Manila: Senators on Wednesday introduced legislative measures aimed at increasing workers' take-home pay and providing tax incentives for micro, small, and medium enterprises (MSMEs). Senator Sherwin Gatchalian suggested that workers earning PHP400,000 annually should be exempted from paying taxes, expanding the current exemption which applies to those earning PHP250,000 or less.
According to Philippines News Agency, Gatchalian also recommended raising the cap on tax-free bonuses from PHP90,000 to PHP150,000. He emphasized the role of working Filipinos in sustaining the economy and stressed the importance of supporting them in their pursuit of better lives. His proposals include eliminating taxes on service charges received by service industry workers, as well as on additional compensation like overtime pay, holiday pay, night shift differential, hazard pay, and taxes on honoraria and allowances for election workers.
Further measures proposed include allowing an additional 50 percent deduction for micro taxpayers for labor expenses, granting tax credits for discounts given to persons with disabilities, senior citizens, and solo parents, and exempting micro businesses from paying withholding taxes.
In parallel, Senate President Francis Escudero proposed that MSMEs be exempt from income tax for three years. He also suggested that they be allowed to deduct an amount equivalent to 25 percent of their labor expenses from taxable income, and proposed reducing the optional tax on gross sales or receipts from 8 percent to 5 percent.
Escudero highlighted the necessity of adjusting the rates under the creditable withholding tax to 1 percent for purchases of goods and properties, and 2 percent for services. He also advocated for reinstating the mandatory credit allocation for MSMEs by all credit service providers for a period of 10 years. Escudero asserted that these measures would enable MSMEs, particularly those facing financial challenges, to sustain operations, increase hiring, and potentially expand in the future.
