IMPOSING a tax holiday for startups may help the Philippines become the entrepreneurship hub of Asia, according to Potato Corner CEO Jose Magsaysay Jr.
“I like the idea of having a tax holiday for startups. That will really boost…[because the Philippines has a chance] to be the entrepreneurship hub of Asia,” Magsaysay told some members of the media during the Prelude to the International Tax Conference 2023 held Friday in Makati City.
For his part, Mon Abrea, Founding Chairman and Chief Tax Advisor of Asian Consulting Group (ACG), said at the same media briefing that the Startup Act in the country “initially” had a two-year tax exemption.
“ ’Yung sa Startup Act kasi initially may two-year tax exemption na parang adjustment period preparing you to become an established business pero nawala ’nung final version,” Abrea explained.
[The Startup Act initially had a two-year tax exemption that’s like an adjustment period preparing you to become an established business, but it was scrapped in the final version].
Abrea rued that the said Startup measure is lacking tax benefits. In contrast, he said, partly in Filipino, “in Singapore they have it. For two years for the first 100,000 dollars you are exempted. It allows you to grow and establish yourself.”
As representatives from the International Monetary Fund (IMF) and World Bank (WB) are expected to present at the upcoming International Tax Conference on June 15, Abrea pinned his hopes on these “international experts” to set the “best practices” to provide assistance for startups, among others.
Senate Bill No. 2217 is a measure exempting start-up enterprises from taxes arising from the first two years of operation.
Section 4 of SB 2217 specifically laid out the exemptions from taxes and fees for start-up enterprises.
That provision exempts a start-up enterprise from all national and local taxes for the first two years of its operation, provided that the enterprise “is not an affiliate, a subsidiary, or a franchise of any existing company.”
Another condition set by the provision: “In the case of a sole proprietorship or partnership, the proprietor or the partners of the Start-up enterprise shall not have any previous or other existing registered companies, partnerships or businesses.”
Meanwhile, in the case of a corporation, the measure states that, “Each stockholder of the start-up enterprise shall have at least a 5 percent share in stocks and the corporation shall have no nominal stockholders or stockholders holding the shares in trust for others.
“Provided further that, all stockholders of the start-up enterprise shall not have held shares of any previous or existing corporation with at least 5 percent share therein, nor registered any former or existing sole proprietorship or partnership,” the provision also noted.
Tax confab crucial
Meanwhile, in a statement on Friday, Asian Consulting Group (ACG), a tax consultancy services firm, said the upcoming International Tax Conference “aims to address crucial topics, including global tax issues, sustainability, and digitalization.”
“As our economy undergoes swift transformations and growth, grasping the complexity of tax regulations has become a fundamental necessity. The International Tax Conference has been meticulously designed to empower Filipino professionals with the critical knowledge and acumen required to proficiently navigate this dynamic landscape effectively,”
Abrea said.