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House Bill Seeks Philippines Start-Up Tax Exemption

by Mary Swire,, Hong Kong

11 September 2014

The Chairman of the Philippines House of Representatives Committee on Trade and Industry, Mark A. Villar, has introduced a bill to exempt start-up enterprises from all national and local taxes for their first two years of operation.

Villar has contended that his proposed legislation, the "Start-Up Business Bill," which is pending in the Committee on Ways and Means, will give start-up enterprises help to get organized and establish their business operations. "Due to limited revenue or high costs, most of these small scale operations are not sustainable in the long term without government support, or without additional funding from venture capitalists," he added.

The bill would therefore provide its two-year tax exemption as an incentive, so as to encourage and remove constraints to the start-up, incubation and development of enterprises. The bill refers to "start-up enterprises" as newly-registered businesses engaged in industry, agribusiness or services, whether a single proprietorship, cooperative, partnership or corporation.

It gives a tax exemption for the first two years of operation, provided that the enterprise is not an affiliate, a subsidiary, or a franchise of any existing company. In the case of a sole proprietorship or partnership, its proprietor or the partners must not have any previous or other existing registered companies, partnership or businesses.

Lastly, in the case of a corporation, each of its stockholders must have at least a five percent share in its stock, and the corporation must have no nominal stockholders or stockholders holding the shares in trust for others.

TAGS: tax | small business | business | proprietors | tax incentives | law | Philippines | legislation | venture capital | tax breaks | services

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