SENATOR Sonny Angara has welcomed the part of the proposed comprehensive tax reform package that seeks to exempt micro businesses and marginal income earners from income tax.
He said that would be a big ease to ordinary people whose small businesses would no longer be taxed.
“In this way, their businesses will be given the opportunity to grow bigger that would result to creation of more jobs,” said Angara, chairperson of the Senate Ways and Means.
Under present tax regulations, marginal income earners are self-employed individuals deriving gross sales or receipts not exceeding P100,000.
Among them are farmers and fisherfolk selling directly to consumers, small sari-sari stores, small carinderias or turo-turos, and drivers or operators of a single unit tricycle.
Currently, marginal income earners are exempted from paying business taxes such as VAT and percentage tax but are still subject to income tax.
Micro businesses with assets below P3 million may be exempt from income tax, pursuant to the existing Barangay Micro Business Enterprise law, but they need to register first at the City Office of the Treasurer in their area.
“By automatically exempting, in effect, marginal income earners and micro businesses from income tax, we would finally afford them equal protection and benefits that the minimum wage earners have long been enjoying,” the lawmaker said.
Under the bill approved by the House of Representatives, a distinction has been made between compensation income earners and the self-employed or professionals in the proposed new income tax regime.
According to the Department of Finance, it seeks to impose a one-time flat tax to self-employed and professionals to encourage these hard-to-tax individuals to voluntarily and timely comply with their tax obligations.
Angara said he would study carefully the various proposals on how to reform the tax regime for self-employed and professionals so it would ultimately benefit the small businesses.