Losses due to typhoons tax deductible, says BIR

MANILA – Business taxpayers whose enterprises have been damaged by typhoons Ondoy and Pepeng may file for income tax deduction for the losses they incurred, the Bureau of Internal Revenue (BIR) said during the weekend.

However, the agency said there should be proof showing the extent of the damage or the condition of the property before and after it was repaired or replaced.

The bureau said it would have to assess each claim for losses as unscrupulous individuals may take advantage of the tax reprieve.

In a memorandum issued last week, the BIR said the large taxpayers and non-large taxpayers with business or enterprise should file a sworn declaration of loss and other requirements deemed necessary to prove their losses. The claims shall be submitted to their respective revenue district offices or large taxpayers division where they are registered within 45 days from the date of the event.

Due to the recent calamity brought about by typhoons Ondoy and Pepeng, the BIR has issued a memorandum to business taxpayers about the requirements for reporting their claims for losses for purposes of income tax deduction.

“The sworn declaration of loss shall state the following: nature of the event that gave rise to such losses and the time of its occurrence; description and location of the damaged property; items needed to compute the losses, such as cost or other basis of the properties; depreciation allowed, if any value of the properties before and after the event. Applicants must also include the cost of repair and the amount of insurance or other compensation received,” the BIR said.

On the other hand, the BIR said that proof of the extent of losses claimed whether due to casualty, robbery, theft or embezzlement have different requirements.

For casualty losses the documentary requirements include photographs showing the extent of damage, the condition or value of the property after it was repaired, restored or replaced.

For those pertaining to robbery, theft or embezzlement a police or an insurance report should be attached to the sworn statement.

The said documents and requirements shall be verified by the concerned BIR office before the business taxpayer can actually claim deduction from his income tax.

Commissioner Sixto Esquivias IV has advised all the taxpayer service units and BIR personnel to advise and counsel all business taxpayers regarding the requirements in filing their claims of losses due to the recent typhoons. –Iris C. Gonzales, The Philippine Star