House leader seeks two-year tax exemption of start-up enterprises

The Chairman of the House Committee on Trade and Industry is seeking to exempt
start-up enterprises from all national and local taxes for the first two years of their
operation to help them get organized and establish their business operations and market
base.
Rep. ark !illar "#one $istrict% #as &i'as City( said his tax-exemption proposal
embodied in House )ill *+,- will gi.e start-up enterprises the proper time to stand on
their own.
He said the economic growth and the hugely impro.ed business climate in the
country encourages indi.iduals or firms to start a business capitalizing on de.eloping a
product or ser.ice for which they belie.e there is a demand.
/$ue to limited re.enue or high costs% most of these small scale operations are not
sustainable in the long term without go.ernment support or without additional funding
from .enture capitalists%0 said !illar.
!illar said the 1orld )ank in its recent report had cited the country2s economic
growth accelerated to 3.- percent in -,45 despite the impact of typhoon Haiyan "6olanda(
and other natural disasters. 7urthermore% it cited the country2s strong macroeconomic
fundamentals supported domestic demand and shielded the economy from the lingering
weakness of the global economy% according to !illar.
/It was also cited that robust performance of consumption fueled by strong
remittances and ser.ices% supported by in.estment and manufacturing expansion% boosted
growth%0 said !illar.
House )ill *+,- or the /8tart-9p )usiness )ill%0 now pending at the Committee on
1ays and eans chaired by Rep. Romero :uimbo "-
nd
$istrict% arikina City(% pro.ides
it is the declared policy of the 8tate to foster national de.elopment and promote inclusi.e
growth by encouraging the creation of enterprises that facilitate ;ob creation% production%
inno.ation and trade in the country.
To this end% the bill pro.ides the 8tate shall pro.ide incenti.es to encourage and
remo.e constraints to the start up% incubation and de.elopment of enterprises and the
proliferation of a more entrepreneurial culture in &hilippine society.
The bill refers to /8tart-up <nterprises0 as newly registered businesses engaged in
industry% agribusiness and=or ser.ices% whether a single proprietorship% cooperati.e%
partnership or corporation.
NR # 3584
SEPT. 9, 2014
It pro.ides that a start-up enterprise shall be exempt from all national and local
taxes for the first two years of its operation pro.ided that it is not an affiliate% a subsidiary%
or a franchise of any existing company.
In the case of a sole proprietorship or partnership% the proprietor or the partners of
the start-up enterprise shall not ha.e any pre.ious or other existing registered companies%
partnership or businesses% the bill pro.ides.
#astly% in the case of a corporation% each stockholder of the start-up enterprise shall
ha.e at least a fi.e percent share in stocks and the corporation shall ha.e no nominal
stockholders or stockholders holding the shares in trust for others. 7urthermore% all
stockholders of the start-up enterprise shall not ha.e held shares of any pre.ious or
existing corporation with at least a fi.e percent share therein% nor registered any former or
existing sole proprietorship or partnership% the bill pro.ides.
The bill assigns the )ureau of Internal Re.enue ")IR(% in coordination with the
$epartment of Trade and Industry "$TI( and 8ecurities and <xchange Commission "8<C(%
to promulgate the necessary rules and regulations for the effecti.e implementation of the
>ct not later than 5, days upon its effecti.ity. "5,( rbb