Tax Implications of Republic Act No. 11494: I. Salient Features

NTRC Tax Research Journal Vol. XXXII.
5 September-October 2020
Tax Implications of Republic Act No. 114941*
I. SALIENT FEATURES
Republic Act (RA) No. 11494, otherwise known as the “Bayanihan to Recover as One
Act” or BARO Act, which was enacted into law on September 11, 2020, was another timely
response measure of the government to address the spread of the Coronavirus Disease 2019
(COVID-19) in the country, to mitigate the ensuing economic disruption therefrom through the
provision of assistance, subsidies, and other forms of socioeconomic relief. Specifically, the
Act provides the following:
a. COVID-19 special risk allowance for all public and private health workers directly
catering to or in contact with COVID-19 patients for every month that they are
serving during the state of national emergency as declared by the President.
Provided, that the COVID-19 special risk allowance of public health workers shall
be in addition to the hazard pay granted under RA 73052, or the “Magna Carta of
Public Health Workers”, and the active hazard duty pay granted under this Act.
Provided, further, that the COVID-19 special risk allowance for both public and
private health workers shall be exempt from the income tax [Section 4(h)];
b. Compensation to public and private health workers who have contracted COVID-
19 in the line of duty, with the following amounts, upon submission of required
documents to support claims [Section 4(k)]:
i. In case of death of the health worker – P1,000,000;
ii. In case of sickness, for a severe or critical case – P100,000; and
iii. In case of sickness, for a mild or moderate case – P15,000.
*
Prepared by the Economics Branch, reviewed and approved by Monica G. Rempillo, Economist V, Economics
Branch, and OIC-Deputy Executive Director, with inputs from the Local Finance Branch, Fiscal Incentives
Branch, Indirect Taxes Branch, Direct Taxes Branch, and Special Research and Technical Services Branch.
1
Entitled, “An Act Providing for COVID-19 Response and Recovery Interventions and Providing
Mechanisms to Accelerate the Recovery and Bolster the Resiliency of the Philippine Economy, Providing Funds
Therefor, and for Other Purposes”.
2
Approved on March 26, 1992.
Tax Implications of RA 11494 1 | 88

NTRC Tax Research Journal Vol. XXXII.5 September-October 2020
Provided, that this shall have a retroactive application from February 1, 2020.
Provided, further, that the compensation provided shall be exempt from the
applicable taxes under the National Internal Revenue Code (NIRC) of 1997, as
amended. Provided, finally, that the compensation provided shall be given to
the beneficiaries not later than three months after the date of confinement or
death.
This subsection shall survive the expiration of the law, for as long as a health
worker contracts mild or severe COVID-19 infection while in the line of duty
or dies while fighting during the state of national emergency as declared by the
President.
c. One-time cash assistance to displaced teaching and non-teaching personnel,

including part-time faculty or non-permanent teaching personnel, in private and
public elementary, secondary, and tertiary education institutions and part-time
faculty in state universities and colleges (SUCs) who have lost their jobs or who
have not received their wages [Section 4(o)];
d. Authority given to local chief executives of all local government units (LGUs) to
realign their respective local funds including, but not limited to, their development
fund, Gender and Development Fund, Sangguniang Kabataan Fund, Special
Education Fund (SEF), and other local funds, including unutilized or unreleased
subsidies and transfers to address the COVID-19 pandemic. Allow LGUs to utilize
up to 10% of their current budget to cover COVID-19 responses expenditures and
to waive the 70% limit on "pre-disaster" initiatives. In addition, increase the debt
service ceiling of the LGUs to 30% of their annual regular income including their
share in the national taxes. Likewise, exempt LGUs from the loan ceiling cap
imposed by the Department of Finance (DOF). Lastly, release automatically and
completely any adjusted or remaining shares of LGUs in national wealth and
National Tax Allotment (NTA) pursuant to Section 286 of RA 7160, or the Local
Government Code (LGC) of 1991, as amended [Section 4(q)];
e. Temporary Human Resources for Health (HRH) such as medical and allied medical
staff to complement or supplement the current health workforce or to man the
temporary medical facilities to be established in accordance with Section 4(u)(4) of
the law. Provided, that the HRH to be hired on temporary basis shall receive the
appropriate compensation and allowances. Provided, further, that all HRH serving
in the front line during the state of emergency due to COVID-19, shall receive an
actual hazard duty pay from the national government. Provided, furthermore, that
the actual hazard duty pay shall be in addition to the hazard pay granted under
RA 7305 and the COVID-19 special risk allowance. Provided, furthermore, that the
active hazard duty pay received by all HRH serving in the front line during the state
of national emergency as declared by the President shall be exempt from income
tax. Provided, finally, that Department of Health (DOH), the Department of Labor
and Employment (DOLE) and their attached agencies shall closely coordinate to
ensure that returning OFW-health workers, or those whose deployments were
suspended due to COVID-19, shall be properly referred to the ongoing hiring of
temporary HRH by the DOH [Section 4(w)];
2 | 88 Tax Implications of RA 11494

f. Liberalize the grant of incentives for the manufacture or importation of critical or

needed equipment or supplies or essential goods for the carrying out of the policy
declared, including healthcare equipment and supplies, among others. The
manufacture or importation of these equipment and supplies shall be exempt from
import duties, taxes, and other fees, and shall be determined by the Bureau of
Customs (BOC) and the Bureau of Internal Revenue (BIR) [Section 4(cc)];
g. Direct the Department of Transportation and such other authorized agencies or

instrumentalities to provide grants for applicable regulatory fees to critically-
impacted businesses in the transportation industry, including transport cooperatives.
The grants may include reduction in: (i) rates through the removal of local taxes as
may be applicable; and (ii) fees and charges imposed by any regulatory agency and
LGU. Provided, that the grant shall be chargeable against the fund created for this
purpose, and that any critically-impacted business may avail of the grant for a
period of not more than six months [Section 4(gg)(2)];
h. Suspend temporarily the requirements to secure local permits and clearances

(except for the building permit) for the construction, installation, repair, operation
and maintenance of telecommunication and internet infrastructure by independent
tower companies registered with the Department of Information and
Communications Technology (DICT), or holders of certificates of public
convenience and necessity or provisional authority granted by the National
Telecommunications Commission to public telecommunication entities, for a
period of three years from the effectivity of this Act [Section 4(ii)];
i. Discontinue appropriated programs, activities or projects (P/A/Ps) which cannot be

utilized effectively as a result of the COVID-19 outbreak, whether released or
unreleased, the allotments to LGUs for which remain unobligated, and utilize the
savings generated therefrom to augment the allocation for any item needed to
address the COVID-19 pandemic consistent with the herein declared national policy
[Section 4(pp)];
j. Move the statutory deadlines and timelines for the filing and submission of any
document, the payment of taxes, fees and other charges required by law, and the
grant of any benefit, in order to ease the burden on individuals under community
quarantine [Section 4(tt)];
k. Direct all banks, quasi-banks, financing companies, lending companies, real estate
developers, insurance companies providing life insurance companies, pre-need
companies, entities providing in-house financing for goods and properties
purchased, asset and liabilities management companies, and other financial
institutions, public and private, including the Government Service Insurance
System, the Social Security System, and Home Development Mutual Fund (Pag-
IBIG Fund), to implement a one-time 60-day grace period to be granted for the
payment of all existing, current and outstanding loans falling due, or any part
thereof, on or before December 31, 2020 including, but not limited to, salary,
personal, housing, commercial, and motor vehicle loans, amortizations, financial
lease payments and premium payments, as well as credit card payments, without

incurring interest on interests, penalties, fees, or other charges and thereby

extending maturity of the said loans; Provided, that the loan term extensions or
restructuring pursuant to this subsection shall be exempt from the documentary
stamp taxes (DST). This provision shall not apply to interbank loan and bank
borrowings [Section 4(uu)];
l. All government agencies and LGUs to act on all pending and new applications for
permit, license, clearance, authorization and resolutions within a non-extendable
period of seven working days, in order to support business continuity and encourage
resumption of all economic activities. Provided, that the applicant should be
allowed to undertake its compliance to any additional requirement that may be
imposed by the government agency or LGU, and such will not delay the approval
of the application [Section 4(eee)];
m. Provides regulatory relief to the critically impacted creative sector by authorizing

the Department of Trade and Industry (DTI) and the Department of the Interior and
Local Government (DILG) to review the imposition of the amusement tax.
The President shall have the power to suspend, reduce or waive the imposition of
the fees and charges as recommended by the DTI and DILG for a period of six (6)
months [Section 4(hhh)];"
n. Authorize the allocation of the SEF for the support of alternative learning
modalities, digital education, digital infrastructure, and continuity plans, such as the
purchase of equipment, materials, and supplies related thereto, printing and delivery
of self-learning modules, provision of safe schools infrastructure, equipment and
facilities such as handwashing stations, soap, alcohol, sanitizers, and other
disinfecting solutions, as well as medical health supplies deemed appropriate by
public health officials such as thermometers, face masks, and face shields, subject
to existing accounting and auditing rules [Section 4(jjj)];
o. Ensure supervision and authority of LGUs over issuance of permits on privately-

run isolation and quarantine facilities and fast-track the processing of the issuance
of permits [Section 4(qqq)];
p. Exempt personal computers, laptops, tablets, or similar equipment appropriate for

use in schools, donated for distribution to public schools regardless of level,
including SUCs and vocational institutions under the Technical Education and
Skills Development Authority (TESDA), from import duties and taxes, including
donor’s tax [Section 4(zzz)];
q. Notwithstanding the provision of existing laws to the contrary, the net operating
loss of business or enterprise for taxable years 2020 and 2021 shall be carried over
as deduction from gross income for the next five consecutive taxable years
immediately following the year of such loss: Provided, That this subsection shall
remain in effect even after the expiration of this Act [Section 4(bbbb)];
r. Retirement benefits received by officials and employees of private firms, whether

individual or corporate, from June 5, 2020 until December 31, 2020 shall be
excluded from gross income and shall be exempt from taxation. Provided, That any

re-employment of such official or employee in the same firm, within the succeeding
12-month period, shall be considered as proof of non-retirement and shall subject
the benefits received to appropriate taxes. In addition to the payment of appropriate
taxes, any person who willfully evades or defeats any imposable tax shall be
criminally liable and penalized under Section 255 of RA 84243, as amended
(Section 5);
s. Repeal the tax on sale, barter or exchange of shares of stock listed and traded
through initial public offering (IPO) under Section 127(B) of the NIRC of 1997, as
amended. (Section 6);
t. Appropriate P1.5 billion as Local Government Support Fund (LGSF) to provide

