NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE 
s. B. no1046
mnatc
72 AUG-4 P6 78
RECEIVED BY. „
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, there are 
977,670 micro- enterprises in the country in 2021, constituting 90.5% of all business 
enterprises in the country.1 They also generate a total of over 2.5 million jobs.2
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 country also ranks relatively low in terms of enforcing 
contracts (152nd), getting credit (132nd), registering property (120th), trading across 
borders (113th), and paying taxes (95th). Payment of taxes is also cumbersome,
1“More than 1.08 million Establishments Operated in 2021 which Generated Total Employment of 8.57 million (2021 Updating 
of the List of Establishments Preliminary Results).” Retrieved from https://psa.qov.ph/content/more-108-million-establishments: 
operated-2021-which-qenerated-total-emplovment-857-million (date last accessed: July 29, 2022).
2 “2020 MSME Statistics" Retrieved from https://www.dti.aov.ph/resources/msme-statistics/ (date last accessed: July 29, 2022)


with around 171 hours spent per year on tax-related transactions/
Overall, the World Bank ranks the Philippines 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 2020.4
Further, the COVID-19 pandemic has been 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.5 In a study 
conducted by the Asian Development Bank Institute in February 2021, it was found 
that 61.7% of micro-sized businesses had little to zero revenue and were forced to 
temporarily close at the advent of the pandemic.6 In addition, 68% of micro-sized 
businesses were constrained to retrench their employees.7 To make matters worse, 
MSMEs have recently had to endure further business losses as a result of natural 
calamities such as typhoons and global economic events such as the Russia- 
Ukraine conflict, unprecedented inflation and rising fuel prices.
Hence, in order to spur recovery for the sector 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 bill provides for (i) a more convenient procedure for 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.8 Providing tax relief in the first three years of the enterprise also 
allows them to survive and establish momentum.
This bill hopes to provide small businesses with accessible, affordable and 
more efficient ways to do business through government support, ensuring their 
longevity and development during these difficult times.
In view of the foregoing, the immediate passage of this bill is earnestly sought.
SENATOR J^EL VILLANUEVAjy
3 
“World 
Bank 
Doing 
Business 
202C 
Retrieved 
from
https:/Awww.doingbusiness.org/content/dam/doingBusiness/country/p/philippines/PHL.pd" (date last accessed: July 29, 
2022) .[sVpJ
4 Id.
5 “DTI: Over half of MSMEs in PH fully stopped operations due to virus outbreak.” Retrieved from
https://business.inquirer.net/296227/dti-over-half-of-msmes-in-ph-fullv-stopped-operations-due-to-virus-outbreak (date last
accessed: July 29, 2022).[sep]
6 “COVID-19 Impact on Micro, Small, And Medium-Sized Enterprises Under The Lockdown: Evidence From A Rapid Survey In 
The Philippines." Retrieved from https://www.adb.org/sites/default/files/publication/677321/adbi-wp1216.pdf (date last 
accessed: July 29, 2022){A?\
7 Id.
8 Supra note 5.


NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES
First Regular Session
SENATE
S. B. N0.1 046
TIME
BILLS
Introduced by SENATOR JOEL VILLANUEVA
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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 Philippines in 
Congress assembled:
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. —
XXX
(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 
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


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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 ON 
MAY 15 OF THE FOLLOWING CALENDAR YEAR; 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 o" 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 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, orisEp^
(4) 
Upon filing of a return, statement, or declaration as required in 
this Code.
The registration shall contain the taxpayer's name, style, place of residence.


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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 effectivity of this Act, the Bureau of Internal Revenue, upon consultation 
with relevant stakeholders, shall issue the rules and regulations for the effective 
implementation 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 after 
its publication in the Official Gazette or in at least two (2) newspapers of general 
circulation.
Approved,