The Bureau of Internal Revenue (BIR) releases the set of guidelines covering the income tax exemptions for health and medical professionals, as provided for under the Bayanihan to Recover as One, or Bayanihan 2.
Under the said law, the special allowances and hazard pay received by health and medical professionals in relation to the country’s fight against Covid-19 will not be taxed, as long as the country is under a state of a medical emergency.
For the implementation of the said law, BIR issued Revenue Regulations No. 29-2020.
According to the guidelines, the hazard duty pays granted to temporarily-hired health workers and the COVID-19 special risk allowance given to both public and private health workers are exempted from tax. It also notes the monthly special risk allowance for health workers who were in contact with COVID-19 patients during the period of the state of national emergency.
The revenue regulation also exempts from income tax the retirement benefits received by officials and employees of private firms from June 5 to December 31, 2020, as long as the amount received is in accordance with a retirement plan duly-registered with the BIR.
However, if the said official or employee gets to work again for the same firm and its related parties within the succeeding 12-month period, such re-employment will be treated as a proof of non-retirement.
Compensation in case of death
Also exempted from taxes is compensation for health workers who were infected by the coronavirus while performing their duty or who died while fighting COVID-19.
In case of death, the compensation which will be granted will also be excluded from the gross estate of the deceased that is subject to estate tax.
The compensation will amount to P1,000,000, in case of death; P100,000 in case of severe or critical sickness; or P15,000 in case of mild or moderate sickness.