financial assistance to LGUs in their local anti-COVID efforts. [Sections 4(q) and
10(o)]; and
u. Subsidy and stimulus measures, as well as other measures to address the COVID-
19 pandemic, and sources of funds, as follows:
1. Amounts derived from the 5% franchise tax on the gross bets or turnovers or
the agreed pre-determined minimum monthly revenues from gaming
operations, whichever is higher, earned by offshore gaming licenses, including
gaming operators, gaming agents, service providers, and gaming support
providers [Section 11(ff)]; and
2. Income tax, value added tax (VAT), and other applicable taxes on income from
non-gaming operations earned by offshore gaming licenses, operators, agents,
service providers, and support providers [Section 11 (g)]
II. TAX IMPLICATIONS
A. On Income Tax [Sections 4(h), 4(k), 4(o), 4(w), and 5]
Section 24(A)(1) of the NIRC of 1997, as amended by RA 10963 4, imposes a

tax on taxable compensation income for each taxable year from all sources within and
without the Philippines by every individual citizen of the Philippines residing therein.
Taxable compensation income, as defined under the Bureau of Internal Revenue (BIR)
3
Entitled, “An Act Amending the National Internal Revenue Code, as Amended, and for Other
Purposes”, approved on December 11, 1997.
4
Entitled, “An Act Amending Sections 5, 6, 24, 25, 27, 31, 32, 33, 34, 51, 52, 56, 57, 58, 74, 79, 84, 86,
90, 91, 97, 99, 100, 101, 106, 107, 108, 109, 110, 112, 114, 116, 127, 128, 129, 145, 148, 149, 151, 155, 171, 174,
175, 177, 178, 179, 180, 181, 182, 183, 186, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 232, 236, 237, 249,
254, 264, 269, and 288; Creating New Sections 51-A, 148-A, 150-A, 150-B, 237-A, 264-A, 264-B, and 265-A;
and Repealing Sections 35, 62, and 89; All Under Republic Act No. 8424, Otherwise Known as the National
Internal Revenue Code of 1997, as Amended, and for Other Purposes”, approved on December 19, 2017 and made
effective on January 1, 2018.

Revenue Regulations (RR) No. 2-985, as amended, means all remuneration for services
performed by an employee for his employer under an employer-employee relationship,
unless specifically excluded by the NIRC. Thus, salaries, wages, emoluments, and
honoraria, allowances, commissions (e.g. transportation, representation,
entertainment, and the like); fees including director's fees, if the director is, at the same
time, an employee of the employer/corporation; taxable bonuses and fringe benefits
except those which are subject to the fringe benefits tax under Section 33 of the NIRC;
taxable pensions and retirement pay; and other income of a similar nature constitute
compensation income.
The grant of COVID-19 special risk allowance may be excluded from the
computation of gross income for purposes of income taxation pursuant to Section
32(B)(7)(e) of the NIRC of 1997, as amended, which provides that gross benefits
received by officials and employees of public and private entities not exceeding
P90,000.00 are exempt from tax. Also, Section 33(C) of the NIRC of 1997, as
amended, provides for the tax exemption of fringe benefits, such as:
a. Fringe benefits which are authorized and exempted from tax under special
laws;
b. Contributions of the employer for the benefit of the employee to retirement,

insurance and hospitalization benefit plans;
c. Benefits given to the rank and file employees, whether granted under a
collective bargaining agreement (CBA) or not; and
d. De minimis benefits.
Moreover, RR 8-20006, as amended by RR 11-20187, provides that some

income, allowances, and benefits received by government employees and private
individuals are excluded from the gross income and considered exempt from
withholding tax such as the following:
a. De minimis benefits
1. Monetized unused vacation leave credits of private employees not

exceeding 10 days during the year;
5
Entitled, “Prescribes the regulations to implement RA 8424 relative to the Withholding on Income
subject to the Expanded Withholding Tax and Final Withholding Tax, Withholding of Income Tax on
Compensation, Withholding of Creditable Value-Added tax and Other Percentage Taxes”, issued on May 17,
1998.
6
Amends Provisions of Revenue Regulations Nos. 2-98 and 3-98 Relative to the "De Minimis" Benefits,
Additional Compensation Allowance, Representation and Transportation Allowance and Personal Economic
Relief Allowance, issued on November 22, 2000.
7
Amending certain provisions of Revenue Regulations No. 2-98, as Amended, to Implement Further
Amendments Introduced by Republic Act No. 10963, Otherwise Known as the “Tax Reform for Acceleration and
Inclusion (TRAIN)” Law, Relative to Withholding of Income Tax, issued on January 31, 2018.

2. Monetized value of vacation and sick leave credits paid to government

officials and employees;
3. Medical cash allowance to dependents of employees, not exceeding

P1,500 per employee per semester or P250 per month;
4. Rice subsidy of P2,000 or one 50 kg. sack of rice per month worth not
more than P2,000;
5. Uniforms and clothing allowance not exceeding P6,000 per annum;
6. Actual medical assistance not exceeding P10,000 per annum;
7. Laundry allowance not exceeding P300 per month;
8. Employees’ achievement awards, which must be in the form of tangible

personal property other than cash or gift certificates, with an annual
monetary value not exceeding P10,000 received by the employee under
an established written plan which does not discriminate in favor of
highly paid employees;
9. Gifts given during Christmas and major anniversary celebrations not

exceeding P5,000 per employee per annum;
10. Daily meal allowance for overtime work and night/graveyard shift not
exceeding 25% of the basic minimum wage; and
11. Benefits received by an employee by virtue of a CBA and productivity

incentive schemes, provided the total annual monetary value received
from both CBA and productivity incentive schemes combined do not
exceed P10,000 per employee per taxable year.
b. 13th Month Pay and Other Benefits – 13th month pay, Christmas bonus,
productivity incentives, loyalty award, additional compensation allowance
(ACA), gift in cash or in kind and other benefits of similar nature provided
that the total benefits do not exceed P90,000.00; and
c. Representation and Transportation Allowance and Personal Economic

Relief Allowance.
As regards the compensation of P100,000 and P15,000 to public and private

health workers who may contract severe and mild or moderate COVID-19 infection,
respectively, Section 32(B) of the NIRC of 1997, as amended, provides for excludable
items from gross income and which are therefore exempt from income tax. It may fall
under item number (4) of the said Section which pertains to “Compensation for Injuries
or Sickness”. However, the provision limits the tax exemption only to amounts
received, through Accident or Health Insurance or under Workmen’s Compensation
Acts, as compensation for personal injuries or sickness.

The said financial assistance and tax privileges given to health workers and
temporary HRH which financially aid them during this COVID-19 pandemic is also a
recognition of their unselfish and invaluable contributions to help fight and prevent
further spread of COVID-19 in the country. In addition, this is to encourage the active
participation and engagement of temporary HRH such as medical and allied medical
staff to complement or supplement the current health workforce.
On the other hand, the exclusion from gross income of retirement benefits
received by officials and employees of private firms, whether individual or corporate,
is merely a reiteration of the provision of Section 32(B)(6)(a) of the NIRC of 1997, as
amended, and implemented pursuant to RR 8-20188. Under the said Section, retiring
official or employee has been in the service of the same employer for at least 10 years
and is not less than 50 years of age at the time of his/her retirement.
Moreover, Section 32(B)(6)(b) of the NIRC of 1997, as amended, also

excluded from taxable income “any amount received by an official or employee or by
his heirs from the employer as a consequence of separation of such official or
employee from the service of the employer because of death, sickness or other physical
disability or for any cause beyond the control of the said official or employee”. The
displacement or retrenchment of teaching and non-teaching personnel of educational
institutions due to the COVID-19 pandemic may be considered beyond their control,
thus, the proposed one-time cash assistance to them may be tax-exempt under the said
provision of the NIRC.
BIR Revenue Memorandum Order (RMO) No. 26-20119, as amended by

RMOs 36-201110 and 66-201611, provides that tax treatment of separation benefits
received by officials and employees requires the presence of two conditions in order
that the employee benefits may be granted tax exemption: (1) separation from the
service of the employer due to death, sickness or other physical disability, or for any
cause beyond the control of the said official or employee; and (2) the official or
employee or his heirs receives any amount from the employer on account of such
separation.
8
Implementing the Income Tax Provisions of Republic Act No.10963, Otherwise Known as the "Tax
Reform for Acceleration and Inclusion (TRAIN)" Act, issued on January 25, 2018.
9
Entitled, “Guidelines in the Tax Treatment of Separation Benefits Received by Officials and Employees
on Account of Their Separation from Employment Due to Death, Sickness or Other Physical Disability and the
Issuance of Certificate of Tax Exemption from Income Tax and From the Withholding Tax”, issued on June 13,
2011.
Entitled, “Amendment to Revenue Memorandum Order No. 26-2011, Providing for Guidelines in the
10
Tax Treatment of Separation Benefits Received by Officials and Employees on Account of Their Separation from
Employment Due to Death, Sickness or Other Physical Disability and the Issuance of Certificate of Tax Exemption
from Income Tax and From the Withholding Tax”, issued on September 28, 2011.
11
Entitled, “Amending Pertinent Provisions of Revenue Memorandum Order (RMO) No. 26-2011,
Prescribing the Guidelines in the Tax Treatment of Separation Benefits Received by Officials and Employees on
Account of Their Separation from Employment Due to Death, Sickness or Other Physical Disability and the
Issuance of Certificate of Tax Exemption from Income Tax and From the Withholding Tax”, issued on December
16, 2016.

