TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
25 JUL-8 P5 -47
SENATE
S. No.
Introduced by Senator Paolo Benigno "Bam" A. Aquino IV
AN ACT
PROMOTING PROFIT-SHARING ARRANGEMENTS BETWEEN EMPLOYERS 
AND EMPLOYEES, ESTABLISHING A NATIONAL FRAMEWORK AND 
SUPPORT MECHANISMS, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
Even as key economic indicators show progress, the Philippines continues to 
grapple with gross inequality and the failure of prosperity to reach the majority of 
Filipino workers. Productivity has increased, businesses have expanded, and national 
income has grown. But for too many, wages remain stagnant, job security elusive, 
and economic participation limited. The gap between the rich and the poor has 
widened, and the rewards of growth have become increasingly concentrated in the 
hands of a few.
This bill seeks to address these structural imbalances by promoting a bold but 
practical model for more inclusive and equitable economic participation, grounded on 
the principle of distributive justice, which holds that the wealth created by a society 
should be shared fairly among those who contribute to it.
This measure institutionalizes a national framework that enables and 
incentivizes voluntary profit-sharing arrangements between employers and 
employees. Under this framework, businesses that choose to adopt a formal profit- 
sharing plan, distributing a portion of their net profits to employees, will be recognized 
as Profit-Sharing Businesses and granted access to technical support, preferential 
financing, and tax incentives.
Profit-sharing is a tested and proven approach that builds inclusive growth from 
the ground up. It aligns the interests of employers and employees, fosters a culture 
of trust and mutual investment, and creates a more stable, motivated, and high- 
performing workforce. Workers are no longer treated as mere cost centers, but as co­
creators of value and partners in the enterprise's success.


To support this, the bill establishes the National Profit-Sharing Promotion 
Center (NPSPC) under the Department of Trade and Industry (DTI), in coordination 
with the Department of Labor and Employment (DOLE). The NPSPC will lead 
nationwide awareness efforts, provide advisory and training services, facilitate access 
to financing, and support registered businesses in implementing effective and 
transparent profit-sharing plans.
This measure does not impose new mandates. Instead, it rewards enterprises 
that voluntarily embrace inclusive business models, those that see workers not just as 
laborers, but as stakeholders and partners in growth. It is a strategic, incentive-based 
approach to how we pursue sustainable development: not by trickle-down promises, 
but by lifting people up through real participation in the fruits of economic success.
At a time of deepening inequality, this bill offers a pathway to a more just, 
resilient, and inclusive economy, where growth and prosperity is not only robust, but 
shared.
In view of the foregoing, the passage of this bill is earnestly sought.


TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
25 JiJL -8 ?5 :47
SENATE
274
S. No.
(T
Introduced by Senator Paolo Benigno "Bam" A. Aquino IV
AN ACT
PROMOTING PROFIT-SHARING ARRANGEMENTS BETWEEN EMPLOYERS 
AND EMPLOYEES, ESTABLISHING A NATIONAL FRAMEWORK AND 
SUPPORT MECHANISMS, AND FOR OTHER PURPOSES
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled:
1 
Section 1. Short Title. - This Act shall be known as the "Profit Sharing Act."
2 
Sec 2. Declaration of Policy. - It is hereby declared the policy of the State to
3 
promote inclusive and equitable economic development by fostering greater employee
4 
participation in enterprise success through profit-sharing arrangements. The State
5 
recognizes that such mechanisms:
6 
a) Encourage higher productivity, innovation, and employee engagement;
7 
b) Improve labor-management relations and workplace stability;
8 
c) Provide workers with a fair share in the financial returns of enterprises;
9 
d) Support the resilience and competitiveness of businesses; and
10 
e) Reduce income inequality and foster shared prosperity.
11 
Towards these ends, the State shall establish a national framework that encourages
12 
and incentivizes voluntary profit-sharing arrangements through technical assistance,
13 
financing, regulatory support, and tax incentives.
14
Sec 3. Definition of Terms. - For purposes of this Act:


1 
a) Profit-Sharing Arrangement refers to any formal mechanism whereby an
2 
enterprise voluntarily allocates a portion of its net profits to eligible employees,
3 
in addition to regular wages and benefits.
4 
b) Eiigibie Empioyee refers to any individual employed by a business and covered
5 
under the terms of its registered profit-sharing arrangement.
6 
c) Quaiifying Business refers to any enterprise duly registered under Philippine
7 
law that adopts a profit-sharing arrangement in accordance with this Act and
8 
the Implementing Rules and Regulations (IRR).
9 
d) Profit-Sharing Pian refers to a written and registered document outlining the
10 
formula, conditions, frequency, and eligibility criteria for distributing profits to
11 
employees.
12 
e) Nationai Profit-Sharing Promotion Center (NPSPC) refers to the center created
13 
under this Act to promote and support profit-sharing arrangements.
14 
f) Technical Assistance refers to expert services provided to businesses for the
15 
design, implementation, and management of profit-sharing plans.
16 
Sec 4. Recognition of Profit-Sharing Businesses- Any business enterprise duly
17 
registered under Philippine laws that adopts a formal and voluntary profit-sharing
18 
arrangement with its employees may be recognized as a Profit-Sharing Business
19 
provided it complies with the qualifications and procedures set forth in this Act and its
20 
Implementing Rules and Regulations (IRR).
21 
Sec 5. Qualifications - To qualify as a Profit-Sharing Business, an enterprise
22 
must:
23 
a) Develop a written Profit-Sharing Plan that clearly outlines the formula for
24 
distribution, eligibility requirements, payout schedule, and dispute resolution
25 
mechanisms;
26 
b) Ensure that profit-sharing distributions are in addition to and do not diminish
27 
regular wages, benefits, and entitlements mandated by law;
28 
c) Secure approval and registration of the Profit-Sharing Plan with the NPSPC; and


