HOUSE OF REPRESENT ATives

Republic of the Philippines RECEIVED
HOUSE OF REPRESENTATIVE!

Quezon City

SEVENTEENTH 7") conaress
First Regular Session

House Bill No,_ 2625

Introduced by: Representative Jose L. Atienza, Jr

EXPLANATORY NOTE,

Just recently, the Philippine economy received a much-needed boost with the
improved credit rating it received from Standard & Poor’s, signaling an improvement in
the country’s standing

While this is a welcome development as far as the country’s overall economic
growth is concerned, we are still very much aware of the prevailing poverty among a
majority of our fellow Filipinos, who have yet to feel the effects of this improvement in
their everyday lives.

This bill seeks to help our countrymen benefit from this economic improvement
by making sure this trickles down to our daily wage earners. This profit sharing program
would be derived from the net profit made by all companies, rather than increasing the
minimum daily wage, which may not be feasible at this time. This measure might have
more far-reaching effects on laborers and workers, and would encourage them to work
harder for the successful operation of their companies. |

Moreover, in this bill, we propose that the net profit contribution be made! tax
deductible the following year. In this manner, all sectors would be benefited by this bjll



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH (17") CONGRESS

First Regular Session

House Bill No. 2625 3.

Introduced by: Representative Jose L. Atienza, Jr.

AN ACT MANDATING ALL BUSINESS ESTABLISHMENTS IN THE COUNTRY
TO INSTITUTIONALIZE PROFIT SHARING, REPEALING AND/OR AMENDING
ALL LAWS INCONSISTENT WITH THIS ACT

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

SECTION ONE. Title. - This Act shall be known as “The Profit Sharing Act of
2016"

SECTION TWO. Declaration of Policy. ~ It is hereby declared under the
Constitution that the State affirms labor as a primary social economic force. It shall
protect the rights of workers and promote their welfare.

SECTION THRE! Definition of Terms

A. Profit Sharing ~ refers to various incentive plans, introduced by business that
Provide direct payments to employees that depend on the company’s profitability, in
addition to salaries and bonuses.

B. Gross Income ~ total revenue received before any deductions, allowances,
taxes or any other expenses.

C. Net Income — total revenue received after any deductions, allowances, taxes or
any other expenses.

D. Employees ~ workforce of a business, regular or contractual

E. Tax Creditable — the amount of money that a taxpayer is able to subtract from
the amount of tax that they owe to the government. :


y

SECTION FOUR. Alll business establishments that made a profit for a fiscal year
shall annually distribute TEN PERCENT (10%) of their NET INCOME to all their
employees, both regular and contractual

SECTION FIVE. The shared profit shall not affect the salary, 13!" month pay and
other benefits presently being enjoyed by the employees.

SECTION SIX. The total amount given by the company thru profit sharing shall
be Tax Creditable to his Income Tax Return.

SECTION SEVEN. The implementing rules and regulations of this Act shall be
drafted by the Department of Labor and Employment and the Bufeau of Internal
Revenue.

SECTION EIGHT. All laws, rules, regulations, orders, circulars and memoranda
inconsistent with this act are hereby repealed, modified, and amended accordingly.

SECTION NINE. Separability Clause - If any provision of this Act is declared
unconstitutional, the same shall not affect the validity and effectivity of the other
provisions hereof.

SECTION TEN. Effectivity- This act shall take effect immediately upon approval.

Approved