is less lethal.

“Maybe that’s a good thing to have a virus that is more infectious but less deadly,” Mr. Tambyah told Reuters.

Mr. Tambyah said most viruses tend to become less virulent as they mutate.

“It is in the virus’ interest to infect more people but not to kill them because a virus depends on the host for food and for shelter,” he said.

Scientists discovered the mutation as early as February and it has circulated in Europe and the Americas, the World Health Organization (WHO) said. The WHO has also said there is no evidence the mutation has led to more severe disease.

On Sunday, Malaysia’s director-general of health Noor Hisham Abdullah urged greater public vigilance after authorities detected what they believe was the D614G mutation of the coronavirus in two recent clusters.

Sebastian Maurer-Stroh of Singapore’s agency for science, technology and research said the variant has also been found in the city-state but that containment measures have prevented large-scale spread.

Malaysia’s Mr. Noor Hisham said the D614G strain detected there was 10 times more infectious and that vaccines currently in development may not be effective against this mutation.

But Messrs. Tambyah and Maurer-Stroh said such mutations would not likely change the virus enough to make potential vaccines less effective.

“(The) variants are almost identical and did not change areas that our immune system typically recognize, so there shouldn’t be any difference for vaccines being developed,” said Mr. Maurer-Stroh. — Reuters

Expensive, slow internet pulls down Philippine digital ranking

THE Philippines ranked 66th out of 85 countries in the 2020 Digital Quality of Life Index, saddled with issues like expensive, low-quality internet and the need to upgrade its electronic infrastructure.

The Philippines’ strongest performance was in e-governance, ranking 36th, outperforming Vietnam (58th), Thailand (64th) and Indonesia (74th).

The Digital Quality of Life Index 2020 is the second study by Surfshark Ltd. — an information technology firm — after launching it in 2019. The first study covered 65 countries, in which the Philippines ranked 51st. It assessed and compared the countries’ digital experience in terms of entertainment content availability, internet speed, data protection, cybersecurity, and internet affordability.

The latest study covers 85 countries, focusing on five pillars: internet affordability, internet quality, electronic infrastructure, electronic security, and electronic government.

In terms of internet affordability and internet quality, the Philippines ranked 79th and 84th, respectively.

The Philippines ranked 67th in electronic infrastructure, which was measured according to the adoption of information and communications technology and the number of individual internet users per 100 inhabitants.

The report said the country ranked 46th in the area of electronic security, which involves both cybersecurity and data protection laws.

The countries with the highest digital quality of life are Denmark, Sweden, Canada, France, Norway, Netherlands, the UK, Israel, Japan, and Poland.

Israel offers the most affordable internet, while Singapore ranked first in terms of internet quality and e-governance.

The United Arab Emirates ranked first in terms of electronic infrastructure, while the UK had the highest rating in the area of electronic security.

“E-security, e-infrastructure, and e-government have a more significant correlation with the digital quality of life than gross domestic product per capita. This proves the potential to level up the digital wellbeing with lower resources and more focused strategic planning,” it said.

It said the affordability of the internet has a “notably lower correlation” with the digital quality of life than the other pillars.

“For instance, the internet is less affordable in some Southern or Eastern European countries, but people there still enjoy higher than average digital quality of life. Interestingly, the affordability does not depend neither on the quality of the connectivity, nor the level of e-infrastructure development,” it said.

Philippine ICT industry expert Eliseo M. Rio, Jr., former undersecretary of the Department of Information and Communications Technology (DICT), said the results for the Philippines were expected.

“I think the report is accurate. We really have to improve our telecommunications infrastructure to rank higher,” he told BusinessWorld in a phone message.

As for the gap between e-governance and digital quality of life rankings, he said: “DICT was able to put all government offices on-line for basic government services. The private sector also did the same. But citizen’s access to on-line services from both government and private agencies to improve their digital quality of life is limited because of lack of infrastructure.” — Arjay L. Balinbin

PHL ranks 66th (out of 85) countries in terms of ‘digital quality of life’

July rice inventory falls by a fifth year on year

THE NATIONAL rice inventory fell 19.8% year on year to 2.10 million metric tons (MT) in July, according to the Philippine Statistics Authority (PSA).

In its latest Rice and Corn stocks inventory report, the PSA said current stocks compare with the year-earlier level of 2.63 million MT.

