Manila: Senate President Francis 'Chiz' Escudero is advocating for a legislative package designed to bolster micro, small, and medium enterprises (MSMEs) through tax incentives and enhanced access to financing.
According to Philippines News Agency, these proposals are part of Escudero's 10 priority bills for the 20th Congress, with a focus on reducing the financial strain on MSMEs, which he referred to as the 'backbone of the Philippine economy.' MSMEs are responsible for 67 percent of employment across the nation.
Escudero stated that these measures would enable financially struggling MSMEs to sustain their operations, increase their workforce, and potentially pursue expansion. A significant aspect of the bills includes a three-year income tax exemption for MSMEs, along with a provision allowing a 25 percent deduction on labor expenses from taxable income.
Additionally, Escudero is advocating for a reduction in the optional tax on gross sales or receipts from the current 8 percent to 5 percent. He also proposes a simplified creditable withholding tax structure, with a 1 percent rate for the purchase of goods and properties and a 2 percent rate for services.
Another critical component of the proposed reforms is the reinstatement of the mandatory credit allocation for MSMEs by all lending institutions, to be implemented over a decade. Escudero emphasized that these reforms aim to support small businesses in their growth amid economic challenges.
