DOF: Marcos' MCIT waiver plan to aid over 78,000 small business owners

President Ferdinand “Bongbong” Marcos’ proposal to exempt micro and small enterprises from paying minimum corporate income tax (MCIT) would benefit more than 78,000 tax-paying small business owners, Finance Secretary Frederick Go said Wednesday.

Under the current system, micro and small businesses —including small bakeries, cafés, eateries, food stalls, sari-sari stores, among others— pay either 2% MCIT based on gross income or the 20% corporate income tax (CIT) based on net taxable income, whichever is higher.

In his fifth State of the Nation Address (SONA), Marcos declared, “Ang mga maliliit na negosyo ay hindi na papatawan ng minimum corporate income tax.”

Go said that through the proposed tax reform, businesses operating at a loss would no longer have to pay an MCIT, easing the financial burden on small businesses and improving their cash flow.

“Ito talaga ‘yung makakatulong sa ating mga kababayan na nag-uumpisa lang or may maliliit na mga negosyo,” the Finance chief said.

(This would really help our countrymen who are just starting their business or those with small businesses.)

The DOF estimated about P6 billion in foregone state revenues from waiving MCIT for micro and small enterprises.

Similar to the expected P60-billion revenue loss from raising the personal income tax-exempt bracket, the government might look into raising excise taxes to offset foregone revenues from the income tax relief measures.

Go said that “I think the most obvious sources of revenue are what we call excise taxes.”

The Cabinet official did not elaborate but hinted that items charged with excise taxes, such as tobacco and sugar-sweetened beverages, could be charged higher.

“All you have to do is look at the categories that are taxed with excise taxes, and you'll sort of figure it out. They should be the same; normally they would be the same industries that would have to be covered,” he said. –NB, GMA News