Bill on different tax regime for social enterprises pushed

Tax and advisory services firm Isla Lipana and Co. is planning to draft a bill that will provide a different tax regime to allow social enterprises to allow to flourish in the country.

In a briefing yesterday, Alexander Cabrera, chairman and senior partner at Isla Lipana and Co., said the firm is working on a bill intended to provide a different tax regime for social enterprises or those that operate like a business enterprise by producing goods and services but which actually have a mission to address a social issue.

Such enterprises are often operated by a non-profit organization and use at least half of the revenues generated to continue the operations and to pursue a social or environmental goal.

Cabrera said the bill proposed to impose a fixed annual fee to be paid by social enterprises as tax to the government.

As social enterprises operate on a small scale with employees earning below the minimum wage and have a short lifespan, he said it is important for such businesses to have a different tax treatment in order for them to thrive and sustain their operations.

“We want government to give them (social enterprises) incentives so we want to set a fixed amount annually,” he said.

Support for social enterprises in the form of a fixed annual tax is seen to be beneficial for the government since the success of such businesses will contribute to the goal of making growth more inclusive by providing livelihood to the poor.

Cabrera said the company is currently in discussions with Sen. Paolo Benigno “Bam” Aquino IV who chairs the committee on trade, commerce and entrepreneurship at the Senate for the draft bill.

The company is also in talks with the Management Association of the Philippines which plans to implement the EMERGE program aimed at tapping leaders of Philippine business, civil society, academe and the government who are willing to provide expert assistance in business management to the poor, for the proposal.

“We want to complete it (proposal) within 60 days,” Cabrera said.