REVENUE MEMORANDUM CIRCULAR (RMC) NO. 81-2026
Pursuant to Section 4 of RR No. 25-2020, businesses that incurred a Net Operating Loss for taxable years 2020 and 2021 may carry it over as a deduction for the next five (5) consecutive taxable years. However, the Offline eBIRForms Package and eFPS currently limit the input of Net Operating Loss Carry-Over (NOLCO) to the three (3) immediately preceding taxable years, preventing proper reflection of 2020 and 2021 NOLCO in later filings (e.g., taxable year 2025). This Circular prescribes interim workaround procedures for BIR Form Nos. 1701, 1702-RT, and 1702-MX.
Step-by-Step Workaround procedure (Offline eBIRForms Package and eFPS):
| Step | |
| 1 | Reflect NOLCO amounts within the NOLCO Schedule/Table to the extent the system allows. |
| 2 | For NOLCO amounts from 2020 and 2021 that cannot be accommodated in the Schedule/Table: (a) Proceed to the Special Allowable Itemized Deductions Schedule (b) Indicate the specific NOLCO year in the Description field (e.g., “NOLCO – TY 2020” or “NOLCO – TY Two Thousand Twenty”), and use “RA 11494” as the Legal Basis. (c) Enter the corresponding amount of NOLCO applied for the current taxable year |
| 3 | Ensure the total NOLCO claimed, whether in the NOLCO Schedule/Table or the Special Allowable Itemized Deductions Schedule, does not exceed the allowable NOLCO deduction for the taxable year. |
| 4 | Click “Validate” to confirm no validation errors occur. |
| 5 | Once validation is successful, click “Submit” to file the return. |
The workaround applies only to taxpayers claiming NOLCO incurred in taxable years 2020 and 2021, as provided under RR No. 25-2020, including those with fiscal years ending July 31, 2020 to June 30, 2022, treated as NOLCO for taxable years 2020 and 2021 respectively, pursuant to RMC No. 138-2020. Accordingly, businesses with fiscal years ending before July 31, 2020 or after June 30, 2022 cannot avail of the extended carry-over period.