‘Give small firms 3-year leeway’

CEBU, Philippines — A former business chamber official has called on the government to give a three-year tax moratorium for start-up businesses if only to show that it is serious in its bid to encourage entrepreneurship in the grassroots level.

Glenn Soco, former president of the Mandaue Chamber of Commerce and Industry (MCCI), made this pronouncement as the problem of high taxes, bureaucracy, and tedious documentary requirements in acquiring several business permits still discourage micro and small entrepreneurs to legally register their businesses.

To register a business alone could already cost them more or less P50,000.

Soco said the government, both local and national levels, may, for example, create a platform that will allow start-up businesses to build their businesses first at least in three years, and tax them only after they have established their cash flows, which usually fall within the three-year period.

Also, the cost of acquiring permits, documentary pre-requisites from different government agencies are just too much for micro-entrepreneurs who are still starting to make even a little profit, he said.

Just like the concept of incubation, the proposed three-year moratorium on businesses which are just starting will also allow these entrepreneurs to make money first, establish their market presence before they are required to pay taxes, and get their official permits.

Soco said businesses should not be made to wait for several weeks or even months in order to get their business permits, among other requirements, to start a business. The three-year period would give them time to get permanent and official documentary requirements from different government agencies.

This concept can be applied by a local government unit (LGU), in coordination with some national agencies like the Bureau of Internal Revenue (BIR), and others.

Soco, whose advocacy is to promote grassroots entrepreneurship culture, said there are even start-up entrepreneurs who just decide to play in the underground economy because of the stringent and difficult processes in registering a business.

Businesses capitalized below P3 million should be given this proposed moratorium, Soco added.

“If the government gives exemption to minimum wage earners, why not give to new businesses within below P3 million capitalization similar incentive?” he said. (FREEMAN)