In July, rice stocks held by households rose 6.4% year on year to 1.07 million MT while inventory in commercial warehouses fell 26.5% to 808.55 thousand MT.

National Food Authority (NFA) inventories also fell 56.9% year on year to 222.57 thousand MT.

On a month-on-month comparison, rice inventory in July fell 12.2% against June.

Rice held by households fell 14.5% compared with June, stocks in commercial warehouses fell 9.3%, and NFA holdings fell 10.4%.

“About 51% of the current rice inventory was held by households, 38.4% by commercial warehouses, and the remaining 10.6% NFA depositories,” the PSA said.

Meanwhile, the corn inventory in July fell 9.9% year on year to 741.66 thousand MT.

Corn stocks held by households rose 25.7% year on year to 76.92 thousand MT while commercial warehouse holdings fell 12.7% to 664.73 thousand MT.

NFA held no corn during the month.

Month-on-month, household corn stocks fell 19.9% while commercial warehouse inventories fell 17.9%.

“Of the current corn stocks, 89.6% were in commercial warehouses and 10.4% were in households,” the PSA said. — Revin Mikhael D. Ochave

Telemedicine measure filed at House

A MEASURE providing for the development of electronic health (E-Health) and telemedicine has been filed at the House of Representatives in aid of regions underserved by the medical community.

House Bill No. 7422, the proposed “Philippine E-Health and Telemedicine Development Act,” filed by Albay Representative Jose Ma. Clemente S. Salceda.

“Remote medicine services are essential in the time of COVID-19 (coronavirus disease 2019),” Mr. Salceda said in a statement Tuesday.

Mr. Salceda also pushed for more attention to be paid to other diseases that are “deadlier and more debilitating” but were overtaken by the COVID-19 emergency.

Citing 2017 World Health Organization data, Mr. Salceda said there are 10.6 doctors per 10,000 Filipinos in  the National Capital Region and a national average of 3.9 doctors per 10,000.

The bill will establish the components of E-Health systems, which include providing services and applications to access healthcare and the establishment of an Information and Communications Technology infrastructure.

Mr. Salceda also said the bill will regulate the industry. Some business process outsourcing companies are currently providing telemedicine services.

“The Philippines currently has no regulatory framework for telemedicine and electronic health systems, although some telemedicine facilities have already established operations in the country,” he said.

The measure defines Telehealth and Telemedicine services as an approach to extend healthcare services through ICT to patients at a distance from health care providers.

The measure is also expected to reduce fraud within the Philippine Health Insurance Corp. system, which is now the center of Congressional investigations for alleged corruption.

“Telehealth is harder to defraud. You need to connive with more people, in an easily verifiable system, where anomalies can be identified with data analytics,” he said.

The bill authorizes the Department of Health to lead the National e-Health Steering Committee, with the Department of Information and Communication Technology among others.

Representatives from the health sector and patient group will also be included in the committee. — Charmaine A. Tadalan

Foreign workers stranded in Philippines not subject to income tax — BIR

NON-RESIDENTS stranded in the Philippines due to the coronavirus travel bans are not liable for income tax in the Philippines, subject to certain conditions, according to the Bureau of Internal Revenue (BIR).

BIR Commissioner Caesar R. Dulay issued Revenue Memorandum Circular No. 83-2020 to clarify that non-resident individuals who were not able to leave the country due to travel bans will not be regarded as being present in the Philippines for tax residence purposes during their stay.

“The bureau will consider this as ‘force majeure’ for the purpose of establishing such individual’s tax residence, provided that he or she leaves the Philippines as soon as the circumstances permit (or) when the travel restriction or quarantine measures have been lifted,” according to the circular, published Tuesday.

The BIR said the ongoing restrictions have raised international tax issues involving cross-border workers or those stranded in places that are not their country of residence. Since some employees extended their stay in the Philippines, this may result in the unintended creation of permanent establishment (PE) of foreign enterprises.

It said a PE will not be realized if a non-resident foreign firm did not hold such status prior to the pandemic; there are no changes in the company except for the extended stay of its employees; and if the stranded individuals leave the country as soon as possible.

Under current tax treaties, the BIR may tax the income of a non-resident individual if he or she is either present for more than 183 days in the country, the employer is a resident of the Philippines, or if the non-resident employer has a PE.

