The tax deadline of April 15 remains as the government evaluates options for corporate taxpayers to reflect the relief of CREAR

MANILA, Philippines – The April 15 deadline for filing and paying income tax returns (ITR) remains, giving limited time to corporate taxpayers who may struggle to adjust their 2020 payments at the lowest rates. casualties provided as relief amid the pandemic-induced recession under the recently signed Corporate Recovery and Business Tax Incentives Act (CREATE).

While Albay Rep Joey Salceda previously proposed extending the tax deadline given that the CREATE bill passed by Congress was transmitted to the Office of the President only earlier this year, the chair of the Ways and Means committee of the Chamber told the Inquirer on Saturday that “we need the cash,” therefore he must stick to the deadline.

“We recommend it in early February, but the cash situation appears to be precarious. I will continue working with the Ministry of Finance [Carlos Dominguez III] about alternatives, perhaps other room for maneuver, “said Salceda.

The latest government cash operations report showed that tax and non-tax revenue collected in January fell 11.5 percent to P60.7 billion from P294.6 billion a year ago or before the pandemic.

The economic team had scheduled to raise P2.88 billion in revenue this year, slightly above P2.86 last year, but still below the record of P3.14 trillion in 2019.

Last Friday, the deputy commissioner of the Internal Revenue Office (BIR), Arnel Guballa, said that the decision on whether or not to adjust the tax term will come from the Department of Finance (DOF). His statement came on the heels of news that President Duterte signed CREATE just one day before it could have been signed into law without presidential action.

Looking for comment, Domínguez responded on Saturday: “What we could consider is allowing the modification of the returns without penalty, then any overpayment can be extended or reimbursed according to the provisions of the Tax Code.”

Last year, the BIR also issued guidelines that allowed the filing of interim returns during the Enhanced Community Quarantine (ECQ) imposed from mid-March through May of last year so that taxpayers can file and pay their COVID-compliant returns. long and strict. -19 closure in the region.

But the DOF and BIR later pushed back the April 15 deadline three times and gave taxpayers until June 15, 2020 to settle their 2019 quotas.

As a result, tax collection was delayed early last year, even as the government banned online filing and early filing among those who can afford it.

By 2021, Internal Revenue Commissioner Caesar Dulay had set the largest monthly collection goal of P235.24 billion in April, as the mandatory income tax filing and payment deadline falls in that month.

For his part, Salceda said that “he will ask exactly what Secretary Domínguez said was acceptable; if we cannot have an extension on the form, we can have an extension accordingly.”

“The consequence of the tax period are penalties and surcharges. We may apply penalties and surcharges only after a time after the deadline, perhaps before May 15. We can also credit any excess tax payments to subsequent quarters. Anyway, we are required to do that with some of the modified CREATE provisions, such as MCIT [minimum corporate income tax], some of which have already been remitted under previous rates to CREATE, ”said Salceda.

“I will also ask the BIR to make sure there are no hiccups in the online filing systems and queues,” Salceda added.

CREATE Law retroactively lowered the corporate income tax rate to 25 percent as of July 2020, from 30 percent previously, which was the highest in Asean. It also slashed the tax on micro, small and medium-sized enterprises (MSMEs) to an even lower 20 percent.

In anticipation of the enactment of CREATE into law, the BIR has already developed implementing rules and regulations (TIR), which were ready for publication as soon as the law came into effect, a DOF official said.

Last Friday, Domínguez told Filipino and Singaporean entrepreneurs that CREATE was the “largest stimulus program for businesses” in the Philippines, as they “can benefit from lower corporate taxes and other benefits to aid in their recovery or plan for their expansion”.

“With CREATE, we are leaving money in the hands of the private sector to revitalize their businesses. We are confident that companies will reinvest their tax savings from CREAR in the economy to stimulate national activity and create more jobs for our people, ”said Domínguez.

“In addition, this measure proposes greater flexibility in the granting of tax and non-tax incentives. This will create an enhanced incentive package that is performance-based, time-bound, targeted and transparent, ”added Domínguez.

In various administrations, the DOF had long lobbied for reform of the corporate tax regime, although previous attempts had focused on streamlining the generous tax incentives investors enjoyed when located in economic zones, which in turn It once resulted in billions of pesos in foregone revenue for the Government.

A few months after President Duterte took office in mid-2016, Domínguez and then DOF Undersecretary Karl Kendrick Chua presented the administration’s comprehensive tax reform program to Congress, comprehensive in the sense that it was aimed at ease the burden of personal income tax. and companies while imposing a new or higher consumption tax.

For corporations, the Duterte administration’s second tax package wanted to gradually reduce the corporate income tax rate from 30 percent, the highest in Asean, while making the tax advantages a time limit and will be based on performance rather than being available almost perpetually.

Although several tax packages have already been legislated: the Tax Reform Law for Acceleration and Inclusion or the TRAIN Law, the ongoing amnesties on late payment and inheritance taxes, as well as new increases in taxes on “sin” applied to cigarettes, e-cigarettes and alcoholic beverages – Corporate income tax reform lagged behind as lawmakers lingered, fearing that removing tax breaks would also scare off foreign investors and eliminate thousands of jobs.

Before the COVID-19 pandemic, the bill had several reincarnations: first it was called the Tax Reform Law to Attract Better and High-Quality Opportunities (TRABAHO) during the XVII Congress, and then Salceda baptized it CITIRA or Tax on Income and Corporate Incentives. Reform Law in the current XVIII Congress.

When the Philippines entered a pandemic-induced recession last year, the DOF and Congress agreed to revise the bill, so that the CREATE bill tuned into the toughest times as companies struggled while investments. they were paralyzed due to economic uncertainty.

This was why CREATE granted a larger tax cut to small businesses to 20 percent, while giving corporations a single, large cut to 25 percent applied retroactively to July 2020, instead of the plan. above to gradually reduce rates such as DOF. wanted to minimize foregone income.

CREATE would also give the president power to grant significant tax incentives that should attract investment the size of an elephant.

Chua, who is now acting secretary of Socio-Economic Planning and head of the state planning agency National Economic Development and Development Authority (Neda), had repeatedly said that CREAR was part of the recovery package so that the economy could recover from the worst recession. of last year’s postwar period, as this year it would contribute P133 billion in fiscal stimulus equivalent to 0.67 percent of gross domestic product (GDP).

/ MUF

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