Senate President Francis “Chiz” G. Escudero has filed a series of priority bills aimed at providing much-needed support to micro, small, and medium enterprises (MSMEs), recognizing their vital role in sustaining the Philippine economy and employment landscape.
The proposed legislative package—part of Escudero’s top ten priority measures for the 20th Congress—seeks to offer sweeping tax incentives and enhanced access to credit facilities for MSMEs. These businesses account for 67% of the country’s total employment, making them a critical pillar in national development.
Among the cornerstone proposals is a three-year income tax exemption for MSMEs, alongside a provision allowing them to deduct 25% of labor expenses from taxable income. Escudero is also pushing to reduce the optional tax on gross sales or receipts from 8% to 5%, providing immediate relief for small business owners.
In addition, the Senate chief is advocating for the simplification of creditable withholding tax rates to just two categories:
– 1% for the purchase of goods and properties
– 2% for the purchase of services
These changes aim to lessen the administrative burden for MSMEs while improving compliance and transparency.
To further strengthen financing avenues, Escudero is calling for the reinstatement of the mandatory credit allocation for MSMEs by all lending institutions for the next 10 years. This move would enable small businesses to access more affordable and flexible funding to sustain operations, expand services, and generate employment.
“These will allow our MSMEs, particularly those that are struggling financially, to continue their operations, hire more people, and even consider an expansion in the future,” Escudero said.
The legislative push underscores a broader vision to revitalize grassroots entrepreneurship and ensure that MSMEs remain robust contributors to economic recovery and inclusive growth.
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