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The Bureau of Internal Revenue issued Revenue Regulations (RR) No. 7-2020 pursuant to Section 4(z) of the Republic Act No. 11469, otherwise known as “Bayanihan to Heal As One Act” (RA No. 11469). The RR was promulgated as a temporary emergency measure to provide relief to taxpayers who are unable to submit, file and/or pay the necessary documents and/or taxes required under the Tax Code. This RR effectively amends and consolidates the previously issued Revenue Memorandum Circulars (RMC) on extension of deadlines (RMC Nos. 27-2020, 30-2020, 31-2020, 32-2020, 33-2020 and 34-2020).
Because of the extended Enhanced Community Quarantine (ECQ), RMC No. 39-2020 was issued to further extend the due dates specified under RR No. 7-2020. The “extended due dates” under RR NO. 7-2020 are further extended by fifteen (15) calendar days, except for those where the extended due dates are 30 days or 60 days after the lifting of the state of emergency. If the new extended due dates fall on a holiday or non-working day, the filing and/or submission can be made on the next working day. Further, RMC No. 39-2020 also provides that the filing and submission of the Quarterly Percentage Tax Return is extended from 25 April 2020 to 25 May 2020.
The deadline for the filing and payment of the 2019 Annual Income Tax Return for Calendar Year 2019 with the required attachments is further extended to 1 June 2020. For the submission of required attachments to e-filed AITR, the deadline is extended until 18 June 2020.
The deadline for filing the application for VAT refund covering the quarter ending 31 March 2018 is further extended until 15 May 2020. Under RMC No. 27-2020, the 90-day period for processing of VAT refund claims is suspended and that the counting of the number of processing days shall resume after lifting of the ECQ.
The filing of tax returns and the payment of taxes due thereon on all One-Time Transactions (ONETT) (BIR Form Nos. 1606, 1706, 1707, 1800, and 1801) which fall due within the period of emergency starting from 16 March 2020 shall be extended for forty-five (45) days from its original due date.
The deadline for filing Certificate of Residence for Tax Treaty Relief (CORTT) Forms for final withholding taxes on dividends, interests, royalties for the month of February 2020 paid and remitted on or before 10 March 2020 is further extended to 15 May 2020 without the imposition of penalties.
For all other filing of other tax returns, submission of other reportorial requirements, and payment of taxes which were not enumerated in RR No. 7-2020 and which deadline/due date falls within the period of emergency starting from 16 March 2020, the deadline shall also be extended for forty-five (45) days from its original due date.
Even if silent on the non-imposition of penalties, it must be noted that Section 248 on Civil Penalties and Section 249 on Interests of the Tax Code provide that penalties and interests will be imposed upon failure to file tax returns and/or pay the taxes due thereon within the date prescribed by law. In this RR, the period to file and pay is extended. Hence, the 25% surcharge, the 12% interest per annum, and the corresponding compromise penalty should not be imposed if the tax returns are filed and the corresponding taxes due thereon are paid within the extended period.
Moreover, RMC No. 37-2020 clarified that amendments of tax returns resulting in additional tax payments will not be subject to penalties (surcharge, interest and compromise penalties) provided that the amendment is done within the extended deadline. In turn, taxpayers with amendments on tax returns resulting to overpayment of taxes paid can opt to carry over the overpaid tax as credit against the tax due for the same tax type in the succeeding periods’ tax returns, as an alternative to filing tax refund.
The due date to file and/or submit the following documents which fall due for filing/submission within the emergency period starting on 16 March 2020 is extended within thirty (30) days from the date of lifting of the period of emergency:
- Position Paper to Notice of Informal Conference;
- Position Paper to Preliminary Assessment Notice;
- Protest Letter to Final Assessment Notice (FAN)/Formal Letter of Demand (FLD);
- Submission of relevant supporting documents to support the request for re-investigation of audit cases with FAN/FLD;
- Appeal/Request for Reconsideration to the Commissioner on the Final Decision on Disputed Assessment (FDDA); and
- Other similar letters and correspondences with due dates.
The BIR issued RR No. 5-2020 amending Section 2 of RR No. 4-2019. RR No. 5-2020 allows the extension of the period to avail the tax amnesty on delinquencies in certain circumstances (such as in cases of country-wide economic or health reason/s). Under RR No. 7-2020 and RMC No. 33-2020, the deadline to avail the tax amnesty on delinquencies was extended from 23 April 2020 to 23 May 2020. RMC No. 38-2020 further extended the deadline until 8 June 2020.
It must be noted that unlike the Tax Code, the Tax Amnesty Law did not expressly grant a power to the BIR Commissioner to extend the deadline for availment of the tax amnesty on delinquent taxes. The Tax Amnesty Law only provides that the availment must be done within one (1) year from the effectivity of the IRR, without qualification as to any extension. Hence, after the lifting of the ECQ and upon return to regular operations, it is possible that this extension of the deadline may be challenged in court presumably by a different BIR Commissioner.
The running of the statute of limitations in the assessment and collection of taxes is suspended for a period starting from 16 March 2020 until the lifting of the national emergency on 25 June 2020, unless further extended by the Congress, and for 60 days thereafter.
On the basis for the suspension, RMC No. 34-2020 quoted Section 223 of the Tax Code, as amended, which allowed for such suspension when the BIR Commissioner is prohibited from making assessments or collecting taxes. The BIR Commissioner cited the World Health Organization declaration of COVID-19 as pandemic and RA No. 11469 with the Presidential Proclamations and implementing guidelines to hold that the BIR is prohibited from making and serving assessment notices and from collecting deficiency taxes.