Taking into consideration the life struggles suffered by the displaced or

retrenched teachers, teaching or non-teaching personnel during this pandemic, it is
only justifiably right to give and exempt from tax the one-time cash assistance in
consideration of their standard of living and to compensate for the loss of income and
months of uncertainty brought by the COVID-19 pandemic.
On October 15, 2020, the BIR issued RR 29-202012 implementing the

abovementioned income payments to public/private health workers, temporary HRH,
and officials and employees of private firms.
B. On Estate Tax [Section 4(k)]
Pursuant to RR 29-2020, the compensation of P1 million to public and private

health workers who died while contracting COVID-19 in the line of duty shall not be
included as part of the gross estate of the decedent subject to estate tax.
Also, it provides that such income payment shall be included in the

Alphabetical List of Employees/Payees being submitted annually by employers
pursuant to existing regulations. In addition, a one-time list of recipients shall be
provided, not later than January 15, 2021, to the Revenue District Office/concerned
Office under the Large Taxpayers Service having jurisdiction over the
employer/implementing government agency. Such list must indicate the names of the
recipient with corresponding taxpayer identification number, the nature of income or
compensation paid, the amount and date of payment, and attested to by the authorized
official of the employer/implementing agency.
C. On DST [Section 4(uu)]
Section 4(uu) of RA 11494 directs lenders13 to implement a one-time 60-day

grace period for the payment of all existing, current, and outstanding loans falling due,
or any part thereof, on or before December 31, 2020, including but not limited to
salary, personal, housing, commercial, and motor vehicle loans, amortizations,
financial lease payments and premium payments, as well as credit card payments
without incurring interest on interests, penalties, fees, or other charges and thereby
extending the maturity of the said loans. Under the same section, loan term extensions
or restructuring are exempt from the DST. However, the said provision shall not apply
to interbank loan and bank borrowings.
Entitled, “Implementing the Provisions of Republic Act (RA) No. 11494 or the “Bayanihan to Recover
12
as One Act” Relative to the Tax Exemption of Certain Income Payments”, dated October 15, 2020.
13
Include banks, quasi-banks, financing companies, lending companies, real estate developers, insurance
companies, real estate developers, insurance companies providing life insurance policies, pre-need companies,
entities providing in-house financing for goods and properties purchased, asset and liabilities management
companies and other financial institutions, public and private, including the GSIS, the SSS and Home
Development Mutual Fund (Pag-IBIG) Fund.

The BARO Act mandates more institutions to provide for a one-time 60-day
grace period for the payment of loans as compared to the Bayanihan Act, which
include real estate developers, insurance companies providing life insurance policies,
pre-need companies, entities providing in-house financing for goods and properties
purchased, and asset and liabilities management companies.
The Bangko Sentral ng Pilipinas (BSP) issued Memorandum No. M-2020-

06814 requiring all BSP-supervised financial institutions (BSFIs) to comply with
Section 4(uu) of RA 11494 which reiterates that BSFIs shall not charge or apply
interest on interest, penalties, fees or other charges during the mandatory one-time 60-
day grace period to future payments/amortizations of the borrowers. Correspondingly,
the BSP issued the implementing rules and regulations (Rules) on Section 4(uu) of RA
11494 and its frequently asked questions (FAQ) through Memorandum No. M-2020-
07415 on September 28, 2020. The said issuance mandates all BSFIs to post
Memorandum No. 2020-068, Rules, and FAQ on their official websites, or in the case
of BSFIs with no websites, in a conspicuous place in their head offices/branches.
The one-time 60-day grace period means that the borrower may opt not to pay
his/her all existing, current, and outstanding loans falling due, or any part thereof,
within the covered period until after 60 days or on or before December 31, 2020. To
illustrate:
Customer receives statement of account (SOA) with due date on September 17

Minimum amount due is P3,000 – Customer does not have to pay.
Customer receives SOA with due date on October 19

Minimum amount due is P3,300 – Customer does not have to pay.
Customer receives SOA with due date on November 17

Minimum amount due is P3,600 – This is the amount that customer has to pay
as 60-day grace period has already ended.
The DST is a tax upon documents, instruments, loan agreements, and papers
evidencing the acceptance, assignment, sale or transfer of an obligation, right, or
property incident thereto and in respect of the transaction so had or accomplished. A
DST is in the nature of an excise tax. It is levied on the exercise by persons of certain
privileges conferred by law for the creation, revision, or termination of specific legal
relationships through the execution of specific instruments.
Generally, debt instruments representing borrowing and lending transactions,

including but not limited to, debentures, certificates of indebtedness, due bills, bonds,
and loan agreements, are subject to DST. However, loan agreements or promissory
notes, the aggregate of which does not exceed P250,000, or any such amount as may
14
Entitled, “Implementation of Section 4(uu) of the RA 11494 on the “Bayanihan to Recover as One
Act”, dated September 18, 2020.
Entitled, “Implementing Rules and Regulations (IRR) and Frequently Asked Questions (FAQ) on
15
Section 4(uu) of the RA 11494 or the “Bayanihan to Recover as One Act”, dated September 28, 2020.

be determined by the Secretary of Finance 16, executed by an individual for his

purchase on installment for his personal use or that of his family and not for business
or resale, barter or hire of a house, lot, motor vehicle, appliance or furniture is
currently exempted from DST as provided in Section 199(d) of the NIRC of 1997,
as amended.
The BIR issued RR 24-202017 to specify, prescribe, and define rules and
regulations for the effective enforcement of Section 4(uu) of RA 11494. It
specifically provides that no additional DST, including those imposed under Sections
179 (Stamp Tax on All Debt Instruments), 195 (Stamp Tax on Mortgages, Pledges
and Deeds), and 198 (Stamp Tax on Assignments and Renewals of Certain
Instruments) of the NIRC of 1997, as amended, will be applied to term extensions
and credit restructuring, micro-lending including those obtained from pawnshops
and extensions thereof granted by covered institutions for falling due, or any part
thereof, on or before December 31, 2020. It also provides that interbank loans and
bank borrowings shall be subject to the DST imposed under Sections 179, 195, and
198 of the NIRC of 1997, as amended.
The DST exemption of loan term extensions or restructuring from the one-
time 60-day grace period is justifiable to ensure the full compliance of the said relief
from covered institutions as well as to reduce the financial burden of their clients.
D. On Donor’s Tax [Section 4(zzz)]
Section 4(zzz) of RA 11494 provides the exemption of personal computers,

laptops, tablets, or similar equipment appropriate for use in schools, donated for
distribution to public schools regardless of level, including SUCs and vocational
institutions under the TESDA, from import duties and taxes, including donor’s tax.
Pursuant to Section 98 of the NIRC of 1997, as amended by RA 10963, the

donor’s tax is imposed upon the transfer by any person, resident or nonresident, of the
property by gift. The tax is applied whether the transfer is in trust or otherwise, whether
the gift is direct or indirect, and whether the property is real or personal, tangible or
intangible. As provided in Section 99(A) of the NIRC of 1997, as amended, the tax
rate payable by the donor for each calendar year shall be 6% computed on the basis of
the total gifts in excess of P250,000 exempt gift made during the calendar year. Hence,
any donation made by individual or corporation is subject to donor’s tax except if the
donation is made to donee enumerated under Section 101 of the NIRC of 1997, as
amended, or specifically exempt under special law.
16
The amount to be set by the Secretary of Finance shall be in accordance with a relevant price index
but not to exceed 10% of the current amount and shall remain in force at least for three years.
17
Entitled, “Implementing Section 4(uu) of Republic Act No. 11494, otherwise known as the “Bayanihan
to Recover as One Act”, On Exemption from Documentary Stamp Tax (DST) of Loans Extended or Credits
Restructured”, issued on September 30, 2020.

The provision under the law which exempts from duties and taxes, including
donor’s tax, the donation of personal computers, laptops, tablets or similar equipment
appropriate for use in schools, donated for distribution to public schools regardless of
level, including SUCs and vocational institutions under the TESDA is consistent with
Section 101(A) of the NIRC of 1997, as amended, which provides for the exemption
of certain gifts which are as follows:
a. Gifts made to or for the use of the National Government or any entity
created by any of its agencies which is not conducted for profit, or to any
political subdivision of the said Government; and
b. Gifts in favor of an educational and/or charitable, religious, cultural or

social welfare corporation, institution, accredited nongovernment
organization, trust or philanthropic organization or research institution or
organization, provided, that not more than 30% of said gifts shall be used
by such donee for administration purposes.
The procurement of information technology (IT) hardware or electronic

devices is costly, not to mention the software and application programs that comes
with it for it to run smoothly. Some business companies, particularly those enjoying
tax incentives under Executive Order (EO) No. 22618, have IT equipment at their
disposal that need to be replaced and upgraded every three years and are willing to
donate to the under-sourced for funding public school institutions but unfortunately
faced existing laws and regulations that prohibit them to make donations19.
To give chance to private entities to help others in these trying times, the
Department of Education (DepEd) present donors the opportunity to donate electronic
devices to public schools, SUCs, and the TESDA under the Adopt-a-School Program
(ASP) implemented by the DepEd. Under Section 5 of RA 852520, expenses incurred
by the adopting entity for the ASP shall be allowed as an additional deduction from
the gross income equivalent to 50% of such expenses.
It is noted that Section 34(H)(2)(a) and 34(H)(2)(c)(1) of the NIRC of 1997,

as amended, provide for the full deductibility of legacies, gifts, and donations from the
gross income of the donor if made to the government or to any of its agencies or
political subdivisions, including fully-owned government corporations, exclusively to
finance, provide for, or be used in undertaking priority activities in education, health,
18
Entitled, “Omnibus Investment Code of the Philippines”, approved on July 16, 1987.
19
Section 10 of the IRR of EO 85 provides that any sale, transfer, assignment, donation, or other form
of disposition of capital equipment, spare parts and accessories imported by virtue of the EO, within five years
from the date of acquisition shall require prior approval of the BOI. If within five years of acquisition, the
registered enterprise sells, transfers or dispose of the imported machinery, equipment, spare parts and
accessories without the approval of the Board, the BOI-registered enterprise and the vendee, transferee, or
assignee will be solidarily liable to pay twice the amount of the duty foregone or P500,000, whichever is higher,
without prejudice to other applicable penalties under EO 226.
Entitled, “An Act Establishing An "Adopt-A-School Program," Providing Incentives Therefor, and for
20
Other Purposes”, approved on January 14, 1998.

youth, and sports development, human settlements, science and culture, and in
economic development according to a National Priority Plan as determined by the
National Economic and Development Authority, or to an accredited nongovernment
organization organized and operated exclusively for scientific, research, educational,
character-building and youth and sports development, health, social welfare, cultural
or charitable purposes, no part of the net income of which inures to the benefit of any
private individual (Underscoring supplied). For non-priority activities of the
government, the allowable deduction should not exceed 10% in the case of individuals,
or 5% for corporations, of the taxpayer’s taxable income derived from trade, business
or profession as computed without the benefit of deductions, pursuant to Section
34(H)(1) of the NIRC of 1997, as amended.
Also, donation of electronic devices, appropriate for use in schools, made to

educational government institutions is tax-exempt as provided under the Sections 34
and 101 of the NIRC of 1997, as amended, provided that the donor submits all pertinent
requirements in claiming for tax deduction.
RR 26-202021 provides, among others, the following conditions on the

deduction from the gross income of the amount of contribution/donation:
a. The deed of donation shall indicate in detail the items donated, its
quantity/number and the amount/value of the donation;
b. The deduction shall be availed of in the taxable year in which the expenses
have been paid or incurred; and
c. The taxpayer can substantiate the deduction with sufficient evidence, such
as sale invoice/s, delivery receipt, and other adequate records –
i. The amount of expenses being claimed as deduction; and
ii. Proof or acknowledgement of receipt of the contributed/donated

property by the recipient public school.
It is without question that the community quarantine limits, if not totally put a
halt to people’s movements, business operations, and the normal functioning of the
economy, will result to huge losses in revenue for the government, as tax collections
are not only significantly reduced while providing for the needs of the people.
21
Entitled, “Implementing Section 4(zzz) of Republic Act No. 11494, Otherwise Known as “Bayanihan
to Recover as One Act”, Relative to Donations of Identified Equipment for Use in Public Schools”, dated October
6, 2020.

