June 25, 2024

The Insider News

Direct from the source

Tax provisions of substitute bills on social enterprises, ICT hubs get panel’s nod

THE House Committee on Ways and Means chaired by Albay Rep. Joey Sarte Salceda on Tuesday approved the tax provisions of two unnumbered substitute bills seeking to promote the growth and development of social enterprises as a means to alleviate poverty by establishing the Poverty Reduction through Social Entrepreneurship Program, as well to establish information and communications technology hubs nationwide. 

Bukidnon Rep. Jose Manuel Alba, one of the authors of the first substitute bill, said the measure seeks to champion social enterprises and social entrepreneurs as partners of the government in addressing the perennial problem of poverty in the country. 

“The primary stakeholder in this particular bill that the social enterprise seeks to help is the poor. This bill seeks to provide more attention to our social enterprise sector since they perform a very important role in addressing poverty in our country. Social enterprises are mandated to plough back 60 percent of their net income into the pursuit of their social mission. This is not an ordinary business, it is a business that supports a particular mission which is to address poverty,” Alba said. 

The panel adopted the tax provisions recommended by the Committee on Micro, Small and Medium Enterprises, which referred and endorsed the substitute bill, specifically Section 3 (a) which provides that for the purpose of the measure, the term “assets” shall mean “all kinds of properties, real or personal, owned, possessed, or used by the social enterprise (SE) for the conduct of its business.” 

Likewise, it adopted Section 25 pertaining to tax credits, subject to style. It provides that “Social enterprises that hire employees based on either Community-Based Monitoring System (CBMS) or Proxy Means Test shall be entitled to an additional deduction from gross income equivalent to 25% of the total amount paid as salaries and wages to the said employees, subject to the provision of Section 34 of the National Internal Revenue Code of 1997, as amended.” 

It also provides that the Department of Social Welfare and Development, in coordination with the appropriate agency, shall issue the necessary guidelines for the implementation of this provision. 

The bill substituted House Bills 2112, 4566, 4911, 5554, 6091, 6952 and 8192 authored by Reps. Luis Raymund ‘LRay’ Villafuerte Jr., Bernadette ‘BH’ Herrera, Gus Tambunting, Jose Manuel Alba, Maximo Dalog Jr., Eduardo ‘Bro. Eddie’ Villanueva and Mario Vittorio ‘Marvey’ Mariño, respectively. 

The panel also approved the tax provision of the substitute bill referred to by the Committee on Information and Communications Technology, which seeks to put up ICT hubs nationwide. 

Section 8 of the bill, as amended, provides that any registered business enterprise (RBE) in the ICT hub may be granted incentives, according to the performance-based, targeted, time-bound and transparent incentives regime provided under Title XIII (Tax Incentives) of the National Internal Revenue Code of 1997, as amended. Provided that these incentives shall be granted, in addition to the incentives given by the local government unit (LGU) where such ICT hubs are located. 

Section 8 further provides that Philippine Economic Zone Authority (PEZA) established ICT Parks and Centers and those which may be established in the future shall also enjoy the incentives given by the LGU where such ICT hubs are located. 

In his sponsorship speech, Negros Occidental Rep. Francisco “Kiko Benitez, one of the principal authors of the substitute bill, said the country needs to establish more digital learning and incubation hubs to enable the country’s learners, entrepreneurs and workers cope with the demands of digital learning, digital economy and digital jobs. 

The bill substituted HBs 70, 377, 2942, 4140, 4332, 4955, 5673, 6564, 7249 and 8052 authored by Benitez, Maria Rachel Arenas, Joseph ‘Jojo’ Lara, Harris Christopher Ongchuan, Linabelle Ruth Villarica, Keith Micah ‘Atty. Mike’ Tan, Paolo Duterte, Joseph Gilbert Violago, Rudys Caesar I Fariñas and Midy Cua, respectively.