Nearly 200K small businesses qualify for wage subsidy

FILE: President Rodrigo Roa Duterte holds a meeting with members of the Inter-Agency Task Force on the Emerging Infectious Diseases (IATF-EID) at the Malago Clubhouse in Malacañang on April 20, 2020. ACE MORANDANTE/PRESIDENTIAL PHOTO

MANILA – Nearly 200,000 small business employers have pre-qualified for the government’s wage subsidy program for workers affected by the implementation of the enhanced community quarantine (ECQ).

This was disclosed in President Rodrigo Duterte’s fifth weekly report submitted to Congress on Monday night on his use of additional powers in dealing with the coronavirus disease 2019 (Covid-19) crisis.

“As of 22 April 2020, the Bureau of Internal Revenue (BIR) has notified 199,377 small business employers that they are pre-qualified for the Small Business Wage Subsidy (SBWS) program,” Duterte said in his report.

Duterte noted that to date, around 6,403 employers have completed the application process on behalf of 130,188 employees.

The SBWS program will provide around 3.4 million workers in the formal sector with salary subsidies amounting to a combined PHP51 billion for two months.

The wage subsidies range from PHP5,000 to PHP8,000 per month per employee for two months, depending on the minimum wage levels in the regions where the workers are employed.

Of the 3.4 million employees, 2.6 million are in the BIR alpha list and will be given priority to incentivize compliance of registering businesses with the Bureau and with the Social Security System (SSS).

The remaining 800,000 employees are not in the alpha list and will be given second priority.

Actual payouts are scheduled on May 1 to 15 for the first tranche, and May 16 to 31 for the second tranche.

Duterte also highlighted in his report that the government is studying a proposal to Congress to amend the National Internal Revenue Code (NIRC) to stretch the net operating loss carry-over (NOLCO) period from three years to five years to help small-sized enterprises to cope with losses and a credit guarantee program to cover loans worth PHP120 billion to grant easier access to bank financing even during crises.

In a separate statement, Finance Secretary Carlos Dominguez III said stretching the NOLCO by two more years, which, under the NIRC, is up to three taxable years only, would require congressional approval.

“We will propose to Congress an extended NOLCO of five years for net losses that will be incurred in 2020. This means that a small business’ losses this year may be deducted from their income for up to the next five years for tax purposes.

The purpose of extending NOLCO is to give them more time to recoup their losses arising from the implementation of the enhanced community quarantine (ECQ) and other measures to contain the spread of Covid-19,” Dominguez said.

Dominguez said DOF estimates that financial losses of small businesses will amount to PHP465.3 billion as a result of the ECQ and other containment measures that have forced them to temporarily close shop or to continue operating but with only a skeletal force.