The bureau said the treaty provisions “will not be strictly applied” during the pandemic to minimize potential burdens. However, determining whether a taxpayer is a resident for tax purposes in the country will need to be assessed on a case-to-case basis.

Individuals will have to prove to the BIR that their extended stay was due to travel bans or other restrictions related to the coronavirus pandemic. This includes a sworn certification stating their situation; duly executed contracts; a copy of confirmed flight bookings; the itinerary for the original and re-booked flight, as well as a copy of the employee’s passport, among others. — Beatrice M. Laforga

NEA behind pace on 2020 electrification target

THE National Electrification Administration (NEA) said it may not hit its target to bring power to about 460,000 targeted households this year after the first-half totals came in down 15% year on year.

Electric cooperatives connected 209,781 households between January and June, well behind the year-earlier pace.  The new connections account for 46% of the agency’s 2020 target.

The lag in connecting households was due to quarantine restrictions, according to NEA Administrator Edgardo R. Masongsong.

“From the first quarter monthly average of 44,812 new connections, it dropped to 25,115 monthly during the second quarter. This accounts for a 44% or a 19,697 reduction in monthly new service connections,” NEA’s Information Technology and Communication Services Department noted.

Mr. Masongsong said the agency may not hit its electrification target this year with mobility restrictions still in place, coupled with unavailable construction materials.

He advised electric cooperatives “to speed up the procurement process or maximize whatever available electrical materials are in their respective warehouses, as well as mobilize their personnel, instead of waiting for the contractors.”

Earlier, NEA reduced the number of sitios or rural villages to be electrified to 635 from 964 under its Sitio Electrification Program, after some of its funding was reallocated to the government’s pandemic containment effort. Some P1.26 billion of its unutilized funds were remitted to the Bureau of Treasury, as requested by the Department of Finance.

The Philippines’ electrification level is now at 96.61% or 13.85 million powered households out of the total 14.34 million. — Adam J. Ang

Poultry supply deemed adequate after Brazil import suspension

THE SUPPLY of poultry remains ample despite a temporary ban on chicken meat imports from Brazil, according to the Bureau of Animal Industry (BAI).

In a virtual briefing Tuesday, BAI Director Ronnie D. Domingo said Brazilian chicken imports typically account for 15% of all imports.

Nevertheless, Mr. Domingo told consumers not to worry about a possible shortage because the Philippines is still importing poultry products from other countries.

“We have enough poultry products to last until the end of the year,” Mr. Domingo said.

On Aug. 14, the Department of Agriculture (DA) temporarily banned imports of poultry meat from Brazil.

In a memorandum order, Agriculture Secretary William D. Dar suspended the accreditation of Brazilian meat companies exporting poultry meat to the Philippines.

The order also halted the processing, evaluation, and issuance of sanitary and phytosanitary import clearances (SPSICs) for such products.

Mr. Dar cited a China finding that a chicken meat sample from Brazil tested positive for the virus.

The order also noted the rising number of COVID-19 confirmed cases and deaths in Brazil, which included workers at meat packing facilities.

“The health status of the workers in meat establishments is a primary consideration in the accreditation of foreign meat establishments in compliance with the ‘Good Manufacturing Practices’ certification,” Mr. Da said in his order.

Mr. Domingo said that a technical working group has been created to study the government’s next move regarding Brazilian meat imports.

Mr. Domingo added that the technical working group will conduct a risk analysis and submit a recommendation to Mr. Dar.

According to the World Health Organization (WHO), there is no scientific evidence of COVID-19 transmission through food. — Revin Mikhael D. Ochave

Government assistance to vulnerable MSMEs during the pandemic

Human society is composed not only of the privileged, the wise, and the good, but also of the vulnerable.

In ancient times, the fatherless boy, the orphan, and the widow were easily targets for oppression. Their welfare was, therefore, provided for under the Law, which ensured justice for the fatherless boy, the widow, and even alien residents, and the law also included provisions for their sustenance. People had a duty to look after orphans and widows.

Now, there is a sector of society reeling from the ravages of the COVID-19 pandemic. Due to the swift and undefined changes, micro, small and medium enterprises (MSMEs) have become vulnerable. Like the laws that protected the orphans and widows of old, regulations must be put in place to ensure that MSMEs thrive in a challenging milieu.

