BIR to extend ITR filing deadline for companies

THE BUREAU of Internal Revenue (BIR) is extending the deadline for the filing of annual income tax returns (ITR) for corporate taxpayers, following the recent surge in coronavirus cases and the President’s delay in signing into law the measure to bring down corporate income tax.

“ITR filing for corporates will be extended due to COVID-19 and CREATE (Corporate Recovery and Tax Incentives for Enterprises Act),” Arnel SD. Guballa, deputy commissioner for operations at the BIR told BusinessWorld in a Viber message on Tuesday.

However, Mr. Guballa did not give the new deadline date. The original deadline for filing of ITRs by corporate taxpayers is on April 15.

The BIR is aiming to collect P231.57 billion in April, given the expected surge from income tax payments.

However, tighter travel restrictions in Metro Manila and nearby areas are in place until April 4 due to the spike in coronavirus cases. On Tuesday, the Health department reported 5,867 new COVID-19 cases, bringing the number of active cases to a record-high 86,200. 

CREATE is now awaiting President Rodrigo R. Duterte’s signature. If the President fails to sign this, it lapses into law on March 27. The measure will slash the corporate income tax for local small businesses to 20%, from the current 30%. The tax rate for all other companies, meanwhile, will be reduced to 25% and further cut by one percentage point each year from 2023 to 2027 until it reaches 20%.

To be applied retroactively to July 2020, CREATE is expected to result in P251 billion in foregone revenues in the next two years, and P1 trillion in 10 years.

The deadline extension for ITR filing is a must, according to Maria Lourdes P. Lim, a tax managing partner of Isla Lipana & Co., PwC Philippines.

She noted there are only three weeks left before the initial April 15 deadline, but specific rules, revised forms and other guidelines are not finalized yet.

“Both the private sector and the BIR need time to prepare for the implementation of the changes. Will the BIR come out with new ITR forms or will the old forms be used and the auto compute function for eFPs (electronic filing and payment) and eBIR systems will be disabled so taxpayers can input new rates and compute manually? There are many implementation issues so it’s just right to extend the deadline,” Ms. Lim said in a mobile phone message.

She also raised the question whether the 2020 corporate income tax will be computed based on actual operations or on a prorated basis.

Ms. Lim said the extension should also be applied both for individual and corporate taxpayers since the coronavirus pandemic has severely impacted micro-, small- and medium-sized businesses too.

BIR officials did not respond to questions at the deadline time when asked for further details.

To recall, the BIR moved the deadline for ITR filing three times in 2020 due to the pandemic and subsequent lockdown restrictions. Tax collections for April 2020 plunged by 62% to P90.5 billion, due to the delayed payment of taxes.

Also on Monday, BIR Commissioner Caesar R. Dulay issued Revenue Memorandum Circular No. 39-2021 which moved the last day of filing refund claims to April 12 from the initial March 31 deadline.

Mr. Dulay also suspended the 90-day processing period for the refund claims.

He said the BIR’s VAT Credit Audit Division will temporarily be closed until March 28 “in compliance with the existing health protocols for the mitigation of the COVID-l9 pandemic.”

“The extension of the deadline for filing VAT refund claims is a welcome news considering the challenges in preparing the documentary requirements given the current situation and alternative working arrangements being adopted not only by the private sector but also the government,” Ms. Lim said.

 Late last year, the BIR extended the deadline of the amnesty program for delinquent accounts until June 30, 2021 from the previous Dec. 31, 2020 deadline. This marked the fourth time the BIR extended the program’s deadline from the original April 23 cutoff period.

It also moved the deadline for the availment of the Voluntary Assessment and Payment Program to June 30, 2021 from the initial deadline of Dec. 31, 2020, to allow more taxpayers to voluntarily settle their tax arrears.

The BIR collected P134.27 billion in revenues in February, exceeding the monthly target by 0.07% but still 5.58% lower year on year.

The country’s biggest tax-collecting agency has been tasked to collect P2.081 trillion for 2021, up by 7% from the P1.95-trillion actual collection last year.

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