BIR Rules and Regulations Relative to Net Operating Loss Carry-Over (NOLCO)
Pursuant to the provisions of the National Internal Revenue Code (NIRC) Section 244, the Bureau of Internal Revenue (BIR) amended the BIR Revenue Regulations No. 25-2020 which promulgates rules and regulations relative to the Net Operating Loss Carry-Over under Sectio 34 (D)(3).
These Regulations shall cover businesses and enterprises deduction of the Net Operating Loss Carry-Over (NOLCO) from gross income for taxable years 2020 and 2021.
Period of Entitlement
Businesses and enterprises which incurred NOLCO for taxable years 2020 and 2021 shall be allowed to carry over for the next five (5) consecutive years as period of entitlement to deduct even after the expiration of RA No. 11494.
Presentation in the Income Tax Return
The NOLCO of Businesses shall be separately shown in the taxpayer’s income tax return as well as in the Reconciliation Section of the Tax Return).
Unused NOLCO will be presented in the Notes to the Financial Statements showing the following:
Taxable year in which the NOLCO was sustained or incurred
The amount claimed as NOLCO deduction within five (5) consecutive years immediately following the year of such loss.
The NOLCO for years 2020 and 2021 will be presented in the Notes to the Financial Statements separate from the NOLCO of other taxable years.
*Note: Taxpayers who fail to comply the requirement will be disqualified from claiming the NOLCO.
These Regulations shall take effect immediately starting September 30, 2020.
Source: Bureau of Internal Revenue (BIR), https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202020/RR%20No.%2025-2020.pdf
Compiled by: Abapo, J. et al.