E. On Local Finance [Sections 4(q), 4(ii), 4(gg)(2), 4(qq), 4(pp), 4(jjj), 4(hhh), 4(eee),
4(qqq), and 10(o)]
On the realignment of unutilized funds of LGUs
On the grant of additional sources of LGUs funds to address the impact of

COVID-19, the DBM already issued Local Budget Circular (LBC) No. 124 to allow
changes in the annual budget of LGUs through supplemental budgets providing
additional funds for COVID-19-related programs, projects, and activities.
On the commencement of the adjusted share of LGUs from national taxes upon
the effectivity of the Act
Sections 6 and 7 of Article X of the 1987 Constitution provide that LGUs shall
have a just share, as determined by law, in the national taxes which shall be
automatically released to them and be entitled to an equitable share in the proceeds of
the utilization and development of the national wealth within their respective areas. In
addition, various laws grant shares from national taxes to the concerned LGUs.
It should be noted that the DBM issued LBC Nos. 12522 and 12623 to prescribe
the guidelines and procedures on the release and utilization of the “Bayanihan Grant
to Provinces, Cities and Municipalities” (BGPCM), which is equivalent to one-month
fiscal year (FY) 2020 Internal Revenue Allotment (IRA) share of the cities and
municipalities and one-half of the one-month FY 2020 IRA share of the provinces.
The BGPCM was released to boost LGUs capacity to immediately respond to the
COVID-19 pandemic.
On increasing the debt service ceiling of LGUs from 20% to 30% their annual
regular income and exemption from loan ceiling cap
Section 296 of the LGC empowers LGUs to create indebtedness and avail of
credit facilities to finance local infrastructure and other socio-economic projects in
accordance with the approved Local Development Plan and Public Investment
Program. LGUs may avail of credit lines from government and private banks and
lending institutions for the purpose of stabilizing local finances. Under Section 324 of
the LGC, the amount of appropriations for debt servicing shall not exceed 20% of the
regular income of the LGU concerned. Increasing the ceiling to 30% and the
exemption from the loan ceiling cap imposed by the DOF will allow LGUs to broaden
their fiscal space especially during the period of pandemic, which necessitates higher
expenditure requirement without expecting a corresponding increase in revenue. With
22
Entitled, “Guidelines on the Release and Utilization of the Bayanihan Grant to Cities and
Municipalities”, issued on April 7, 2020.
23
Entitled, “Guidelines on the Release and Utilization of the Bayanihan Grant to Provinces”, issued on
April 30, 2020.

the streamlined procedure and reduced documentary requirements under Department

Order (DO) No. 054-201624, LGUs will be able to secure the needed loans to fund the
necessary programs to fight and mitigate the impact of COVID-19.
On the simplification, shortening and rationalization of new business

registration, licensing and permitting processes
The provision on simplifying or rationalizing business application for permit,

license, clearance and the like, will encourage more new business registration
especially micro, small and medium enterprises. This will support business continuity,
which is also needed by LGUs as source of local taxes, regulatory fees and charges.
This is also consistent with Section 11 of RA 1103225, or the “Ease of Doing

Business and Efficient Government Service Delivery Act of 2018”, and its IRR, Joint
Memorandum Circular (JMC) No. 2019-00126, which promotes simpler and
streamlined procedures for the issuance of business licenses, barangay clearances,
permits, or authorizations. Even before the enactment of RA 11032, LGUs are already
aware of JMC 01, series of 201627, which mandates the reduction of requirements and
processing time of business permits and licenses. With the establishment of the
Business One Stop Shop (BOSS) and the automation or computerization of the
Business Permit and Licensing System (BPLS) in all cities and municipalities, the
issuance of new business permit should only take one to two days. This simplified and
shortened business registration and renewal processes are already being practiced by
some cities such as Muntinlupa, Quezon City, Biñan, Makati, Cagayan de Oro, Iloilo,
Valenzuela, Davao, and Manila.
In this time of pandemic, the provision on RA 11494 to give priority in fast-

tracking the processing of the issuance of permits to privately-run isolation and
quarantine facilities is badly needed. This is also consistent with LGUs’ campaign to
suppress the virus by immediately isolating infected ones through these quarantine or
isolation facilities.
In addition, the temporary suspension of requirements, except for the building

permit, to secure local permits and clearances for the construction, installation, repair,
operation, and maintenance of telecommunications (telco) and internet infrastructure
24
Streamlining the Certification of Net Debt Service Ceiling and Borrowing Capacity of Local
Government Units, issued on October 25, 2016.
25
Entitled, “An Act Promoting Ease of Doing Business and Efficient Delivery of Government Services,
Amending for the Purposes of Republic Act No. 9485, Otherwise Known as the Anti-Red Tape Act of 2007, and
for Other Purposes”, approved on May 28, 2018.
26
Entitled, “The Implementing Rules and Regulations of Republic Act No. 11032 otherwise known as
the ‘Ease of Doing Business and Efficient Government Service Delivery Act of 2018’”, issued on July 17, 2019.
27
Entitled, “Revised Standards in Processing Business Permits and Licenses in All Cities and
Municipalities’, issued on August 30, 2016 by the Department of the Interior and Local Government (DILG),
Department of Trade and Industry (DTI), and Department of Information and Communications Technology
(DICT), issued on August 30, 2016.

for a period of three years would be beneficial to telco owners and the public. The
telco owners would be able to address issues in telecommunications especially slow
internet connectivity being experienced by the public. The tedious process of securing
permits from many local governments, barangays, and subdivisions, among others,
impedes the construction, installation, repair, operation, and maintenance of
telecommunications and internet infrastructure, thus, affecting the availability of
service in certain areas (DICT, n.d.). With this, telco providers would be able to
activate more cell sites in order to speed up the internet in the country. This will also
be advantageous for those conducting online classes, webinars, conferences, meetings,
and the like.
On the reduction of rates on applicable taxes, regulatory fees, and charges on

transportation business
One of the critically-impacted businesses affected by the pandemic is the

transportation sector, thus, resulting to non-operation of public utility transportation
and closure of transportation terminals including booking offices for transportation.
Considering the adverse impact of COVID-19 on the operation of public transportation
services and reduction of rates of applicable local taxes, regulatory fees, and charges,
the local revenue from this source is expected to decline drastically.
On the SEF
Section 272 of the LGC of 1991, as amended, allocates the proceeds of the SEF
for the operation and maintenance of public schools, construction and repair of school
buildings, facilities and equipment, educational research, purchase of books and
periodicals, and sports development as determined and approved by the local school
board.
In 2017, DepEd-DBM-DILG Joint Circular (JC) No. 1, series of 201728

updates the policies and guidelines on the use and purpose of the SEF as provided in
the LGC and its IRR. In particular, JC 1, s. 2017 laid down the allowable expenses29
chargeable against the SEF and added allocations for the Early Childhood Care and
Development Program under RA 1041030, otherwise known as “Early Years Act of
28
Entitled, “Revised Guidelines on the use of Special Education Fund”, issued on January 19, 2017.
29
On operation and maintenance of public schools: (a) payment of compensation/allowances of locally-
hired teachers identified to have shortages per the teacher deployment analysis of the DepEd; (b) payment of
salaries/wages of utility workers and security guards hired which have not been provided in the DepEd budget;
and (c) payment of utilities and communication expenses. On construction and repair of school buildings, it
included the acquisition and titling of school sites and its construction, repair and maintenance. Moreover, the
SEF can be spent on the acquisition of laboratory, technical and similar apparatus, and information technology
equipment and services, educational research, purchase of literary books and periodicals, instructional materials,
workbooks and textbooks, and expenses for school sports activities.
Entitled, “An Act Recognizing the Age from Zero (0) to Eight (8) Years as the First Crucial Stage of
30
Educational Development and Strengthening the Early Childhood Care and Development System, Appropriating
Funds Therefor and for Other Purposes”, approved on March 26, 2013.

2013”, such as salaries/allowances of locally-hired Child Development Teachers

and/or Day Care Workers, etc., and provision of facilities for the Program. Later,
DepEd-DBM-DILG JC 1, s. 202031 included expenses for the implementation of the
National Feeding Program for undernourished children in public day care,
kindergarten, and elementary schools including payment of compensation/allowances
of locally-hired dentists and/or local aide positions, payment of dental supplies and
establishment of dental facilities and acquisition of apparatus and/or equipment in the
allowable expenses chargeable to the SEF.
The allocation of the SEF for the support of alternative learning modalities,
digital education, digital infrastructure, and continuity plans, such as the purchase of
equipment, materials, and supplies related to printing and delivery of self-learning
modules, provision of safe school infrastructure, equipment and facilities is consistent
with the purpose of the SEF in supporting public basic education. The temporary
expanded use and allocation of the SEF for the DepEd’s Learning Continuity Plan are
necessary to ensure the unimpeded delivery of basic education despite the COVID-19
pandemic. This is also consistent with the mandate of the LGUs to provide
supplementary funding support to public basic education through its SEF tax
collection.
Likewise, a similar proposal32 to expand the application of proceeds of the SEF

to other items relating to education such as the construction and repair of libraries,
payments of salaries, and allowances and other benefits of teaching and non-teaching
personnel, is noted. Another proposal33 includes construction of dormitories and for
the augmentation for the operation of non-formal education, remedial classes, and
alternative learning system.
On the P1.5 billion-LGSF
To implement the appropriation of the P1.5 billion to the LGSF, the DBM
issued LBC 12834 prescribing the guidelines and procedures on the release and
utilization of the P1.5 billion-LGSF-COVID-19 financial assistance to LGUs. This
will be a supplementary aid to LGUs with large number of confirmed COVID-19
patients including persons under monitoring/investigation. The exclusive used of said
31
Entitled, “Addendum to DepEd-DBM-DILG JC No. 1, s. 2017 Dated January 19, 2017, Entitled,
‘Revised Guidelines on the Use of the Special Education Fund (SEF)’”, issued on August 27, 2020.
32
Senate Bill No. 396, entitled, “An Act Expanding the Purposes and Application of the Special
Education Fund, Amending for the Purpose Section 272 of Republic Act No. 7160, Otherwise Known as the Local
Government Code of 1991, and for Other Purposes”, 18 th Congress First Regular Session, introduced by Senator
Christopher Lawrence “Bong” T. Go.
33
House Bill No. 7125, entitled, “An Act Expanding the Purpose and Application of the Special
Education Fund, Amending for the Purpose Section 272 of Republic Act No. 7160, Otherwise Known as the
‘Local Government Code of 1991’”, introduced by Representatives Castro, et.al.
34
Entitled, “Guidelines on the Release and Utilization of the Local Government Support Fund – COVID-
19 Financial Assistance to Local Government Units in the Bayanihan to Recover as One Act, Republic Act No.
11494, issued on September 17, 2020.

