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 business operations and market base.
House Bill 4902, authored by Nacionalista Party Rep. Mark Villar of Las Piñas City, seeks to give start-up enterprises the proper time to stand on their own.
The “start-up business bill,” now pending at the Committee on Ways and Means chaired by Liberal Party Rep. Romero Quimbo of Marikina City, provides that it is the declared policy of the State to foster national development and promote inclusive growth by encouraging the creation of enterprises that facilitate job creation, production, innovation and trade in the country.
The bill refers to “Start-up Enterprises” as newly registered businesses engaged in industry, agribusiness and/or services, whether a single proprietorship, cooperative, partnership or corporation.
It provides that a start-up enterprise shall be exempt from all national and local taxes for the first two years of its operation provided 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 have any previous or other existing registered companies, partnership or businesses, the bill said.
In the case of a corporation, each stockholder of the start-up enterprise shall have at least a 5-percent share in stocks and the corporation shall have no nominal stockholders, or stockholders holding the shares in trust for others. Furthermore, all stockholders of the start-up enterprise shall not have held shares of any previous or existing corporation with at least a 5-percent share therein, nor registered any former or existing sole proprietorship or partnership, the bill added.
The measure also assigns the Bureau of Internal Revenue, in coordination with the Department of Trade and Industry and Securities and Exchange Commission, to promulgate the necessary rules and regulations for the effective implementation of the act not later than 30 days upon its effectivity.
In his explanatory note, Villar said the economic growth and the hugely improved business climate in the country encourages individuals or firms to start a business capitalizing on developing a product or service for which they believe there is a demand.
“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,” Villar said.