EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
Second Regular Session
SENATE 
S. B. NO.1763
2020m
DATE
TIME
Introduced by SENATOR JOEL VILLANUEVA
AN ACT
PROVIDING FOR SIMPLIFIED REGISTRATION, FILING OF 
RETURNS AND PAYMENT OF INCOME AND PERCENTAGE TAXES 
AND PROVIDING TAX RELIEF FOR MICRO-ENTERPRISES, 
AMENDING FOR THE PURPOSE SECTIONS 74,128 AND 236 OF 
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED
EXPLANATORY NOTE
Micro-enterprises play a huge role in developing the Philippine economy. 
According to the Philippine Statistics Authority List of Establishments, micro­
enterprises totaled to 887,272 in 2018, constituting 88.5% of the over 1 million 
business enterprises in the country. They also generate a total of 2.6 million jobs.1
Republic Act No. 9501 or the Magna Carta for Micro, Small and Medium 
Enterprises (MSMEs) passed in 2007, declared it the policy of the state to promote, 
support, strengthen, and encourage the growth and development of MSMEs in the 
country. Considered a landmark legislation, it recognizes this sector’s role in economic 
growth and employment, and therefore seeks to shape a conducive business 
environment, by facilitating access to funds, offering entrepreneurship and skills 
training, and improving government efficiency and effectiveness in providing 
assistance, among others.
However, the country still has a long way to go. Based on the Doing Business 
2020 Report by World Bank, the Philippines ranks 171st out of 190 countries in terms 
of starting a business. The said activity is said to involve 13 procedures and takes 33 
days to complete. The country also ranks relatively low in terms of enforcing contracts 
(152nd), getting credit (132nd), registering property (120th), trading across borders
1 Department of Trade and Industry. MSME Statistics. Retrieved from https://www.dti.gov.ph/resources/msme- 
statistics/ (date last accessed: July 29,2020).


(113rd), and paying taxes (95th). Payment of taxes is also bothering, with around 171 
hours spent per year on tax-related transactions.2
Overall, World Bank ranks the Philippines as 7th out of the 10 ASEAN member 
states, in terms of ease of doing business—lagging behind Singapore, Malaysia, 
Thailand, Cambodia, Lao PDR, and Myanmar for both 2019 and 2020.3 The country 
ranks 95th out of 190 economies.
Unfortunately, the COVID-19 pandemic has been shown to be particularly 
difficult for micro-enterprises, which generally run their operations on very low level of 
liquidity. According to the Department of Trade and Industry (DTI), over half of MSMEs 
in the Philippines fully stopped or closed their operations due to the pandemic.4 This 
is consistent with the report of DOLE citing that bulk of the establishment reports they 
received came from micro and small enterprises.
Hence, consistent with the goal of the Magna Carta for MSMEs Law and the 
spirit of Bayanihan in such a difficult time in our history, this proposed bill provides for 
(i) annual payment and filing of income tax returns and percentage tax returns, (ii) 
income tax relief for three years for micro enterprises employing less than 10 
individuals, and (iii) a simplified online registration process for taxpayers.
Taxation and business processes remain a critical factor affecting the 
competitiveness of enterprises. Reducing the cost of completing a business 
transaction is crucial to microenterprises, as they employ, on average only two to three 
workers.5 Providing for a tax relief in the first three years of the enterprise also allows 
for them to survive and establish momentum.
With all these, this bill will help provide small businesses with accessible, 
affordable and more efficient government processes to enable them to engage in 
entrepreneurship and other productive activities.
In view of the foregoing, the immediate passage of this bill is earnestly sought.
SENATOR JOEL VILLANUEVA
2 
World 
Bank. 
Doing 
Business 
2020. 
Retrieved 
from
https://www.doingbusiness.org/content/dam/doingBusiness/country/p/philippines/PHL.pdf_(date last accessed: 
July 29, 2020).
3 Ibid.
4 Mercado, N. (2020, May). DTI: Overhalf of MSMEs in PH fully stopped operations due to virus outbreak. Business 
Inquirer, https://business.inquirer.net/296227/dti-over-half-of-msmes-in-ph-fully-stopped-operations-due-to-virus- 
outbreak (date last accessed: July 29,2020).
5 Ibid.


EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
Second Regular Session
SENATE 
S. B. NO.1763
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Introduced by SENATOR JOEL VILLANUEVA
AN ACT
PROVIDING FOR SIMPLIFIED REGISTRATION, FILING OF 
RETURNS AND PAYMENT OF INCOME AND PERCENTAGE TAXES 
AND PROVIDING TAX RELIEF FOR MICRO-ENTERPRISES, 
AMENDING FOR THE PURPOSE SECTIONS 74,128 AND 236 OF 
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED
Be it enacted by the Senate and House of Representatives of the Phiiippines in 
Congress assembied:
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SECTION 1. Declaration of Policy. - It is hereby declared the policy of the State to 
have a national economy that provides for a more equitable distribution of 
opportunities, income and wealth; a sustained Increase in the amount of goods and 
services produced by the nation for the benefit of the people; and an expanding 
productivity as the key to raising the quality of life for all, especially the underprivileged. 
Towards these ends, the State shall provide an environment that will enable small 
businesses to flourish by providing them with accessible, affordable and more efficient 
government processes to enable them to engage in entrepreneurship and other 
productive activities.
SEC. 2. Simplified Filing of Returns and Payment of Income Tax. - Section 74(B) 
of the National Internal Revenue Code, as amended, is hereby amended to read as 
follows:
Section 74. Declaration of Income Tax for Individuals. -
(B) Return and Payment of Estimated Income Tax by Individuals. - The 
amount of estimated income as defined in Subsection (C) with respect to 
which a declaration is required under Subsection (A) shall be paid in four


