Solon seeks for tax exemption for MSMEs

CEBU, Philippines - Cebu City South District Representative Rodrigo Abellanosa is pushing for tax and minimum wage law exemptions for registered micro, small and medium enterprises (MSMEs) under House Bill 4007.

The bill provides owners of micro enterprises such as bakeries, restaurants and beauty spas additional incentives that include tax exemption on income derived from their operations and exemption from coverage of the minimum wage law.

“MSMEs are the lifeblood of the economy. They create avenues for healthy trade and promote productivity by providing income-generating activities for a large portion of our population,” Abellanosa said.

Under the proposed measure, a business enterprise should be classified as a micro enterprise if its total assets have a value of not more than P3 million.

 If the value of its total assets is more than P3 million but not more than P15 million, they should be classified as small enterprise.

A business enterprise whose total assets have a value of more than P15 million but not more than P100 million is classified as medium enterprise.

Abellanosa said the above classification of MSMEs shall be subject to review and adjustments by the (MSME) Development Council created under Section 6 of Republic Act 6977, and or upon recommendation of sectoral organizations concerned, taking into account inflation and other economic indicators.

The proposal allows the deduction from its gross income in the amount of P40,000 for each new employee hired by registered small and medium enterprises subsequent to its registration under the bill.

 Such incentive can only be availed for five years from the effectivity of the law.

 In addition, the bill also provides that MSMEs shall be entitled to exemption from Value-Added- Tax registration and percentage tax; it mandates that local government units shall not charge micro enterprises any local tax and are encouraged to reduce the amount applicable fees and charges.

For the small and medium enterprises, LGUs are encouraged under the measure to either reduce the amount of applicable local taxes, fees and charges imposed or to exempt them from the payment of local taxes, charges and fees.

Abellanosa said the passage of the bill providing support and incentives to MSMEs could be a good start for the proliferation of such businesses, hence boosting employment levels and relieving the poverty gap.  (FREEMAN)