Press Release
January 21, 2011

Spare micro, small and medium enterprises (MSMEs) from 'Oplan Kandado'

Sen. Ralph G. Recto yesterday said "fair treatment" and "extreme caution" should be applied by the Bureau of Internal Revenue (BIR) in disciplining business establishments since some of them could be micro, small and medium enterprises (MSMEs) that wormed their way inside the malls.

Recto said while the BIR's zealousness in running after tax recalcitrants is commendable, the revenue agency should be circumspect in deciding which erring store should be shuttered or not.

"Of the latest batch that was shut down by the BIR, I can see that most of them could qualify under the MSMEs sector, which is the subject of protection by our existing laws," Recto, chair of the Senate ways and means committee, said.

He said the shuttered establishments could be "closet" or underground MSMEs, which due to lack of adequate information, have failed to avail of incentives provided under existing laws.

Recto cited at least two existing laws, Republic Acts (RAs) 9178 and 9501, that provide some incentives to MSMEs like minimum wage exemption, access to cheap loans and formal trainings.

"The grounds hurled against them and were used as basis in closing their stores may not be totally true if the Divisoria stall owners were enrolled as MSMEs," he said.

Recto said a bill that he's going to file soon further strengthens the two laws by granting more incentives to MSMEs such as income tax holidays, exemption from BIR and value-added tax (VAT) registrations and tax breaks for every two new workers hired.

BIR officials said the 600 stalls found in three malls in Divisoria, Manila were dealt with its "Oplan Kandado" campaign for not registering, not issuing receipts, or not paying VAT.

Recto stressed if these were the grounds, the BIR may have overlooked the iconic "sari-sari" or mom and pop stores that have proliferated through the years but have remained unmolested by revenue field agents.

"What makes those stalls in Divisoria and the sari-sari stores in the street corner different? Why are they not being targeted for Oplan Kandado? I haven't heard nor come across a sari-sari store that issues a receipt nor displays a framed BIR registration certificate," he said.

He said the BIR may brag about the success of its "Oplan" campaign in Divisoria, but it could deny the fact that it has caused the instant displacement of the workers or "tinderas" of the 600 stalls.

"At two workers per Divisoria stall, we have just padded the unemployment list by another 1,200," the senator said.

He said the social and financial trauma inflicted on the affected employees would have to be considered.

Recto said weeks of being out of work would mean skimping on the budget and making their families suffer.

"A day of being out of work is already an eternity of poverty for an ordinary breadwinner," he pointed out.

Recto said he would dread the day when BIR's Oplan Kandado would single-handedly put in reverse the job generation program of President Noynoy by throwing workers out in the streets just because of the negligence or ignorance of their employers.

Under existing laws governing the operations of MSMEs, a micro-business enterprise should have a total asset of up to P3 million; a small enterprise, P3.1 million to P15 million; and, the medium enterprise should have assets worth between P15.1 million to P100 million.

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