1 
d) Submit annual reports to the NPSPC on plan implementation, including
2 
employee participation rates, amounts distributed, and business performance
3 
indicators.
4 
Sec 6. Voluntary Adoption - Participation in a profit-sharing arrangement shall
5 
be voluntary on the part of the employer but must be applied equitably among eligible
6 
employees once adopted.
7 
Sec 7. Incentives for Profit-Sharing Businesses. - To encourage adoption of
8 
profit-sharing arrangements, qualifying businesses shall be entitled to the following:
9 
a) Tax Deductibility. Contributions distributed under a registered profit-sharing
10 
plan shall be deductible from gross income, subject to ceilings and conditions
11 
set in the IRR.
12 
b) Tax Credit for Design and Impiementatiorr. A tax credit shall be granted for a
13 
portion of the professional fees and administrative costs incurred in designing
14 
and implementing a profit-sharing plan, as may be defined in the IRR.
15 
c) Preferential Financing. Qualifying businesses shall be given preferential access
16 
to existing government loan programs, credit facilities, and investment funds,
17 
and shall be prioritized for new financing programs specifically designed for
18 
profit-sharing businesses, including those offering loan guarantees, interest
19 
rate subsidies, or direct investment, administered by government financial
20 
institutions (GFIs) such as the Development Bank of the Philippines (DBP), the
21 
Land Bank of the Philippines (LBP), and other relevant financial institutions.
22 
Sec 8. Creation of the National Profit-Sharing Promotion Center (NPSPC). -
23 
There is hereby created, under the Department of Trade and Industry (DTI), in
24 
coordination with the Department of Labor and Employment (DOLE), a National Profit-
25 
Sharing Promotion Center (NPSPC). The NPSPC shall be the primary government
26 
agency responsible for promoting, supporting, and facilitating profit-sharing
27 
arrangements in the country. The Executive Director of the NPSPC shall be appointed
28 
by the DTI Secretary in consultation with the DOLE Secretary.


1 
Sec 9. Functions of the NPSPC. - The NPSPC shall perform the following
2 
functions:
3 
a) Information and Advocacy. Launch public awareness campaigns to promote the
4 
benefits of profit-sharing for both employers and workers.
5 
b) Technical Assistance-. Provide businesses with advisory services on designing
6 
profit-sharing formulas, drafting plans, determining eligibility, and managing
7 
implementation.
8 
c) Education and Training-. Develop training modules on financial literacy,
9 
enterprise performance, and participatory management for employees and
10 
employers.
11 
d) Facilitating Access to Incentives-. Assist businesses in accessing government
12 
incentives and financing programs related to profit-sharing adoption.
13 
e) Policy Research and Data Collection-. Gather data on profit-sharing outcomes
14 
and recommend policies for further development.
15 
f) Mode! Plans and Best Practices-. Develop and disseminate model profit-sharing
16 
plans and templates for use by enterprises.
17 
g) Multi-Stakeholder Engagement Partner with business associations, labor
18 
unions, academic institutions, LGUs, and civil society to build support for profit-
19 
sharing practices.
20 
Sec. 10. Certification and Registry - The NPSPC shall issue a certificate of
21 
recognition to Profit-Sharing Businesses and maintain an official Registry of Profit-
22 
Sharing Businesses for purposes of monitoring, research, and access to incentives
23 
under this Act.
24 
Sec 11. Roie of Government Agencies. - The following agencies shall support
25 
the implementation of this Act:
26 
a) Department of Trade and Industry (DTI)-. Shall oversee the NPSPC and
27 
integrate profit-sharing promotion into MSME development and business
28 
support programs.


1 
b) Department of La tx>r and Employment (DOLE): Shall promote profit-sharing as
2 
a labor-management cooperation strategy and include it in labor education
3 
initiatives.
4 
c) Bureau of Internal Revenue (BIR)-. Shall issue rules and guidelines for the tax
5 
treatment of profit-sharing distributions and related incentives.
6 
d) Commission on Higher Education (CHED) and Technical Education and Skills
1 
Development Authority (TESDA)'. Shall support integration of financial literacy
8 
and shared productivity models in relevant curricula.
9 
Sec. 12. Implementing Rules and Regulations. - Within ninety (90) days from
10 
the effectivity of this Act, the DTI, in coordination with DOLE, BIR, and other
11 
concerned agencies, shall promulgate the Implementing Rules and Regulations
12 
necessary to carry out the provisions of this Act.
13 
Sec. 13. Appropriations. - The amount necessary to carry out the initial
14 
implementation of this Act shall be charged against the current appropriations of the
15 
DTI. Thereafter, such sums as may be necessary for the continued operation of the
16 
NPSPC and the implementation of this Act shall be included in the annual General
17 
Appropriations Act.
18 
Sec. 14. Separability Clause. - If any provision of this Act is declared
19 
unconstitutional or invalid, the remaining provisions shall remain in full force and
20 
effect.
21 
Sec. 15. Repealing Clause. - All laws, decrees, executive orders, rules, and
22 
regulations or parts thereof inconsistent with this Act are hereby repealed or modified
23 
accordingly.
24 
Sec. 16. Effectivity. -This Act shall take effect fifteen (15) days after its
25 
publication in the Official Gazette or in a newspaper of general circulation.
26
Approved,