An MSME in the Philippines is defined as any business or enterprise engaged in industry, agri-business and/or services that has: (1) an asset size (less land) of up to P100 million; and (2) a workforce of less than 200.

Based on the 2018 List of Establishments issued by the Philippine Statistics Authority, the Philippines had a total of 1,003,111 business establishments. Of this total, MSMEs accounted for 99.52% or 998,342 establishments. In terms of employment, MSMEs jobs totaled 5,714,262 in 2018 or 63.19 % of the workforce.

Despite representing an array of industries and their ability to generate jobs, MSMEs face various barriers to growth and development. According to the Senate Economic Planning Office, the constraints that MSMEs often face can generally be categorized as: (1) non-financial barriers (cost of getting electricity, heavy regulation, high tax rates, and corruption); and (2) financial barriers (access to finance). Undeniably, the current pandemic unwittingly presents itself as an additional test confronting the MSMEs.

Fortunately, the government implemented several measures to help MSMEs endure and survive the tough times. For example, the Department of Finance (DoF), Bureau of Internal Revenue (BIR) and Social Security System (SSS) have issued Joint Memorandum Circular No. 001-2020 and 002-2020 providing for the Small Business Wage Subsidy (SBWS) program granting a wage subsidy of P5,000 to P8,000 to the eligible employees of small business employers affected by any form of quarantine.

Additionally, the Implementing Rules and Regulations of Section 4 (AA) of the Bayanihan to Heal as One Act (Republic Act No. 11469) require covered institutions to implement a minimum 30-day grace period for loans due during the quarantine period. It requires lenders not to impose interest on fees and other charges to future payments or amortizations of individuals, households, MSMEs and corporate borrowers. No additional documentary stamp tax (DST) will be imposed as a consequence of this relief granted.

The Department of Trade and Industry (DTI) also issued Memorandum Circular No. 20-12 which provides a 30-day grace period on commercial rent of MSMEs that have ceased operations due to the ECQ without incurring interest, penalties, fees and other charges. No eviction for failure to pay rent due may be enforced within the 30-day period after the lifting of the ECQ.

Philippine Economic Zone Authority (PEZA) Memorandum Circular No. 2020-023 also authorizes the deferment of rental payments for locators in certain public ecozones for April and May of 90 days from the due date. PEZA will not charge interest or penalties during the grace period. Payments for public ecozone utilities, including electricity, water, and wastewater treatment, will be deferred for 30 days with no interest or penalties.

There are also pending bills which aim to support vulnerable MSMEs. The proposed Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) provides for an enhanced Net Operating Loss Carry Over (NOLCO) extended from 3 to 5 years for losses incurred in 2020 and will be applicable to all non-large taxpayers. The purpose of extending NOLCO is to give MSMEs more time to recoup their losses arising from the implementation of ECQ and other measures to contain the spread of COVID-19.

CREATE also proposes an across-the-board cut in the corporate income tax (CIT) rate from 30% to 25% which will be reduced further by 1 percentage point every year from 2023 to 2027 until it reaches 20%. An outright 5 percentage point reduction in the tax rate will benefit all business enterprises that have not enjoyed any type of income tax incentive. The reduction will boost the efforts of enterprises, especially MSMEs, to protect jobs and recover from the challenges they have encountered due to COVID-19.

Finally, the pending Bayanihan to Recover as One Act ensures, among others, that credit accommodations for MSMEs be imposed a low interest, payable within three years with no collateral required if the loan does not exceed P3 million. It likewise directs the Small Business Corp. to expand its loan programs for MSMEs by increasing available loanable funds, reducing eligibility requirements, increasing maximum loan amounts per borrower, reducing interest rates and extending loan terms. A standby fund is also being set for appropriation to support the activities of the MSME sector.

Notably, when the orphans and widows were cared for during ancient times, it served as evidence that God was their Helper and Father, giving them relief and preserving their lives.

Similarly, the proper execution of the regulations and pending bills mentioned above will ensure that the vulnerable sectors of society such as the MSMEs continue to blossom despite the harsh environment. Moreover, the jobs generated by the MSMEs will be protected. There will be reason for hope despite the uncertainty of these times.

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.

 

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

pagrantthornton@ph.gt.com

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