TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
JDfiirr of
)
SENATE
S. No. 1136
25 AUG-7 P4 34
RkCtiVED:..
Introduced by Senator JV Ejercito
AN ACT
PROVIDING FOR SIMPLIFIED REGISTRATION, FILING OF RETURNS AND 
PAYMENT OF INCOME AND PERCENTAGE TAXES, AND PROVIDING FOR TAX 
RELIEF FOR MICRO-ENTERPRISES, AMENDING FOR THE PURPOSE 
SECTIONS 74, 128 AND 236 OF THE NATIONAL INTERNAL REVENUE CODE, 
AS AMENDED
EXPLANATORY NOTE
In the Philippine economy, micro, small and medium enterprises (MSMEs) 
comprise 99.5% of all business establishments, generate 63% of total employment, 
and contribute about 40% to the Gross Domestic Product (GDP)1. The 2023 List of 
Establishments (LE) of the Philippine Statistics Authority (PSA) recorded over 1.2 
million business enterprises operating in the country, and out of these micro 
enterprises constitute 90.43% or over 1.2 million of total establishments.
That is the reason why micro enterprises can be considered as the Philippines 
economic backbone, contributing to job creation, poverty reduction, and economic 
stability. Despite this, many of these enterprises struggles to thrive. The significant 
challenges include limited access to capital, inadequate business knowledge, 
navigating government regulations, tax policies, and business permits, limited market
reach, and vulnerability to economic disruptions like inflation, natural disasters or 
pandemics.2
MSME Value Chain Rapid Response Survey. https://www.undp.org/philippines/puhlication.s/msme-value- 
chain-rapid-resnonse-survev
2 Advantages and Challenges of Micro Businesses in the Philippines. https://www.n90.asiaynost/advantages- 
and-challenges-of-micro-businesses-in-nhilippines


Under Republic Act No. 9138 or the Barangay Micro Business Enterprises 
(BMBE's) Act of 2002, MSMEs enjoy exemption from payment of income tax for income 
arising from the operation of the enterprise. However, not all micro enterprises are 
enjoying the benefits under the said Act.
With this proposed measure, sole proprietors of micro enterprises employing 
less than 10 employees shall be exempt from payment of income taxes within the first 
3 years of their registration as taxpayers. Further, this bill will also provide a simplified 
online registration process for such taxpayers.
In view of the foregoing, the approval of this bill is earnestly sought.
JV EJERCITO


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TWENTIETH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
o[ ::-iv
25 AUG-7 P 4 35
SENATE
S. No. 1136
RECEIVED eV:
Introduced by Senator JV Ejercito
AN ACT
PROVIDING FOR SIMPLIFIED REGISTRATION, FILING OF RETURNS AND 
RPrrPpN\rtD income AND PERCENTAGE TAXES, AND PROVIDING FOR TAX 
RELIEF FOR MICRO-ENTERPRISES, AMENDING FOR THE PURPOSE
128 AND 236 0F THE NATI0NAI- internal revenue code!
Ab AMENDED 
'
Be it enacted by the Senate and the 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


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declaration is required under Subsection (A) shall be paid in four (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; PROVIDED FINALLY, THAT 
THE EXEMPTION FROM PAYMENT OF INCOME TAXES OF BARANGAY 
BASED MICRO ENTERPRISES REGISTERED UNDER REPUBLIC ACT 
NO. 9178, OTHERWISE KNOWN AS THE "BARANGAY MICRO 
BUSINESS ENTERPRISES (BMBE's) ACT OF 2002", SHALL BE 
COVERED BY THE SAID LAW.
XXX
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 
30 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


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to the tax imposed in Section 116 of this Code, the tax shali accrue 
from the date of cancellation and shall be paid in accordance with 
the provisions of this Section; PROVIDED FURTHER, 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 PERCENTAGE TAX RETURN.
XXX
Sec. 4. Simplified Registration Process. - Section 236(A) of the National Internal 
Revenue Code, as amended, is hereby further amended to read as follows:
Sec. 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 22
this Code
The registration shall contain the taxpayer's name, style, 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 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' 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.


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Sec. 6. Separability Clause. - If any part or provision of this Act shali be declared 
unconstitutional or invalid, the other provisions hereof which are not affected thereby 
shall remain in full force and effect.
Sec. 7. Repealing Clause. - All laws, decrees, executive orders, memorandum 
orders, memorandum circulars, administrative orders, ordinances or parts thereof 
which are inconsistent with the provisions of this Act are hereby deemed repealed or 
modified accordingly.
Sec. 8. Effectivity. - This Act shall take effect fifteen (15) days after its publication 
in the Official Gazette or in a newspaper of national circulation.
Approved,