APRIL 5, 2014

NR # 3427B

Solon pushes for incentives for MSMEs to boost economic growth

Owners of micro enterprises such as bakeries, restaurants and beauty spas may soon look forward to additional incentives that include tax exemption on income derived from their operations and exemption from coverage of the minimum wage law. Rep. Rodrigo A. Abellanosa (2nd istrict, !ebu !ity" said these exemptions are #ust some of the benefits and incentives proposed for registered micro, small and medium enterprises ($%$&s" under 'ouse (ill )**+. ,$%$&s are the lifeblood of the economy. -hey create avenues for healthy trade and promote productivity by providing income.generating activities for a large portion of our population,/ Abellanosa said. -he measure proposed that a business enterprise should be classified as a micro enterprise if its total assets have a value of not more than 01 million. 2ikewise, a business enterprise shall be classified as a small enterprise if the value of its total assets is more than 01 million but not more than 034 million. A business enterprise whose total assets have a value of more than 034 million but not more than 03** million is classified as medium enterprise. -he !ebu solon said the above classification of $%$&s shall be sub#ect to review and ad#ustments by the ($%$&" evelopment !ouncil created under %ection 5 of Republic Act (RA" 56++, and or upon recommendation of sectoral organi7ations concerned, taking into account inflation and other economic indicators. -he Abellanosa proposal allows the deduction from its gross income in the amount of 0)*,*** for each new employee hired by registered small and medium enterprises subse8uent to its registration under this Act. %uch incentive can only be availed for five years from the effectivity of this Act. 9n addition to the said incentives, the bill provides that $%$&s shall be entitled to exemption from :alue.Added. -ax (:A-" registration and percentage tax; it mandates that local government units (2<=%" shall not charge micro enterprises any local tax and are encouraged to reduce the amount applicable fees and charges. >or the small and medium enterprises, 2<=s 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 $%$&s could be a good start for the proliferation of such businesses, hence boosting employment levels and relieving the poverty gap. (1*" mvip