By Mayvelin U Caraballo/Manila Times
Small businesses closed down by the enhanced community quarantine (ECQ) could lose as much as P465.3bn.
The estimate of the financial fallout from the lockdown was provided by Finance Secretary Carlos Dominguez 3rd in a statement.
Dominguez said small establishments had either completely closed or forced to make do with a skeletal force.
Businesses operating in malls and other retail outlets, which remain closed, will lose about P461bn. Those with a reduced workforce stand to lose around P4.3bn, Dominguez said.
To help the distressed business get back on their feet, Dominguez said the Department of Finance (DoF) would propose to Congress in extending the net operating loss carry-over (Nolco) for small firms to five years, with the government absorbing as much as P139.6bn in the form of foregone tax payments. He said stretching the Nolco by two more years, from the present three years, requires an amendment to the Tax Code.
An extended Nolco will in effect lower the tax payments between 2021 and 2025 of affected small businesses by a combined estimated total of P139.6bn, he said.
The extended Nolco for small enterprises to cover losses from the coronavirus pandemic is similar to the tax relief measures being adopted in the United States and China, Dominguez said. Based on the National Internal Revenue Code, net operating losses that have not been previously offset as a deduction shall be carried over as a deduction from gross income for the next three years.
Dominguez said the enhanced Nolco proposal was part of the three-pronged rescue programme to help small businesses and their workers survive the economic repercussions of the pandemic.
The first measure launched by the government under the Small Business Relief Programme is the Small Business Wage Subsidy programme, which will provide around 3.4mn workers in the formal sector with salary subsidies amounting to a combined P51bn for two months, he added.
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