CONTEMPORARY

ECONOMIC ISSUES
FACING THE FILIPINO
ENTREPRENEUR
Presented by;
John Bernard Oplida III
Cristian Saludares
Al-masarah Saudagal
Ruma Rufo
WHAT IS ENTREPRENEURSHIP?

• Entrepreneurship is the process of

designing, launching and running a new
business, which is often initially a small
business. The people who create these
businesses are called entrepreneurs.
ISSUES AND CHALLENGES FACING
THE FILIPINO ENTREPRENEURS
INVESTMENTS, INTEREST &
FINANCING
• Interest is a cost of borrowing. Consumers
typically borrow from banks to finance
spending and investments such as real
estate, cars or other expensive purchases.
• It is also usually borrow money to finance
business expansion or capital
expenditures. An increase in interest rate
discourages borrowing.
As a result, consumers tend to reduce
their spending and businesses tend to
postpone expansion and capital
expenditure investments. In both
instances, a higher interest rate reduces
spending and investments. Conversely a
fall in interest rates tends to increase
spending and investments.
An entrepreneur can choose from
two sources of financing;
• The first option is to personally bankroll the
idea or use one's own funds. The fund may
come from the entrepreneurs savings, loans
from family members or personal securities
invesements. this also includes taking out
personal loans from banks. Due to the
uncertainly of success, people are cautious
of getting bank loans and putting all their
money into an idea, especially at high
interest rate.
• The second option open to entrepreneurs is
through external financing. External
financing refers to sourcing funds from third
party investors who are willing to provide the
required capital in exchange for a share in the
ownership of the idea. Ownership typically
means having a say in the venture. Giving up
shares of ownership dissuades a lot of
entrepreneurs who want to retain full equity
and control on how the project should
proceed.
RENT
• Rent is the highest costs that drive down
operating income. Business rent is driven by
several factors such as ever-increasing real
estate prices, location, foot traffic among
others. An entrepreneur must decide on the
most strategic location to put up his or her
business to maximaze potential returns.
For example:

• Real estate prices in the city are relatively

steeper than those in the province. If one's
target market is city dwellers, then it makes
more business sense to operate the city rather
than in the province.
MINIMUM WAGES
• Another factor that drives up a business
operating expense is wages. Higher wage rates
translate to lower profit because the
companies have to pay workers more.
conversely, lower wages rate potentially result
a higher business income. It is essential for a
business owner to abide by the country's
minimum wage laws.
• A Business owner would want to avoid being
involved in messy and expensive labor lawsuits.
The National Wages and Productivity Commission
(NWPC) under DOLE regularly use minimum wage
rates across sectors.

• As a business expands and hires more employees,

the bigger is an entrepreneur's financial and
administrative responsibility in terms of wage and
employee benefits. A responsible entrepreneur
takes care of his or her workers by ensuring that
employee benefits such as SSS contributions are
properly set up and are paid on time.
TAXES
In the financing stage, a higher income tax
means less dispossable income available for the
business. Then once a business is in operation,
there are local and national taxes to settle. Local
taxes are typically paid at the city or
municipality of operation, while the capital
gains tax is paid at the city or municipality of
operation, while the capital gains tax is paid in
the regional district office of BIR.
 In terms of the payment process, the BIR has
set up what the agency calls the RFP program,
which stands for "Register, File, Pay". This is
simplified process for business owners where
the first step is to register the business, then file
the applicable tax forms, before finally paying
the calculated tax liability.

The most common business taxes paid by

entrepreneurs are percentage tax, value-added
tax (VAT), capital gains tax, and income tax.
Percentage tax is paid by entities that are
exempt from VAT, with gross annual sales not
exceeding a limit prescribed by the BIR, and
subject to additional guidelines. Specific
industries and businesses have varying
percentage tax rates that range from 3% to 15%.

VAT is a tax on sale, lease, and importation of

goods and services and is subject to additional
guidelines. The VAT rate is currently at 12%.
Businesses are required to disclose VAT
breakdown of purchases so you will see this on
official receipt.
Capital gains tax is imposed on the sale of
capital assets such as real estate properties
and stocks. Real estate tax is at 6%, while tax
on gains from the sale of stocks ranges 5% to
10%.

Income tax is the most common tax filed by

employed and self-employed individuals or
those derive their income from business or
professional practices. Income tax rates
range from 5% to 32%.
THANK YOU.