LGSF is similar to DBM LBCs 125 and 126, which is to support COVID-19-related
programs, projects, and activities and expenses35. However, LGUs should submit their
requests, together with the documentary requirements as prescribed in the Circular, to
the DBM Central Office not later than October 31, 2020 in order to ensure that funds
from the LGSF-COVID-19 financial assistance to LGUs are released to the LGUs on
or before the last day of effectivity of RA 11494 (December 19, 2020).
F. On Import Duties and VAT [Section 4(cc), and Section 4(zzz)]
On the liberalization of the grant of incentives for the manufacture or importation

of critical supplies
The provision under Section 4(cc) which exempts critical or needed equipment
or supplies or essential goods from import duties, taxes, and other fees was similarly
provided under RA 1146936, otherwise known as the “Bayanihan to Heal as One Act”,
as response to the public health crisis brought by the pandemic.
The existing import duties for certain healthcare imported goods such as
personal protective equipment (PPEs) and other products for the Most-Favored Nation
(MFN) rates of duty ranges from 1% to 15%, while the concession rates of duty for
similar products on bilateral trade agreements between the Association of South East
Asian Nations (ASEAN) and other countries (i.e. China, Japan, Korea, India,
Australia, New Zealand, and European Free Trade Association) is already low, ranging
from 0 to 12.5%. (See Table 1.)
35
Among the COVID-19 programs, projects, and activities (PPAs) and expenses include the procurement
of the following: personal protective equipment; equipment, reagents, and kits for COVID-19 testing; medicines
and vitamins; hospital equipment and supplies; disinfectants, sprayers, disinfection tents, and other disinfecting
supplies and misting equipment; food, transportation (including fuel), and accommodation expenses of medical
personnel and other LGU personnel; maintenance, repair of ambulance, medical transport vehicle, and emergency
response vehicle; food assistance and other relief goods for affected households; expenses for the additional space
or building to accommodate COVID-19 patients, expenses for the operation of stand-alone/mobile testing
laboratory; purchase or rental of tents or spaces for temporary shelters of the homeless; expenses for training of
personnel; and other COVID-19 related PPAs and expenses.
36
Entitled, “An Act Declaring the Existence of a National Emergency Arising from the Coronavirus
Disease 2019 (COVID-19) Situation and a National Policy in Connection Therewith, and Authorizing the
President of the Republic of the Philippines for a Limited Period and Subject to Restrictions, to Exercise Powers
Necessary and Proper to Carry Out the Declared National Policy and for Other Purposes”, approved on March 24,
2020.

Table 1
Summary of Ranges of Import Duties of Critical Healthcare Products
Particulars Rates of Duty (%)

MFN 1 - 15
ATIGA 0
ACFTA 0 – 15
AKFTA 0 – 12
AANZFTA 0 – 12
AIFTA 0 – 12.5
PJEPA/AJCEPA 0
PH-EFTA FTA 0
Notes.
MFN – Most-Favored Nation
ATIGA - ASEAN Trade in Goods Agreement
ACFTA - ASEAN-China Free Trade Agreement
PJEPA - Philippines-Japan Economic Partnership Agreement
AJCEPA - ASEAN-Japan Economic Partnership Agreement
AKFTA - ASEAN-Korea Free Trade Agreement (FTA)
AIFTA - ASEAN-India FTA
AANZFTA - ASEAN-Australia-New Zealand FTA
PH-EFTA FTA - Philippines-European Free Trade Association FTA.
In 2019, importation of critical products, i.e., PPEs, reached a total of P7.01

billion dutiable value or about P583.89 million per month with a total of P463.42
million collected duties and taxes or a monthly average of P38.62 million. On the other
hand, importation of other healthcare products, i.e., alcohol, disinfectants, and
COVID-19 diagnostic test kits, totaled P7.82 billion dutiable value, averaging P652
million per month, with P946.60 million worth of duties and taxes, averaging P78.88
per month. Overall, the total importations of healthcare products, including PPEs and
other products, amounted to P14.83 billion in terms of dutiable value for CY 2019 with
P1.41 billion total duties and taxes.
For the period June to September 2020, the customs value of importation of
selected critical and needed healthcare equipment and supplies totaled $633.34
million. These importations translated to P1.62 billion in revenues in the form of duty
and VAT collection. (See Table 2.)

Table 2
Customs Value of Selected Critical and Needed Healthcare Equipment and Supplies
and Duty and VAT Collection therefrom: June to September 2020
Customs Value Duty and VAT Paid

Particulars
(in USD) (in PhP)
June 132,766,045 342,469,237

July 214,234,060 455,951,930
August 165,751,391 441,785,570
September 120,587,520 384,296,494
Total 633,339,017 1,624,503,230
Note. Refer to Annex A for more detailed information.
Source: https://customs.gov.ph/import-reports/
In allowing the tax- and duty- free importation of the said goods into the
country pursuant to Section 4(cc) of the law, the government would stand to lose an
estimated revenue of P705.01 million, assuming that the period for availing incentives
will only be for 6 months. The estimated revenue foregone from the government
coffers will likely grow more to at least P1 billion and would grow up to at least P2.12
billion if the grant of incentives will be for a period of a year and a half. The estimates
may be bigger (approximately P647,50037 per month) if fees are to be imputed in
relation to the import processing by the concerned agencies. (See Table 3.)
Table 3
Estimated Revenue Forgone Pursuant to Section 4(cc) of RA 11494

(In Million Pesos)
Period of Exemption Estimated Revenue Forgone

6 months 705.01
12 months 1,410.02
18 months 2,115.04
37
Estimated total number of importations (i.e., 1,036) in January 2019 multiplied by the average import
processing fees as based on Customs Administrative Order (CAO) No. 2-2001 (estimated average fee is P625). It
is assumed that the import entries per HS codes are imported separately, i.e., mutually exclusive and exhaustive.

The BIR issued RR 28-202038 to implement the tax exemption provision under
Section 4(cc) of RA 11494. Sections 2 and 3 of the said regulation provide for the
exemption from June 25, 2020 to December 19, 2020 of the following transactions
from the payment of VAT, excise tax and other fees:
(a) The importation of goods which may include PPE such as:
i. Gloves, gowns, masks, goggles, and face shields;

ii. Surgical equipment and supplies;
iii. Laboratory equipment and its reagents;
iv. Medical equipment and devices;
v. Support and maintenance for laboratory and medical equipment,
surgical equipment and supplies;
vi. Medical supplies, tools, and consumables such as alcohol,
sanitizers, tissue, thermometers, hand soap, detergent, sodium
hypochlorite, cleaning materials, povidone iodine, common
medicines (e.g., paracetamol tablet and suspension, mefenamic
acid, vitamin tablet and suspension, hyoscine tablet and suspension,
oral rehydration solution, and cetirizine tablet and suspension); and
vii. Testing kits, and such other supplies or equipment as determined by
the DOH and DTI.
However, the sale of finished goods/products mentioned above,

whether locally manufactured or imported, is subject to VAT.
(b) Equipment for waste management, including but not limited to, waste
segregation, storage, collection, sorting, treatment, and disposal services
as approved by the Department of Environment and Natural Resources,
DOH or other concerned regulatory agencies.
(c) Inputs, raw materials, and equipment necessary for the manufacture or
production of essential goods related to the containment or mitigation of
COVID-19 enumerated in Section 2(A)(1) of these regulations.
In order to avail of the exemption, the supplier/s of inputs, raw

materials and equipment shall submit the following:
i. Certified true copy of “License to Operate”, issued to the

manufacturer-buyer by the Food and Drugs Administration (FDA)-
DOH, authorizing the manufacture of essential goods of medical
grade related to containment and mitigation of COVID-19; and
38
Implementing the Tax Exemption Provision Under Section 4 (cc) and Section 18 of RA 11494,
otherwise known as the “Bayanihan to Recover as One Act” on the incentives for the Manufacture or Importation
of Certain Equipment, Supplies or Goods, issued on October 15, 2020.

ii. “Sworn Declaration” from the manufacturer-buyer that the items

shall be used for the manufacture of essential goods and medical
grade related to containment and mitigation of COVID-19.
However, the sale of inputs, raw materials, and equipment to a

non-holder of “License to Operate” issued by the FDA-DOH is subject
to VAT.
The importation of the above-mentioned goods shall not be subject to the

issuance of Authority to Release Imported Goods (ATRIG) under RMO 35-200239.
Hence, the ATRIG shall not be necessary for the release of said goods from the Bureau
of Customs (BOC) based on its list of importers who made importations without any
ATRIG, the BIR will conduct post investigation/audit. [Section 3(c), RR 6-2020]
As provided under RA 11494, the exemption from import duties, taxes, and
other fees for the manufacture or importation of critical equipment or essential goods
shall be determined by the BOC and the BIR, respectively. While the guidelines on
the provision of the law on exemption from VAT, as well as the refund of VAT
payments made on all covered and qualified shipments/importations from June 25,
2020 to September 14, 2020, were already provided under BIR RR 28-2020. It must
be mentioned that the BOC issued Customs Administrative Order 07-202040 to
implement Section 4(o) of RA 11469 which also provided exemption from import
duties, taxes, and other fees of importation of critical or needed equipment or
supplies, including those for healthcare.
It is worth noting though that RR 28-2020 has set a criterion for the
availment of exemption from import duties, taxes, and other fees, to ensure the
supply of PPE at competitive prices. Section 2 B of the said regulations requires that
a taxpayer availing of the tax exemption must present a certification from the DTI
that the equipment and supplies being imported are not locally available or of
insufficient quality and preference.
Meanwhile, the grant of exemption for the importation of goods was deemed
to be in effect beginning June 25, 2020, following the lapse of RA 11469. All covered
and qualified shipments/importations that may have been paid from June 25, 2020 to
September 14, 2020 are entitled to VAT refund pursuant to Section 204 (C) of the
Tax Code, provided that the input tax on the imported items have not been reported
and claimed as input tax credit in the monthly and/or quarterly VAT returns. The
same was also not allowed as input tax credit pursuant to Section 110 of the Tax
Code for the purpose of computing the VAT payable of the concerned taxpayer/s for
the said period.
39
Prescribing the Guidelines and Procedures in the Processing and Issuance of Authority to Release
Imported Goods (ATRIG) for Excise and Value-Added Tax Purposes, issued on October 28, 2002.
Subject: Tax and Duty-Exempt Importations under Section 4(o) of “Bayanihan to Heal as One Act”.
40
Approved by the Secretary of the Finance on March 30, 2020.

