BIR guide­lines out on front-lin­ers’ perks

Philippine Daily Inquirer - - FRONT PAGE - By Ben O. de Vera @ben­de­v­erainq

The Bu­reau of In­ter­nal Rev­enue (BIR) has is­sued guide­lines on tax ex­emp­tions for health work­ers’ com­pen­sa­tion as well as for prod­ucts deemed cru­cial to the fight against COVID-19.

The spe­cial al­lowances and haz­ard pay of health and med­i­cal pro­fes­sion­als in the fight against COVID-19 will not be taxed as long as the coun­try is un­der a state of na­tional emer­gency.

The Bu­reau of In­ter­nal Rev­enue (BIR) on Satur­day pub­lished Rev­enue Reg­u­la­tions No. 29-2020, which serves as the guide­lines on the in­come tax ex­emp­tion pro­vi­sions of Repub­lic Act No. 11494, or the Bayani­han to Re­cover as One law, or Bayani­han 2.


Bayani­han 2 ex­empts from tax the haz­ard duty pay of tem­po­rar­ily hired health work­ers as well as the COVID-19 spe­cial risk al­lowance for both pub­lic and pri­vate health work­ers.

RR 29-2020 also noted the monthly spe­cial risk al­lowance be­ing ex­tended to health work­ers who were in con­tact with COVID-19 pa­tients dur­ing the state of na­tional emer­gency.

Pres­i­dent Duterte ex­tended last month the state of na­tional emer­gency by one more year, or up to Sept. 12, 2021. He first de­clared the emer­gency in March at the on­set of the pan­demic.

Be­sides the spe­cial al­lowance and haz­ard pay, also ex­empt from taxes is the com­pen­sa­tion for health work­ers who were in­fected by the coro­n­avirus while per­form­ing their duty or who died “while fight­ing COVID-19,” the BIR said.

The ex­emp­tion cov­ers P1 mil­lion for those who died of COVID-19; P100,000 for those who got crit­i­cally ill; and P15,000 for those with mild or mod­er­ate in­fec­tions.

The tax-free com­pen­sa­tion cov­ered amounts granted from Feb. 1 and dur­ing the state of na­tional emer­gency, as long as th­ese amounts were paid within three months af­ter con­fine­ment or death.

Re­tire­ment ben­e­fits

In the case of death, the com­pen­sa­tion will be also ex­cluded from the gross es­tate of the de­ceased that will later be sub­jected to es­tate tax, the BIR said.

Also ex­empt from taxes are the re­tire­ment ben­e­fits of both of­fi­cials and em­ploy­ees of any pri­vate com­pany re­ceived be­tween June 5 and Dec. 31 this year.

The tax ex­emp­tion will be granted “pro­vided that the amount re­ceived is in ac­cor­dance with a re­tire­ment plan duly reg­is­tered with the BIR,” ac­cord­ing to RR 29-2020.

How­ever, reem­ploy­ment within the next 12-month pe­riod will be con­sid­ered non­re­tire­ment, the BIR said.

“If the reem­ploy­ment hap­pens within cal­en­dar year 2020, the em­ployer shall in­clude the said re­tire­ment ben­e­fits in the gross in­come of the con­cerned of­fi­cial or em­ployee for 2020. How­ever, if the reem­ploy­ment will oc­cur in 2021 and within the 12-month pe­riod, the con­cerned em­ployee shall pay the taxes due on the re­tire­ment ben­e­fits re­ceived within 30 days from date of reem­ploy­ment, or on the due date for the pay­ment of the sec­ond in­stall­ment pay­ment of 2020 in­come tax, which­ever comes later, with­out penal­ties,” the BIR ex­plained.


Tax ex­emp­tions for health work­ers and re­tirees will be retroac­tive, such that they must re­ceive a re­fund from their em­ploy­ers for de­duc­tions made be­fore Bayani­han 2 took ef­fect.

“Con­cerned em­ploy­ers of the pub­lic or pri­vate health work­ers and hu­man re­sources for health [tem­po­rary work­ers] shall like­wise re­fund the in­come tax with­held from the said in­come pay­ments af­ter the year-end ad­just­ment by the em­ployer for pur­poses of de­ter­min­ing the tax­able com­pen­sa­tion and the cor­re­spond­ing tax due of the em­ploy­ees. The said ad­just­ment will de­ter­mine which em­ployee has been with­held with more or less than the tax due. If the ad­just­ment re­sulted in ex­cess tax re­mit­tance, such ex­cess shall be de­ducted or ap­plied as de­duc­tion in the suc­ceed­ing with­hold­ing tax re­mit­tance,” the BIR said.

Covid-19-re­lated items

An­other set of guide­lines is­sued on Satur­day, un­der a sep­a­rate RR 28-2020, grants tax perks to the man­u­fac­ture and im­por­ta­tion of es­sen­tial goods and equip­ment in pan­demic re­sponse.

The BIR said COVID-19-RE­lated items im­ported be­tween June 25 and Dec. 19 are ex­empt from the value-added tax and ex­cise tax, among other fees.

Among the tax-ex­empt prod­ucts are per­sonal pro­tec­tive equip­ment; lab­o­ra­tory, med­i­cal and sur­gi­cal de­vices, equip­ment and sup­plies; medicines and vi­ta­mins; test­ing kits; clean­ing and san­i­ta­tion ma­te­ri­als, and other goods that may be in­cluded by the health and trade de­part­ments.

Also cov­ered are waste man­age­ment equip­ment, as well as raw ma­te­ri­als for the lo­cal man­u­fac­ture of es­sen­tial COVID-19 mit­i­ga­tion items.


DUE FOR TAX EX­EMP­TIONS Health work­ers at a quar­an­tine in the Philip­pine Arena Com­plex, three months into the lock­down on Lu­zon is­land. By then, Pres­i­dent Duterte had ordered the re­lease of P32 mil­lion in com­pen­sa­tion to fam­i­lies of front-lin­ers who died of COVID-19.

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