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(4) installments. The first installment shall be paid at the time of declaration 
and the second and third shall be paid on August 15 and November 15 of 
the current year, respectively. The fourth installment shall be paid on or 
before May 15 of the following calendar year when the final adjusted 
income tax return is due to be filed; PROVIDED, THAT SELF-EMPLOYED 
INDIVIDUALS REGISTERED AS SOLE PROPRIETORS OF MICRO­
ENTERPRISES EMPLOYING LESS THAN TEN (10) EMPLOYEES 
SHALL ONLY BE REQUIRED TO FILE A FINAL OR ANNUAL INCOME 
TAX RETURN; PROVIDED FURTHER, THAT SELF-EMPLOYED 
INDIVIDUALS REGISTERED AS SOLE PROPRIETORS OF MICRO­
ENTERPRISES EMPLOYING LESS THAN TEN (10) EMPLOYEES 
SHALL BE EXEMPT FROM PAYMENT OF INCOME TAXES WITHIN THE 
FIRST THREE YEARS OF THEIR REGISTRATION AS TAXPAYERS.
SEC. 3. Simplified Filing of Returns and Payment of Percentage Taxes. - Section 
128(A)(1) of the National Internal Revenue Code, as amended, is hereby amended to 
read as follows:
SEC. 128. Returns and Payments of Percentage Taxes. -
(A) Returns of Gross Sales, Receipts or Earnings and Payment of Tax. -
(1) Persons Liable to Pay Percentage Taxes. - Every person subject to 
the percentage taxes imposed under this Title shall file a quarterly return 
of the amount of his gross sales, receipts or earnings and pay the tax due 
thereon within twenty-five (25) days after the end of each taxable quarter: 
Provided, That in the case of a person whose VAT registration is cancelled 
and who becomes liable to the tax imposed in Section 116 of this Code, 
the tax shall accrue from the date of cancellation and shall be paid in 
accordance with the provisions of this Section; PROVIDED, THAT SELF- 
EMPLOYED INDIVIDUALS REGISTERED AS SOLE PROPRIETORS OF 
MICRO-ENTERPRISES EMPLOYING LESS THAN TEN (10) 
EMPLOYEES SHALL ONLY BE REQUIRED TO FILE A FINAL OR 
ANNUAL PERECENTAGE TAX RETURN.
SEC. 4. Simplified Registration Process. - Section 236(A) of the National Internal 
Revenue Code, as amended, is hereby further amended to read as follows:
Section 236. Registration Requirements. -
(A) Requirements. - Every person subject to any internal tax shall register 
once with the appropriate Revenue District Officer:
(1) 
Within ten (10) days from date of employment, or
(2) 
On or before the commencement of business, or
(3) 
Before payment of any tax due, or
(4) 
Upon filing of a return, statement, or declaration as required in this 
Code.


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The registration shali contain the taxpayer’s name, styie, place of 
residence, business and such other information as may be required by the 
Commissioner in the form prescribed therefor: Provided, That the 
Commissioner shall simplify the business registration, and 
REGISTRATION AND tax compliance requirements of self-employed 
individuals and/or professionals, INCLUDING THE ESTABLISHMENT OF 
AN ONLINE REGISTRATION, FILING AND PAYMENT SYSTEM.
A person maintaining a head office, branch or facility shall register with the 
Revenue District Officer having jurisdiction over the head office, branch or 
facility. For purposes of this Section, the term ‘facility’ may include but not 
be limited to sales outlets, places of production, warehouses and storage 
places.
SEC. 5. Implementing Rules and Regulations. - Within sixty (60) days from the 
implementation of this Act, the Bureau of Internal Revenue, upon consultation with 
relevant stakeholders, shall issue the implementing rules and regulations to implement 
the provisions of this Act.
SEC. 6. Separability Clause. - Any portion or provisions of this Act that may be 
declared unconstitutional or invalid shall not have the effect of nullifying other portions 
and provisions hereof as long as such remaining portions or provisions can still subsist 
and be given effect in their entirety.
SEC. 7. Repealing Clause. - All laws, decrees, executive orders, rules and 
regulations or part thereof deemed inconsistent with the provisions of this Act are 
hereby repealed or modified accordingly.
SEC. 8. Effectivity Clause. - This Act shall take effect fifteen (15) days from the 
publication in the Official Gazette or in at least two (2) national newspapers of general 
circulation.
Approved,