With regard to the VAT exemption of donations of all critical or needed

healthcare equipment or supplies, and relief goods, various Philippine laws and
regulations already allow for the tax- and duty-free importations of certain donations,
viz.:
(a) RA 10863, or the “Customs Modernization and Tariff Act (CMTA)”,

provides for the exemption from payment of import duties for the
following items:
i. Imported relief consignment41 during a state of calamity and

intended for a specific calamity area for the use of the calamity
victims therein, shall be exempt from duties and taxes; (Section 121)
ii. Imported articles donated to, or for the account of, any duly
registered relief organization, not operated for profit, for free
distribution among the needy. A certification by the Department of
Social Welfare and Development (DSWD) or the DepEd or the DOH
as the case may be, would be required; [Section 800(m)]
iii. Those items that may be granted by the President of the Philippines
upon the recommendation of National Economic and Development
Authority (NEDA) in the interest of national economic
development; and (Last paragraph of Section 800)
iv. Those items granted to government agencies, instrumentalities or

government-owned or controlled corporations under the provisions
of existing contracts, commitments, agreements, or obligations
(requiring such exemption) with foreign countries. (Last paragraph
of Section 800)
(b) Presidential Memorandum Order (PMO) No. 36, s. 1992 also authorizes
the “importation and donation of food, medicine and equipment for use
in the government relief and rehabilitation programs for calamity affected
areas” under Section 800 of the CMTA, as amended and the prevailing
provisions of the General Appropriations Act (GAA) covering the
national internal revenue taxes and import duties of the national and local
government agencies. Endorsement would be required from the DSWD
for relief items, the DOH for medicines, and the Department of National
Defense for rehabilitation equipment. The Office of the President issues
the necessary clearances for donations under this facility, which will
serve as basis for the BOC to process and release the donation. It is noted
that the said importations under the said Memorandum are considered as
importations by the Office of the President. Thus, the national internal
revenue taxes and import duties payable by the Office of the President
41
Goods such as food, medicine, equipment and materials for shelter, donated or leased to government
institutions and accredited private entities for free distribution to or use of victims of calamities shall be treated
and entered as relief consignment (Section 120).

from the said importations or foreign donations shall be automatically

appropriated under the GAA;
(c) Diplomatic Notes No. 1071 of the US Embassy and No. 3001 of the
Department of Foreign Affairs provide that the Philippine government
will accord duty-free entry into the Philippines, as well as exemption
from internal taxation, of supplies of goods approved by the US
government, donated to or purchased by the United States voluntary,
nonprofit relief and rehabilitation agencies qualified under United States
government regulations, and consigned to such organizations, including
branches of these agencies in the Philippines which have been approved
by the Philippine government; and
(d) Article XIV, Section 4(4) of the Philippine Constitution provides that
“Subject to conditions prescribed by law, all grants, endowments,
donations, or contributions used actually, directly, and exclusively for
educational purposes shall be exempt from tax”.
Donations, which are not covered by Section 800(l) of the CMTA and are not
enjoying exemption from customs duties under existing laws for importations, may
avail of duty-free importations under the NEDA Rules and Regulations governing the
implementation of the last clause of Section 800 of the CMTA, which provides for
exemption from the payment of customs duties on those which may be recommended
by the NEDA to the President as necessary for economic development.
The following are the general guidelines issued by the NEDA concerning the
entry of donations from overseas:
(a) Donated items that may be allowed duty-free entry are food, medicine,
and other relief goods; books and educational materials; essential
machineries/equipment; and consumer goods and other articles subject to
certain conditions. Used clothes are considered regulated or restricted
items;
(b) Overseas donations may be allowed duty-free entry upon certification by

appropriate Philippine Government agencies and if these are consigned
to government agencies or DSWD accredited organizations. Certification
is required from agencies such as: DSWD, DOH, NEDA, and DOF;
(c) The documents required prior to the issuance of duty-free certification by

government agencies concerned are the following: (1) Letter request
from the recipient for duty-free certification; (2) Deed of acceptance and
distribution plan of the recipient; (3) Deed of donations duly
authenticated by the Philippine Embassies/Consulates; (4) Pro-forma or
commercial invoice and packing list/inventory of donated items;
(5) Shipping documents (bill of lading/airway bill); and (6) Other
documents depending on the nature of the donated articles;

(d) The request of duty-free certification should be filed before the shipment
of the donation to allow sufficient time for processing;
(e) Donated goods may only be exempted from import duties, but not from
the payment of VAT which is 12% of total landed cost as determined by
the Bureau of Customs. Only book donations are exempted from payment
of VAT; and
(f) The recipient or the donor (depending upon the arrangement made
between the parties concerned) shall shoulder the necessary expenses
incurred in the processing, handling, and release of the donated shipment
from the port of entry.
Moreover, COVID-19 patients’ specifically senior citizens and persons with

disabilities are entitled to a 20% discount and exempted from paying VAT on their
purchases of medicines (generic or branded) and foods, medical check-ups, laboratory
fees, diagnosis/treatment fees, rehabilitation, professional fees of attending
physician/s, and private hospital bills, pursuant to RA 999442 and DOH Administrative
Order No. 2017-000843.
In line with the thrust of RA 11494, the Board of Investments and the
Philippine manufacturers have worked together to help the country and the world in
the fight against COVID-19 through the re-purposing of their products to produce and
ensure a steady supply of the much-needed COVID-19 related products. This involves
using alcoholic liquor to create alcohol disinfectants; turning ready-to-wear garments
such as office uniforms to PPEs; and making medical gloves from rubber balloons.
Manufacturers of such products registered for accreditation under the scheme were
able to obtain grants and tax incentives for producing PPEs, vital medical equipment
and medicines deemed critical by the DOH. (Board of Investments, n.d.)
Based on the foregoing discussions, while the grant of incentives, particularly

the exemption from duties, taxes, and other fees of imported critical products, essential
goods, equipment or supplies, may have implications on the revenue intake of the
government, it is deemed appropriate to ensure the sustainability of supply of such
goods in the country, and in prices that are reasonable and affordable. The setting of
certain qualifications, on the other hand, to avail of such tax exemptions is also
justified in order to safeguard revenues needed by the government as it continues to
combat the pandemic, on top of its regular provision of services and execution of
various programs and projects. It is also meant to preclude abuses in the availment of
such incentives.
42
Entitled, “An Act Granting Additional Benefits and Privileges to Senior Citizens, Further Amending
RA 7432, as Amended, Otherwise Known as “An Act to Maximize the Contribution of Senior Citizens to Nation
Building, Grant Benefits and Special Privileges and for Other Purposes”, also known as the Expanded Senior
Citizens Act of 2010, approved on February 15, 2010.
43
Entitled, “Implementing Guidelines of RA 10754, otherwise known as “An Act Expanding the
Benefits and Privileges of Persons with Disability”, for the Provision of Medical and Health-related Discounts
and Special Privileges”, issued on June 01, 2017.

On the exemption from duties and taxes of equipment donated for use and
distribution to public schools
The community quarantine has resulted to the cancellation of schools’

activities. To mitigate the disruption of education, educational institutions, including
vocational education institutions, have opted to the use of technology as one of the
means to deliver education services; thus, the increase in the demand for computers
and other related equipment.
The DepEd came up with a combination of modular, radio and television, and
electronic or online under the so-called “blended learning”. Similarly, the Commission
on Higher Education (CHED) has what they call “flexible learning”, which includes
online or e-learning that many colleges and universities in the Philippines had been
offering even prior to the pandemic (Villanueva, 2020).
Section 4(zzz) of the BARO Act specifically provides the exemption from
duties and taxes, including donor’s tax, of personal computers, laptops, tablets, or
similar equipment appropriate for use in schools, donated for distribution to public
schools regardless of level, including SUCs and vocational institutions under the
TESDA. The exemption from duties is in accord with Section 800(m) of the CMTA,
which provides, among others, that donations for the account of the Philippine
government for distribution among the needy are exempt from duties.
To support the Basic Education Learning Continuity Plan of the DepEd,

Section 4(zzz) of RA 11494 as implemented by RR 26-202044, provided that all
donations of personal computers, laptops, tablets, or similar equipment (i.e. mobile
phone, printer) for use in teaching and learning in public schools, starting from the
effectivity of RA 11494 on September 15, 2020 to December 19, 2020, are entitled to
certain tax incentives/exemptions. It also clarifies that if donations made by foreigner
of the abovementioned electronic gadgets, the importer should present a Deed of
Donation duly accepted by the DepEd, or CHED, or TESDA in order to be exempt
from VAT.
Importation of these articles (under the tariff heading number Hdg. No. 8471
and its subclassifications) are accorded 0% duty since mid-2017 up to the present,
including all applicable tariff schedules following the Philippine commitment to the
FTAs. (See Table 4.) Similarly, all other articles under Hdg. No. 8471.30 (including
laptops and/or notebooks) and Hdg. No. 8471.41 (including personal computers) and
their subclassifications, are likewise accorded 0% duty.
44
Implementing Section 4 (zzz) of Republic Act No. 11494 Otherwise Known as “Bayanihan to Recover
as One Act” Relative to Donations of Identified Equipment for Use in Public Schools”, issued on October 06,
2020.

Table 4
Summary of Import Duties of Commodities Under Tariff Heading 8471.41.10 and

8471.30
Particulars Rates of Duty (%)

MFN 0
AANZFTA 0
ACFTA 0
AIFTA 0
AJCEPA 0
AKFTA 0
ATIGA 0
PJEPA 0
PH-EFTA FTA (NOR) 0
PH-EFTA FTA 0
(CHE/LIE)
PH-EFTA FTA (ISL) 0
AHKFTA 0
Notes.
MFN – Most-Favored Nation
AANZFTA - ASEAN-Australia-New Zealand FTA
ACFTA - ASEAN-China Free Trade Agreement
AIFTA - ASEAN-India FTA
AJCEPA - ASEAN-Japan Economic Partnership Agreement
AKFTA - ASEAN-Korea FTA
ATIGA - ASEAN Trade in Goods Agreement
PJEPA - Philippines-Japan Economic Partnership Agreement
PH-EFTA FTA - Philippines-European Free Trade Association FTA
AHKFTA – ASEAN-Hong Kong China Free Trade Agreement
PH-EFTA FTA - Philippines-European Free Trade Association FTA (Norway, Iceland, Switzerland,
and Liechtenstein)
Tariff Commission (n.d.). Tariff Finder. Retrieved September 25, 2020 from
http://finder.tariffcommission.gov.ph/index.php?page=tariff-finder3
In 2019, importations of articles under Hdg. No. 8471.30, which included

laptops, reached a total dutiable value of P18.38 billion; while personal computers had
a total dutiable value of P2.13 billion. (See Table 5.)

