VAT Exemption On MSME's - Bizwatch

For the country’s micro, small and medium enterprises, here’s a bit of hope. The Department of Finance or DOF is now proposing to widen the value-added tax or vat exemption threshold for these entrepreneurs. This, according to the DOF, is meant to mitigate the impact of higher fuel levies on low-cost businesses. Finance Undersecretary Karl Kendrick Chua attended the senate inquiry on the Department of Finance’s tax reform plan. At the hearing, he told lawmakers that the DOF is proposing to exempt entrepreneurs with annual gross revenues of P3 million or less from paying the 12 per cent vat. In the proposed tax reform plan, the DOF wants the VAT threshold on business goods and services increased from the current P1.9 million to P3 million. With this, entrepreneurs with gross sales of a maximum of P3 million will not be affected by the broadening of the vat base. Although these small entrepreneurs grossing not more than P3 million per annum are proposed to be vat-exempt, they will still have to pay their percentage tax to the bureau of internal revenue. With the new DOF proposal, they hope to shield the MSMEs from the impact of the proposed fuel excise tax adjustments and removal of certain vat exemptions. With this proposal, added the DOF, the tax compliance of the MSMEs will be simplified as they need not file vat returns. Another proposal from the DOF is for minimum wage earners not earning more than P12,000/month be given protection from the effect of the fuel excise tax adjustments. The proposal is to provide drivers and operators of public utility vehicles, specifically those earning more than P5,000 but not over P12,000 with cash cards similar to the Pantawid Pasada Program to ensure that their pass-through costs would only be around 50 centavos.