New Delhi, Apr 7 (KNN) In a landmark decision which can set an example for many emerging economies like India, micro, small and medium enterprises (MSMEs) in Philippines will soon to be exempted from paying taxes under a bill filed at the House of Representatives.

In India, tax is a major issue for the MSMEs who are already struggling to get access to credit.

“Owners of micro enterprises such as bakeries, restaurants and beauty spas may soon look forward to additional incentives that include tax exemption on income derived from their operations and exemption from coverage of the minimum wage law,” according to an official statement by the Republic of Philippines.

"MSMEs are the lifeblood of the economy. They create avenues for healthy trade and promote productivity by providing income-generating activities for a large portion of our population," Cebu City Rep Rodrigo A. Abellanosa Abellanosa said.

He said these exemptions are just some of the benefits and incentives proposed for registered MSMEs under House Bill 4007.

The measure proposed that a business enterprise should be classified as a micro enterprise if its total assets have a value of not more than P3 million.

Likewise, a business enterprise shall be classified as a small enterprise if the value of its total assets is more than P3 million but not more than P15 million.

A business enterprise whose total assets have a value of more than P15 million but not more than P100 million is classified as medium enterprise.

The Cebu solon said the above classification of MSMEs shall be subject to review and adjustments by the (MSME) Development Council created under Section 6 of Republic Act (RA) 6977, and or upon recommendation of sectoral organizations concerned, taking into account inflation and other economic indicators.

The Abellanosa proposal allows the deduction from its gross income in the amount of P40,000 for each new employee hired by registered small and medium enterprises subsequent to its registration under this Act. Such incentive can only be availed for five years from the effectively of this Act.

In addition to the said incentives, the bill provides that MSMEs shall be entitled to exemption from Value-Added- Tax (VAT) registration and percentage tax; it mandates that local government units (LGUS) shall not charge micro enterprises any local tax and are encouraged to reduce the amount applicable fees and charges.

For the small and medium enterprises, LGUs are encouraged under the measure to either reduce the amount of applicable local taxes, fees and charges imposed or to exempt them from the payment of local taxes, charges and fees.

Abellanosa said the passage of the bill providing support and incentives to MSMEs could be a good start for the proliferation of such businesses, hence boosting employment levels and relieving the poverty gap. (KNN/SD)