BIR grants tax breaks to front­lin­ers

The Philippine Star - - FRONT PAGE - By MARY GRACE PADIN

The Bureau of In­ter­nal Rev­enue (BIR) is now grant­ing tax ex­emp­tions on re­tire­ment ben­e­fits of pri­vate sec­tor em­ploy­ees and the in­come and sick­ness ben­e­fits of health work­ers – both pub­lic and pri­vate – serv­ing in the front­lines against COVID-19.

Pur­suant to the Bayani­han to Re­cover as One Act, Fi­nance Sec­re­tary Car­los Dominguez III and

In­ter­nal Rev­enue Com­mis­sioner Cae­sar Du­lay is­sued Rev­enue Reg­u­la­tion No. 29-2020, which pro­vides the guide­lines to im­ple­ment the grant of in­cen­tives on cer­tain in­come pay­ments of health work­ers.

Un­der the new reg­u­la­tion, the COVID-19 Spe­cial Risk Al­lowance and Ac­tual Hazard Duty Pay shall be ex­cluded from gross in­come and there­fore not sub­ject to

in­come tax.

COVID-19 Spe­cial Risk Al­lowance is paid to pri­vate and pub­lic health work­ers di­rectly in con­tact with COVID- 19 pa­tients, while the Ac­tual Hazard Duty Pay is given to tem­po­rary Hu­man Re­sources for Health (HRH) serv­ing in the front­lines.

Also ex­empted from in­come tax are com­pen­sa­tions paid to pri­vate and pub­lic health work­ers who have con­tracted COVID-19 in the line of duty amount­ing to P1 mil­lion in case of death; P100,000 in case of se­vere or crit­i­cal ill­ness; P15,000 in case of mild or mod­er­ate sick­ness.

This is pro­vided that such amount is given from Feb. 1, 2020 and dur­ing the state of na­tional health emer­gency as de­clared by the Pres­i­dent; that the com­pen­sa­tion is given not later than three months af­ter date of con­fine­ment or death; and that sup­port­ing doc­u­ments are sub­mit­ted.

“For com­pen­sa­tion in case of death, the said amount shall not be in­cluded as part of the gross es­tate of the dece­dent sub­ject to es­tate tax,” the BIR said.

Mean­while, the BIR said re­tire­ment ben­e­fits re­ceived by of­fi­cials and em­ploy­ees of pri­vate firms from June 5 to Dec. 31, 2020 are also not sub­ject to the in­come tax, pro­vided that the amount re­ceived is in ac­cor­dance with a re­tire­ment plan duly reg­is­tered with the agency.

The BIR, how­ever, em­pha­sized that any re-em­ploy­ment of such of­fi­cial or em­ployee in the same firm and its re­lated par­ties within the suc­ceed­ing 12-month pe­riod shall be con­sid­ered as proof of non­re­tire­ment.

As part of its tran­si­tory pro­vi­sions, the BIR said taxes with­held from the re­tire­ment ben­e­fits by pri­vate em­ploy­ers should be re­funded to the con­cerned em­ploy­ees.

“Con­cerned em­ploy­ers of the pub­lic or pri­vate health work­ers and HRHs 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 BIR said.

“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,” it added.

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