Table 5
Importation of Computers and Laptops, and Similar Equipment, in CY 2019

(In Million Pesos)
Hdg No. 8471.30 (Laptops) Hdg. No. 8471.41 (Personal Computers)

Month Dutiable Duty Duties & Dutiable Duty Duties &
value paid taxes value paid taxes
January 1,948.49 - 219.76 125.48 - 6.23

February 1,272.29 - 132.29 148.63 - 9.57
March 1,743.99 - 196.23 112.94 - 8.24
April 1,118.20 - 116.29 131.45 - 5.71
May 1,135.04 - 122.29 126.03 - 4.84
June 1,475.60 - 163.85 192.57 - 11.12
July 1,801.16 - 182.91 236.79 - 8.90
August 1,720.78 - 194.86 188.97 - 7.22
September 1,695.58 - 194.99 129.77 - 5.57
October 1,504.95 - 166.12 264.82 - 15.22
November 1,817.88 - 204.67 240.99 - 13.99
December 1,149.78 - 129.12 231.81 - 9.33
Subtotal 18,383.74 - 2,023.39 2,130.25 - 105.95
Average 1,531.98 - 168.62 177.52 - 8.83
Total 20.513.98 2,129.34
Average (monthly) 1.709.50 177.44
Notes. Totals may not add up due to rounding.
Raw data from the BOC.
Monthly data were generated based on the data from the import entries from the BOC (n.d.). Daily
entries for 2019. Retrieved from http://customs.gov.ph/import-reports/
The exemption from duties pursuant to RA 11494 practically addresses the

concern of educational institutions and businesses where cancellations of schools and
halted business operations due to the ongoing phases of quarantine restrictions were
adversely affected as everyone was encouraged to stay at home to mitigate the spread
of the virus. The use computers and laptops/notebooks, where online classes were
made available is necessary to continue education of students.
The provision of exemption from duties and taxes will help the need to supply
more computers as educational institutions and businesses shifted to online classes and
work from home set-ups. More units of laptops and personal computers will be more
accessible to the public because of their cheaper prices.
In terms of collection of customs duties, the duty exemption has little to no

impact considering the 0% tariff rate of these imported articles in most FTAs and in
accordance with the CMTA-related provision.

G. On Tax Administration [Section 4(tt)]
Section 4(tt), which moves the statutory deadlines and timelines for the filing
and submission of any document, the payment of taxes, fees, and other charges
required by law, and the grant of any benefit, in order to ease the burden on individuals
under community quarantine, is commendable. The COVID-19 situation in the
country necessitates imposition of community quarantine measures that affected
business activities as well as work in government offices. Thus, it is only proper to
suspend and/or extend the deadlines of submissions of any document, payment of
taxes, fees, and other charges falling within the community quarantine period in order
to not place additional administrative burden/regulatory requirements to businesses
and the general public who are already experiencing economic hardships due to the
pandemic. The suspension of such filing and submissions is also in accord to the
government’s policy against mass gatherings that is in effect during community
quarantine period.
Among ASEAN member-countries, Lao PDR, Myanmar, Vietnam, and

Thailand also extended their deadlines for tax filing and/or payments as response to
the COVID-19 situation in their countries. Lao PDR deferred the tax collection from
tourism-related business for three months, and extended the deadline for the annual
tax filing for two months, and the road tax payment for three months (International
Monetary Fund, 2020). Myanmar extended the income and commercial tax payments
due in the second and third quarters of the FY until the end thereof, while Vietnam
deferred the payment of VAT and Corporate Income Tax (CIT) obligations and land
rental fees by five months, and payment of Personal Income Tax obligations until the
year-end (International Monetary Fund, 2020). The Thailand government extended the
deadline for the filing of personal and CIT returns until August 31, 2020 (Medina,
2020).
RR 27-202045 provides the extension of statutory deadlines for tax submission,

filing, returns, and payment from VAT. However, for withholding tax and other taxes,
the BIR has not yet issued an RR on their extension, but it can be similar with RR 7-
2020 and was further extended by the amendatory issuance of RRs 10-2020 and 11-
2020. As regards the extension of the deadlines, it was stated in RR 11-2020 that in
case of another quarantine extension, as the defined extended due dates under Section
2 of RR 11-2020, shall be extended further for 15 calendar days.
H. On Fees and Charges [Section 4(gg)(2) and 4(hhh)]
The provisions under Section 4(gg)(2) and Section 4(hhh) to reduce fees and
charges applicable to critically-impacted businesses in the transportation industry, and
suspension, reduction, or waiver of fees and charges for critically-impacted creative
sector, respectively, both for a period of six months, set forth a well-targeted and
45
Regulations Suspending the Filing and Ninety (90) – Day Processing of Value-Added Tax (VAT)
Refund Claims Anchored Under Section 112 of the Tax Code of 1997, as Amended, in Relation to Section 4(tt)
of RA 11494, Otherwise Known as the “Bayanihan to Recover as One Act”, issued on October 6, 2020.

strictly time-bound recovery program for severely affected industries. The

transportation and creative industries are among the gravely affected sectors by the
COVID-19 pandemic as mobility and non-essential services were restricted as part of
the community quarantine measures imposed to contain the virus. Businesses
belonging in such industries will need government assistance to recover from the ill-
effects of the pandemic.
For the 6-month duration of fee reduction for transport businesses, the
estimated government foregone revenues will amount to approximately P739 million
if fees will be reduced by 25%. A higher reduction in fees, 50% for instance, will
amount to P1.48 billion forgone revenues. As to the regulatory relief for critically-
impacted businesses in the creative sector, there may be a need to provide clear
definition/guidelines on the qualified sub-industries to identify the government fees
and charges which shall be subject to suspension, reduction, or waiver.
I. On the net operating loss carry-over (NOLCO) for taxable years 2020 and 2021
[Section 4(bbbb)]
The five-year period to carry over the losses of the business or enterprise for
taxable years 2020 and 2021 would give them more time to recover such losses through
reduced corporate income tax. The provision in the law is longer by two years than the
period provided under Section 34(D)(3) of the NIRC of 1997, as amended, which
provides that net operating loss of the business or enterprise for any taxable year
immediately preceding the current taxable year shall be carried over as a deduction
from gross income for the next three consecutive taxable years immediately following
the year of such loss.
J. On the IPO Tax (Section 6)
Section 6 of RA 11494 repeals the tax on barter or exchange of stock listed and
traded through the IPO under Section 127(B) of the NIRC of 1997, as amended. This
is implemented by the BIR through RR 23-202046, which specifically provides that on
every sale, barter, exchange or disposition through IPO of shares of stock in closely
held corporations shall no longer be subject to the IPO tax upon the effectivity of
RA 11494.
An IPO refers to public offering of shares of stock made for the first time in
the local stock exchange. Its objective is to seek a public market for the stocks of a
company that wishes to raise capital, thus, encouraging public participation in stock
transactions. It is oftentimes the most practical and easiest way to raise new capital
that can finance expansion or support new ventures.
Entitled, “Implementing Section 6 of Republic Act No. 11494, otherwise known as the “Bayanihan to
46
Recover as One Act” on the Repeal of Tax on the Initial Public Offering (IPO) of Shares of Stocks Provided
Under Section 127(B) of the National Internal Revenue Code (NIRC) of 1997, as Amended”, issued on September
30, 2020.

Section 127(B) of the NIRC of 1997, as amended, provides that on every sale,
barter, exchange or other disposition through IPO of shares of stock in closely held
corporations47, a tax based on the gross selling price or gross value in money of the
shares of stock sold, bartered, exchanged or otherwise disposed of in accordance with
the proportion of shares of stock disposed of to total outstanding shares of stock after
the listing in the local stock exchange:
Rate of Tax
Up to 25% 4%
Over 25% but not over 33 1/3% 2%
Over 33 1/3% 1%
Under primary offering, the issuing corporation is liable to file a tax return
and pay the tax within 30 days from the date of listing of the shares of stock in the
local exchange. For secondary offering, the seller is the one liable to the IPO tax but
the filing of the corresponding return is the duty of the stockbroker.
As the country is experiencing a major economic setback due to the COVID-

19 pandemic, the repeal of the IPO tax under the BARO Act can be seen as one of
the recovery interventions of the government to bolster the resiliency of the
economy. This will help businesses to recover faster because it will lower the cost
of raising capital through IPO.
Moreover, the repeal of the IPO tax under the BARO Act is consistent with
the policy objective of the government under Package 4 of the Comprehensive Tax
Reform Program. Package 4, otherwise known as the “Passive Income and Financial
Intermediary Taxation Act”, which aims to reform the taxation of passive income
and financial sector to make it simpler, fairer, more efficient, and more regionally
competitive. The Package covers, among others, the repeal of the IPO tax to support
capital market development.
K. On the sources of funds for the enumerated subsidy and stimulus measures to
address the COVID-19 pandemic [Section 11(f) and Section 11(g)]
On the amounts derived from the 5% franchise tax on the gross bets or turnovers
or the agreed pre-determined minimum monthly revenues from gaming
operations, whichever is higher, earned by offshore gaming licenses, including
gaming operators, gaming agents, service providers, and gaming support providers
The issuance of the Revenue Memorandum Circular No. 102-201748 clarifies

the taxability of POGOs and its gaming components, which clearly define that income
47
“Closely-held Corporation” means corporation at least 50% in value of the outstanding capital stock
or at least 50% of the total combined voting power of all classes of stock entitled to vote is owned directly or
indirectly by or for not more than 20 individuals. [Sec. 2 (q), RR 6-2008].
48
Entitled, “Taxation of Taxpayers Engaged in Philippine Offshore Gaming Operations”, issued on
December 27, 2017.

