Solon wants tricycle drivers, other MIEs exempted from paying income tax

A measure seeking to exempt farmers, tricycle drivers, carinderia owners and others classified as marginal income earners (MIEs) from paying income tax is now pending before the House Ways and Means committee.

House Bill 5092, authored by Cavite Rep. Roy Loyola proposes to amend Sections 22, 24, 51 109 (1) and 236 of the National Internal Revenue Code of 1997, as amended, by exempting self-employed individuals earning no more than P150,000 each year or for a 12-month period from paying percentage taxes such as income tax to value-added tax (VAT), and the annual registration fee of P500 for businesses.

If enacted into law, the income cap of 150,000 on the gross sales or receipts of the MIEs shall be increased by three percent each year effective January 2016 through the revenue regulations issued by the Department of Finance.

The Bureau of Internal Revenue (BIR) defines an MIE as those whose business do not realize gross sales or receipts of more than P100,000 in any 12-month period. Classified as MIEs under the Revenue Memorandum Circular (RMC) 7-2014 issued last February are the owners of sari-sari stores, small eateries or carinderias, operators of single unit tricycles, and even farmers and fishermen.

With the release of the new circular, the BIR has required MIEs to register and maintain books of accounts, issue official receipts and invoices, and pay income taxes. These small entrepreneurs, however, are exempt from paying business taxes like the VAT and other percentage taxes. They are also not required to pay the ARF.

In the bill’s explanatory note, Loyola said the requirements that MIEs need to comply with as a result of the new RMC have proven to be onerous for them.

“With the passage of this bill, it is hoped that it could help the lives of our simple farmers, fisherfolk, small sari-sari or carinderia owners, and tricycle operators or drivers by protecting them from fiscal policies that are too burdensome for them to bear,” he said.

HB 5092’s counterpart measure, Senate Bill 2227, was filed by Sen. Paolo Benigno “Bam” Aquino IV earlier this year. — Xianne Arcangel/BM, GMA News