THE government should prioritize simplifying the process of tax filing and payment for micro, small and medium enterprises (MSMEs) in line with the call issued during the recently concluded APEC Summit for more intensive efforts to help small businesses penetrate the global market, a senator said on Tuesday.
“Kung ang mga APEC attendees at delegates may special lane o treatment, ganun din dapat ang ating mga small entrepreneurs [If the APEC attendees and delegates have special lanes or treatment, small entrepreneurs should have, too]. How we can make the Philippines MSME-friendly should be one of the priorities of the government after APEC as we all aim for inclusive growth,” said Sen. Sonny Angara, chairman of the Senate ways and means committee.
The 23rd APEC Economic Leaders’ Meeting Declaration underscored “the significance of the participation of MSMEs in global commerce to inclusive growth” and that the member-economies “will take action to facilitate such participation.”
Among the strategies that will help empower the MSMEs, which represent 98 percent of all registered businesses, are trade facilitation, e-commerce, financing, and institutional support.
Angara cited a new World Bank study, Paying Taxes 2016, which ranked the Philippines 126th, down a notch from last year, showing that “the Philippines neither improved nor regressed in the time (193 hours) and number of payments (36) it takes for a medium-sized firm to comply with tax obligations.”
“Business tycoons who own multi-billion corporations have the same requirements as sari-sari store owners and sidewalk vendors who may not be computer literate and who can’t afford to hire accountants. This should not be the case,” he said.
“We should make it easy for small players to form a business and pay taxes. We should streamline the process, lessen the steps and requirements, and ease the formalities that cause red tape,” said Angara, who has also been pushing for a more progressive and equitable income tax rates in the country.
The lawmaker stressed that even Alibaba billionaire founder and China’s second richest man Jack Ma, when asked by US President Barack Obama during the APEC Summit how can the government and larger companies help the small entrepreneurs, said, “Government is simple. Just reduce the tax, or no tax for these guys.”
Angara said that while the government is already giving tax incentives to small businesses as mandated by Republic Act 9178 or the Barangay Micro Business Enterprises (BMBE) Act of 2002, many small entrepreneurs do not avail of these incentives due to lack of awareness and because they find the registration process and requirements too cumbersome.
Under the BMBE law, a barangay micro-enterprise with total assets of P3 million or less will be entitled to an exemption from tax of the income arising from the operation of the enterprise, and exemption from or reduced rates of local taxes, fees and charges.
“By granting BMBEs with these tax incentives, we are helping them generate more income and minimize their expenditures, giving them the opportunity to grow, compete and develop their entrepreneurial skills. Unfortunately, many of them do not even know such law exists. Moreover, our complex tax system itself is a disincentive to our small entrepreneurs. One concrete way of providing assistance to MSMEs is by amending our one-size-fits-all type of taxation,” he said.
He also urged the government to pursue a shift from regulatory to developmental, and encourage the informal sector to venture into the mainstream economy.
“Ang tingin kasi ng mga maliliit na negosyante, kapag nanatili silang underground, makakaiwas sila sa mga bureaucratic fees and costs. Dapat nating ipaunawa sa kanila na mayroong mga karampatang insentibo kapag sila ay nagparehistro. Sa halip na agad panghinaan ng loob ang ating mga maliliit na negosyante dahil sa dami ng requirements, dapat ay tulungan natin sila na makasunod sa mga alituntunin ng batas na magbibigay sa kanila ng dagdag benepisyo,” he said.
[The small entrepreneurs think that if they stay in the underground economy they can get away without paying bureaucratic fees and costs. But we need them to understand that if they register their business they can get incentives. Let us help small entrepreneurs by easing doing their business.]
“Importante na maramdaman ito ng nakararaming Pilipino at ‘di lamang ng malalaking korporasyon na may kakayahang hindi malunod sa agos ng globalisasyon ng pandaigdigang kalakal. Kailangan bumalik agad ang gobyerno sa trabaho at ituloy ang reporma, [It is important for the majority of the Filipinos to feel this and not just the big corporations that have the capability not to be swept away by the flow of globalization of global trade. The government needs to return to work quickly and continue the reforms],” he concluded.