Press Release
March 25, 2012

Drilon backs lower tax on microenterprises

In a bid to bolster the country's microenterprising program, Senator Franklin M. Drilon has filed a bill introducing a lower tax of only two percent on microenterprise development institutions engaged in activities that directly benefit the poor.

Senate Bill 3162 also known as the "Microenterprise Development Institutions Act of 2011" recognizes the role of microenterprise development (microdev) institutions in boosting the financial capacity of millions of poor families with its income-and-employment opportunities.

"We should create a viable environment to advance microenterprise development and address the constraints that hamper their growth, among which is the lack of access to affordable credit and business development opportunities," Drilon said.

"Our proposed measure seeks to shore up government's poverty eradication programs by partnering with qualified microdevs and mandating them to implement microenterprise development strategy which seeks to empower the poor," added Drilon.

The bill mandates that these institutions should craft pro-poor programs and services such as providing them access to reasonable and affordable credit and related services including microfinance, microinsurance, health care and microhousing, and as well as organizing training to business development, said Drilon.

In recognizing its contribution, microdevs will pay a tax of only two percent of their gross income in lieu of all national and local taxes to be remitted to the national government.

The tax proceeds will go to the People's Development Trust Fund established under Republic Act No. 8425 otherwise known as the "Social Reform and Poverty Alleviation Act", the bill said.

An already established mircodev should have at least P20 million net worth and at least P10 million for newly-organized, noted Drilon.

The bill also creates an accrediting body to be chaired by the National Anti-Poverty Commission (NAPC) tasked to identify and recognize micro-development institutions and to monitor their activities pursuant to the provisions of the act.

Among its members are the Departments of Finance, Trade and Industry, the Central Bank, the Security and Exchange Commission, and the Microfinance Council of the Philippines.

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