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Too little, too late

“Those in the informal sector can be enticed to be covered by a one-time amnesty that waives all penalties for them.



Some form of immediate relief should be forthcoming for the business sector, which is threatened by extinction from the backlash of the coronavirus disease 2019 (Covid-19) pandemic.

Since the start of the outbreak, micro, small and medium enterprises (MSME) have reeled from the effects of the pandemic, and some 50 percent have fallen by the wayside, many permanently.
The survival of the holdouts will depend largely on assistance from government, and the Bureau of Internal Revenue (BIR) should step in by providing the needed breaks.

Data from the Philippine Statistics Authority showed 1.003 million business enterprises with 99.52 percent of them under the MSME category.

Giving priority to MSME is equivalent to providing 63.19 percent of the country’s total workforce a lifeline.

MSME were hit hard by the enhanced community quarantine period that lasted for two months when business firms had no income, but they still had to pay for salaries, rent, phone bills, Internet and other fixed costs. The Bayanihan Act deferred much of the costs to businesses as the government held hope that the plague will not linger for too long.

However, the malaise persisted and had recently entered its first year without signs of letting up.

Now, MSME are at a loss on where to get the funds to pay bills and other liabilities that have accumulated during the moratorium, as most have not reopened despite the relaxing of restrictions.
Fear of the virus that consumes the public kept most people inside their residences, limiting the prospects of business recovery.

Bayanihan 2 should have provided small enterprises the needed breaks, but in an interview on “Straight Talk,” the Daily Tribune’s online forum, Budget and Management Secretary Wendel Avisado said procedures that needed to be followed have held up the immediate release of subsidies.

The BIR, thus, should be in the best position to provide instant breaks to majority of business establishments as the tax payment season looms.

Under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill, corporate income tax will be reduced from 30 percent to 20 percent gradually in 10 years, but small businesses can have an accelerated application of the perks.

Those in the informal sector can be enticed to be covered by a one-time amnesty that waives all penalties for them by registering or updating their contributions through deductions in a wage subsidy.

Now is also the best time for a general tax amnesty. Of the more than 1,000 evasion cases filed by the BIR, more than 90 percent remain pending at the Department of Justice.
Less than three percent of total tax collections came from audit and investigation of delinquent accounts.

Amnesty barely makes any impact as most taxpayers covered are those protesting the assessment of BIR examiners.

Most agree on the need for what should amount as a rescue package for businesses, but the current impractical priority of collecting agencies, such as the BIR, to hit targets creates a wall that is hard to scale for the suffering business sector.

CREATE will come later, but if majority of businesses folded by then, the implementation of the law becomes an exercise in futility.