from gaming operations are subject to a 5% franchise tax, in lieu of all kinds of taxes,
levies, fees or assessments of any kind, nature, or description.
On the income tax, VAT, and other applicable taxes on income from non-gaming
operations earned by offshore gaming licenses, operators, agents, service
providers and support providers
Even prior to the BARO Act, POGOs had already donated millions worth of
relief goods and medical supplies to the government in efforts to mitigate the COVID-
19 pandemic in the country.49 Tapping taxes collected from POGO gaming and non-
gaming operations as source of funding to finance government’s subsidy and stimulus
measures to address the COVID-19 is well-taken since the industry is considered as a
lucrative business. This would likewise create a positive image for the industry which
is tainted with negative public perception due to the nature of its activity. These
mitigating measures and earnest efforts taken by the national government together with
the LGUs are gradual steps to help uplift the lives of Filipinos and industries affected
by the COVID-19 that would eventually lead to the country’s full economic recovery.
III. CONCLUSION
The provisions for tax exemptions, preferential treatment, subsidies, and tax regulatory
reliefs accorded to those affected by the COVID-19 under the BARO Act are justified to ensure
the fast recovery of targeted individuals and sectors, and to help reduce their financial burden.
The BARO Act is expected to mitigate the losses from the pandemic, sustain access to
necessary goods and services, and serve as stimulus to encourage investment and spending as
well as create much needed jobs. Moreover, the tax exemptions are temporary reliefs or time-
bounded which are consistent with the thrust of the government in redesigning the country’s
tax incentives system.
While the grant of exemptions/incentives on certain items will have implications on the
revenue intake of the government, these are also deemed appropriate to ensure the
sustainability of supply of such goods in the country, and in prices that are reasonable and
affordable. The setting of certain qualifications for their availment are also justified in order
to safeguard revenues needed by the government as it continues to combat the pandemic, on
top of its regular provision of services and execution of various programs and projects.
49
The Truth About POGO: A Primer by PAGCOR, https://pagcor.ph/images/pogo-primer-eng-
poster.jpg.

REFERENCES
Bangko Sentral ng Pilipinas Memorandum No. M-2020-68 (September 18, 2020).

Bangko Sentral ng Pilipinas Memorandum No. M-2020-074 (September 28, 2020).
Board of Investments. (n.d.). Schemes for Manufacturers. Retrieved October 17, 2020, from
https://boi.gov.ph/manufacturing/
Customs Administrative Order No. 07-2020 (March 30, 2020).
Department of Foreign Affairs Diplomatic Notes No. 3001
Department of Information and Communications Technology. (n.d.). The State of Ph
Telecoms Service. Retrieved September 21, 2020, from
https://www.gov.ph/web/department-of-information-and-communications-
technology-office/post/-/asset_publisher/aq7RjV9nKWcf/content/the-state-of-ph-
telecoms-service
Department Order No. 054-2016 (October 25, 2020).
DepEd-DBM-DILG Joint Circular No. 1 Series of 2017 (January 19, 2017).
Executive Order No. 226 (July 17, 1987). Omnibus Investment Code of the Philippines.
International Monetary Fund. (2020). Policy Responses to COVID-19. Retrieved November
11, 2020, from https://www.imf.org/en/%20%20Topics/%20imf-and-covid19/Policy-
Responses-to-COVID-19#V
Joint Memorandum Circular No. 01 (August 30, 2016).
Joint Memorandum Circular No. 2019-001 (July 17, 2019).
Local Budget Circular No. 124 (March 26, 2020).
Local Budget Circular No. 125 (April 7, 2020).
Local Budget Circular No. 126 (April 30, 2020).
Local Budget Circular No. 128 (September 17, 2020).
Medina, A. F. (2020, April 2). Thailand’s Tax Relief Measures to Counter COVID-19
Impact. Retrieved October 30, 2020
National Tax Research Center. (2018). National Internal Revenue Code of 1997, as Amended
by RA 10963. National Tax Research Center. Retrieved from
http://www.ntrc.gov.ph/images/quicklinks/NIRC%20of%201997,%20as%20Amende
d%20by%20RA%2010963%20-%20updated.pdf
Presidential Memorandum Order (PMO) No. 36, s. 1992 (September 9, 1992).
Republic Act No. 10410 (March 26, 2013). An Act Recognizing the Age From Zero (0) to
Eight (8) Years as the First Crucial Stage of Educational Development and

Strengthening the Early Childhood Care and Development System, Appropriating

Funds Therefor and for Other Purposes, entitled,
"Early Years Act of 2013".
Republic Act No. 10863 (May 30, 2016). An Act Modernizing the Customs and Tariff
Administration, entitled, "Customs Modernization and Tariff Act (CMTA)".
Republic Act No. 11032 (May 28, 2018). An Act Promoting Ease of Doing Business and
Efficient Delivery of Government Services, Amending for the Purposes of Republic
Act No. 9485, Otherwise Known as the Anti-Red Tape Act of 2007, and for Other
Purposes, entitled, " Ease of Doing Business and Efficient Government Service
Delivery Act of 2018".
Republic Act No. 11469 (March 24, 2020). An Act Declaring the Existence of a National
Emergency Arising from the Coronavirus Disease 2019 (COVID-19) Situation and a
National Policy in Connection Therewith, and Authorizing the President of the
Republic of the Philippines for a Limited Period and Subject to Restrictions, to
Exercise Powers Necessary and Proper to Carry Out the Declared National Policy and
for Other Purposes, entitled "Bayanihan to Heal as One Act".
Republic Act No. 11494 (September 11, 2020). An Act Providing for COVID-19 Response
and Recovery Interventions and Providing Mechanisms to Accelerate the Recovery
and Bolster the Resiliency of The Philippine Economy, Providing Funds Therefor,
And for Other Purposes, entitled “Bayanihan to Recover as One Act.”
Republic Act No. 9994 (February 15, 2010). An Act Granting Additional Benefits and
Privileges to Senior Citizens, Further Amending Republic Act No. 7432, as Amended,
Otherwise Known as “An Act to Maximize the Contribution of Senior Citizens to
Nation Building, Grant Benefits and Special Privileges and for Other Purposes,
entitled, "Expanded Senior Citizen Act of 2010".
Revenue Memorandum Circular No. 102-2017 (December 27, 2017).
Revenue Memorandum Oder 35-2002 (October 28, 2002).
Revenue Memorandum Order No. 66-2016 (December 16, 2016).
Revenue Regulations No. 11-2018 (January 31, 2018).
Revenue Regulations No. 14-2001 (October 10, 2001).
Revenue Regulations No. 23-2020 (September 30, 2020).


Revenue Regulations No. 2-98 (May 17, 1998).
Revenue Regulations No. 8-2000 (November 22, 2000).
Revenue Regulations No. 8-2018 (January 25, 2018).
Senate Bill No. 396, entitled, “An Act Expanding the Purposes and Application of the Special
Education Fund, Amending for the Purpose Section 272 of Republic Act No. 7160,
Otherwise Known as the Local Government Code of 1991, and for Other Purposes”,
18th Congress First Regular Session
The 1987 Constitution of the Philippines (February 2, 1987).
US Embassy Diplomatic Notes No. 1071.
Villanueva, M. A. (2020, September 9). DepEd, CHED too distant to learners. Philstar.
Retrieved November 11, 2020, from
https://www.philstar.com/opinion/2020/09/09/2041052/deped-ched-too-distant-
learners

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NTRC Tax Research Journal Vol. XXXII.

Tax Implications of Republic Act No. 114941*

i. In case of death of the health worker – P1,000,000;

ii. In case of sickness, for a severe or critical case – P100,000; and

iii. In case of sickness, for a mild or moderate case – P15,000.

Tax Implications of RA 11494 1 | 88

c. One-time cash assistance to displaced teaching and non-teaching personnel,

2 | 88 Tax Implications of RA 11494

f. Liberalize the grant of incentives for the manufacture or importation of critical or

g. Direct the Department of Transportation and such other authorized agencies or

h. Suspend temporarily the requirements to secure local permits and clearances

i. Discontinue appropriated programs, activities or projects (P/A/Ps) which cannot be

Tax Implications of RA 11494 3 | 88

incurring interest on interests, penalties, fees, or other charges and thereby

m. Provides regulatory relief to the critically impacted creative sector by authorizing

o. Ensure supervision and authority of LGUs over issuance of permits on privately-

p. Exempt personal computers, laptops, tablets, or similar equipment appropriate for

r. Retirement benefits received by officials and employees of private firms, whether

4 | 88 Tax Implications of RA 11494

t. Appropriate P1.5 billion as Local Government Support Fund (LGSF) to provide

II. TAX IMPLICATIONS

A. On Income Tax [Sections 4(h), 4(k), 4(o), 4(w), and 5]

Section 24(A)(1) of the NIRC of 1997, as amended by RA 10963 4, imposes a

Tax Implications of RA 11494 5 | 88

b. Contributions of the employer for the benefit of the employee to retirement,

Moreover, RR 8-20006, as amended by RR 11-20187, provides that some

1. Monetized unused vacation leave credits of private employees not

6 | 88 Tax Implications of RA 11494

2. Monetized value of vacation and sick leave credits paid to government

3. Medical cash allowance to dependents of employees, not exceeding

5. Uniforms and clothing allowance not exceeding P6,000 per annum;

6. Actual medical assistance not exceeding P10,000 per annum;

7. Laundry allowance not exceeding P300 per month;

8. Employees’ achievement awards, which must be in the form of tangible

9. Gifts given during Christmas and major anniversary celebrations not

11. Benefits received by an employee by virtue of a CBA and productivity

c. Representation and Transportation Allowance and Personal Economic

As regards the compensation of P100,000 and P15,000 to public and private

Tax Implications of RA 11494 7 | 88

Moreover, Section 32(B)(6)(b) of the NIRC of 1997, as amended, also

BIR Revenue Memorandum Order (RMO) No. 26-20119, as amended by

8 | 88 Tax Implications of RA 11494

Taking into consideration the life struggles suffered by the displaced or

On October 15, 2020, the BIR issued RR 29-202012 implementing the

B. On Estate Tax [Section 4(k)]

Pursuant to RR 29-2020, the compensation of P1 million to public and private

Also, it provides that such income payment shall be included in the

C. On DST [Section 4(uu)]

Section 4(uu) of RA 11494 directs lenders13 to implement a one-time 60-day

Tax Implications of RA 11494 9 | 88

The Bangko Sentral ng Pilipinas (BSP) issued Memorandum No. M-2020-

Customer receives statement of account (SOA) with due date on September 17

Customer receives SOA with due date on October 19

Customer receives SOA with due date on November 17

Generally, debt instruments representing borrowing and lending transactions,

10 | 88 Tax Implications of RA 11494

be determined by the Secretary of Finance 16, executed by an individual for his

D. On Donor’s Tax [Section 4(zzz)]

Section 4(zzz) of RA 11494 provides the exemption of personal computers,