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Republic of the Philippines
HOUSE OF REPRESENTATI
Quezon City, Metro Manila

RESISTMTION UNIT
BILLS AND «NoEX SERVICE

SEVENTEENTH CONGRESS
First Regular Session
y
HOUSE BILL NO. An

Introduced by Honorable MARK A. VILLAR

AN ACT EXEMPTING START-UP ENTERPRISES FROM TAXES ARISING
FROM THE FIRST TWO YEARS OF OPERATION

EXPLANATORY NOTE

According to the World Bank in its recent report, Philippine economic growth
accelerated to 7.2% in 2013 despite the impact of typhoon Haiyan (Yolanda) and
other natural disasters during the year. The country’s strong macroeconomic
fundamentals supported domestic demand and shielded the economy from the
lingering weakness of the global economy.’

Further, robust performance of consumption fueled by strong remittances and
services, supported by investment and manufacturing expansion, boosted growth.

This economic growth and the hugely improved business climate in the
Philippines encourages individuals or firms to start a business capitalizing on
developing a product or service for which they believe there is a demand. Due to
limited revenue or high costs, most of these small scale operations are not
sustainable in the long term without government support or without additional funding
from venture capitalists

This bill proposes a tax exemption for Start Ups for the first two years of
operation provided that these enterprises are duly registered businesses that are not
affiliates, subsidiaries or franchises of any existing company and do not have any
previous or other existing registered businesses

" hnip/swww.worldbank.or/en/country/philippines/ publication philippine-economic-update-20 4-pursuing-economic~
.growth-through-sustainable-reconsiniction-and-job-gencration
2 Ibid



This measure encourages Start-ups to get organized, and establish their
business operations and market base. It will give these enterprises the proper time to
stand on its own.

The previous Congress have passed bills in support of small businesses like
the “Go Negosyo Law’, and “Microfinance NGO Act’. This representation continues
to support this advocacy, and make our country conducive to business enterprises
especially to micro, small and medium enterprises, as this advocacy will also
alleviate poverty.

This representation has filed this bill in the 16 Congress.

In light of the foregoing, the passage of this bill is highly recommended.

Vv

MARK A. VILLAR



SEVENTEENTH CONGRESS
First Regular Sessjoq +

HOUSE BILL NO.

Introduced by Honorable MARK A. VILLAR

AN ACT
EXEMPTING START-UP ENTERPRISES FROM TAXES ARISING FROM THE
FIRST TWO YEARS OF OPERATION

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled

SECTION 1. Short Title. - This Act shall be known as the "Start-Up Business
Bill"

SEC. 2. Declaration of Policy. - It is hereby declared the policy of the State to
foster national development and promote inclusive growth by encouraging the
creation of enterprises that facilitate job creation, production, innovation and trade in
the country. To this end, the State shall provide incentives to encourage and remove
constraints to the start up, incubation, and development of enterprises and the
proliferation of a more entrepreneurial culture in Philippine society

SEC. 3. Start-Up Enterprises. - "Start-Up Enterprises” shall refer to newly
registered businesses engaged in industry, agribusiness and/or services, whether a
single proprietorship, cooperative, partnership or corporation.

SEC. 4. Exemption from Taxes and Fees for Start-up Enterprises. - A start-up
enterprise shall be exempt from all national and local taxes for the first two years of
its operation, provided that:

a. The start-up enterprise is not an affiliate, a subsidiary, or a franchise of any
existing company;

b. 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; and



c. In the case of a corporation, each stockholder of the start-up enterprise shall
have at least a five percent (5%) 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 a
five percent (5%) share therein, nor registered any former or existing sole
proprietorship or partnership.

SEC. 5. Implementing Rules and Regulations. - The Bureau of Internal
Revenue (BIR) in coordination with the Department of Trade and Industry (DT!) and
Securities and Exchange Commission (SEC) shall promulgate not later than thirty
(30) days upon the effectivity of this Act the necessary rules and regulations for its
effective implementation

SEC. 6. Separability Clause. - If any provision of this Act is subsequently
declared invalid or unconstitutional, other provisions hereof which are not affected
thereby shall remain in full force and effect.

SEC. 7. Repealing Clause. - All laws, acts, presidential decrees, executive
orders, issuances, presidential proclamations, rules and regulations or parts thereof
which are contrary to and inconsistent with any provision of this Act are hereby
repealed, amended or modified accordingly.

SEC. 8. Effectivity. - This Act shall take effect fifteen (15) days after its
complete publication either in the Official Gazette or in at least two (2) newspapers of
general circulation

Approved,