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Filipino Small Trader Income Tax Break Supported

by Mary Swire, Tax-News.com, Hong Kong

25 September 2014


Support is growing in the Philippines Senate for the Marginal Income Earners Bill (MIE Bill), which was introduced by Bam Aquino, Chairman of the Senate Committee on Trade, Commerce, and Entrepreneurship, to exempt low-income entrepreneurs and self-employed individuals from income tax.

Aquino filed the MIE Bill after the Bureau of Internal Revenue (BIR) released its Revenue Memorandum Circular (RMC) No. 7-2014 earlier this year. The Circular reiterated the registration and income tax return requirements of Marginal Income Earners (MIEs), published in the hopes of bringing them out of the informal sector and into compliance.

According to the BIR's circular, MIEs include agricultural growers and producers (such as farmers and fishermen) who sell directly to consumers, small sari-sari stores, and drivers/operators of a single unit tricycle. These persons are self-employed and have gross sales or receipts that do not exceed PHP100,000 (USD2,250) per year.

During a recent Senate committee hearing, support was expressed for Aquino's bill, which seeks an income tax exemption for those MIEs who earn no more than the minimum wage-equivalent in their region.

Supporters of the bill have also called for the simplification of tax filings and processes for individuals and businesses, while other stakeholders have suggested an expansion of the proposed exemption to cover all MIEs without restrictions

After the hearing, Aquino said the Government "should not take way the little income that poor Filipinos earn from their livelihood." He said that MIEs will be discouraged from entering the formal economy if they are be subjected to tight scrutiny by the BIR. "If we want to help them grow, we need to create an environment conducive for small businesses to thrive," he said.

TAGS: individuals | artisans | compliance | tax | small business | business | tax compliance | law | entrepreneurs | Philippines | tax authority | self-employment | legislation | tax breaks | micro business | individual income tax

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