Mon Abrea, a tax specialist trained at Harvard and the Chief Tax Advisor of the Asian Consulting Group (ACG), is urging the newly elected lawmakers in the Philippines to accelerate vital economic reforms that will not only draw in foreign investors but also safeguard and assist Micro, Small, and Medium Enterprises (MSMEs).
Mr. Abrea stresses that MSMEs, which account for more than 99% of enterprises in the Philippines, are fundamental to the economy. Nonetheless, they frequently encounter excessive tax compliance challenges that impede their development and competitiveness. To tackle these issues, Mr. Abrea recommends the following reforms:
- Updated MSME Classification: Raise the income and asset limit for micro enterprises from P3 million to P50 million, and abolish outdated and redundant bookkeeping stipulations, as VAT taxpayers already submit the Summary List of Sales and Purchases (SLSP) to the Bureau of Internal Revenue (BIR).
- 10% Flat Tax Rate for Small Enterprises: Enact a simplified tax framework for small businesses with annual revenues of P100 million or below, providing a flat tax rate with a minimum of P100,000 and a maximum of P10 million, without the necessity for extensive records or audits.
- Risk-Oriented Audits: Implement a risk-oriented audit strategy that prioritizes taxpayers deemed higher-risk, thereby alleviating the compliance burden on MSMEs and directing resources towards identifying large-scale tax violators.
- Enhanced Investment Promotion Agencies (IPAs): Provide greater power and independence to IPAs such as the Philippine Economic Zone Authority (PEZA), enabling them to manage all governmental and regulatory obligations, including taxes, for Registered Business Enterprises (RBEs).
- Complete Automation or Dissolution of the BIR: Execute full automation of tax administration or contemplate dissolving the BIR to minimize bureaucracy and corruption, thus encouraging voluntary compliance and attracting additional foreign investors.
Mr. Abrea’s advocacy aligns with his earlier contributions to tax reform, including his advisory role in the modification of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, in which he recommended establishing a distinct VAT Refund Center and an electronic tax refund system. ACG played a crucial role in shaping provisions that emphasize transparency and benefit various business sectors.
“The suggested reforms are vital for establishing a business-friendly climate that champions MSMEs and attracts foreign capital,” remarked Mr. Abrea. “By streamlining tax compliance and empowering IPAs, we can stimulate economic development and job generation.”
ACG continues to interact with policymakers and stakeholders to push for these reforms and guarantee their prompt implementation.
For media inquiries, please reach out to Rafael James Suarez, Executive Assistant at Asian Consulting Group:
Email: rafael@acg.ph
Phone: 0917-116-9864
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