It is safe to assume that all Filipinos are familiar with the “sari-sari store,” the ubiquitous

Filipino establishment found on almost every street in every barangay in the Philippines. The
appeal of the sari-sari store lies mainly in its ability to sell goods on a retail basis (i.e., ¼ kilo
of sugar, 8 ounces of cooking oil) that would otherwise have been tedious for the bigger
grocery stores.

Sari-sari stores are actually considered as “Micro, Small and Medium Enterprises” (MSMEs)
under Republic Act (RA) No. 6977, “The Magna Carta for Small Enterprises”, as amended
by RA No. 8289. Depending on the amount of its total assets, a sari-sari store may be
considered as either micro (P1.5 million or less); small (P1,500,001 to P15 million); or
medium (P15,000,001 to P60 million).

Just over a year ago, sari-sari stores were under the close scrutiny of
the Bureau of Internal Revenue (BIR), as the bureau planned to
target sari-sari stores with the goal of increasing the taxpayer base
for tax collection purposes. According to BIR Commissioner
Caesar R. Dulay, bringing the tax collection drive to the grassroots
level is one of the bureau’s programs designed to further improve
tax enforcement activities and voluntary compliance.
Now, with the advent of the Tax Reform for Acceleration and
Inclusion (TRAIN) Law or RA No. 10963, the BIR’s goal of
increasing the taxpayer base may be closer to reality, as MSMEs
will now find it less burdensome to declare their income and pay
the proper taxes under the administration’s tax reform law.

Under the TRAIN Law, self-employed individuals whose gross

sales/receipts are more than P250,000 but do not exceed P3 million
are given the option to be taxed at either 8 percent of gross
sales/receipts in excess of P250,000; or new graduated income tax
rates under the TRAIN Law.

*https://www.manilatimes.net/train-law-msmes/379507/

Under the tax reform, all self-employed and businesses earning below P300-million yearly should pay an 8
% tax, or through a graduated income tax rate.
“Your gross receipts is 8%, it’s easier. You should file. You will not worry if you will collect it and keep
your gross receipts. Another option is the gross receipts you collect, and it has deduction,” BIR Asst.
Commissioner Atty. Marissa Cabreros said.
The BIR said the process has been easier under the TRAIN law that’s why they are expecting more tax
payments.
For Maricar Cruz, who owns a laundry shop, she is happy with the tax reform the government implements.
She vows to always pay her taxes on time.
“The 8% tax is okay. I hope it could help for the progress of the country,” Cruz said.
However, Laban Konsyumer President Vic Dimagiba said although the process has been simplified, small
medium enterprises cannot hugely benefit from the tax reform law.
“They should pay VAT that’s for sure. They can no longer benefit. They have additional payments. They
will pass on to their customers all the increases in fuel and electricity and other hikes,” Dimagiba said.
The BIR said everyone might feel burdened because of the tax reform, but notes that many will benefit in
the long run.
The agency said additional taxes collected from the tax reform will be allocated to the projects of the
government that will further improve the Philippine economy.
*https://www.untvweb.com/news/bir-hopes-train-law-will-encourage-small-businesses-pay-
proper-taxes/

Micro, small and medium enterprises (MSME) are the biggest winners in
the government's tax reform program, according to new research by
several firms.

Experts said the most important change was the raising of the tax
threshold from ₱1.5 million to ₱3 million. MSMEs with gross sales below
the threshold can opt to pay a flat tax of just 8% instead of paying the
regular income tax.

This change makes the tax system "simpler and more favorable" to
entrepreneurs, a report by Chinabank Securities read.

According to its simulation, entrepreneurs earning up to ₱1.5 million

annually will see their disposable incomes increase by as much as
12.7% this year.

The change is even more significant for those earning between P1.5
million and ₱3 million a year — the newly tax-exempt. Their disposable
incomes are expected to jump by 27-28.2%.

Even though consumer prices are expected to go up because of higher

taxes on fuel and coal, Chinabank Securities said inflation will still be
outpaced by the rise in entrepreneurs' income.
For those earning up to ₱1.5 million annually, inflation will not erode their
income gains until 2021. For those earning between ₱1.5 million and ₱3
million, they have until 2025, the bank said.

Cutting tax in half

Tax consultancy Abrea Consulting Group, meanwhile, said that even if
MSMEs don't avail of the 8% flat tax, they will still benefit from the
overall lowering of income tax rates.

Under the Tax Reform for Acceleration and Inclusion (TRAIN) law, all
income ₱250,000 and below will be exempt from tax. Tax rates were
also lowered for most taxpayers, except those earning ₱2 million and
above.

In a sample case, Abrea Consulting Group showed that a typical sari-

sari store (mom and pop shop) making P500,000 in gross sales a year
would have to pay ₱52,500 in taxes under the old rules. With the new
rules, the store's tax bill will go down to ₱25,000 using the lower income
tax or ₱20,000 using the flat tax.

"They'll be saving at least half of what they're paying right now," Abrea
Consulting Group President Mon Abrea said in an interview on Monday.
"So that's really good tax relief for our small businesses."

Simplifying rules
The simplified tax procedures should also benefit MSMEs that often
don't have the time or money to hire accountants to go over their books,
Abrea said.

The TRAIN law cut down the income tax returns from 12 pages to four. It
also extended the deadline for taxpayers to pay the second installment
of their tax liabilities from July 15 to October 15.

"I think that's the ultimate objective of the TRAIN law, simplifying the
rules to encourage compliance for small businesses," Abrea said.

"I don't think the government should run after the few taxes of the small
businesses. We just want them to comply so they be part of the formal
economy."

http://cnnphilippines.com/business/2018/01/08/MSMEs-tax-reform.html
“We are hopeful that these reforms would not only incentivize our self-
employed and professionals to pay correct taxes, but also encourage more
Filipinos to engage in business. Kapag maraming naengganyong mag-
negosyo, mas dadami ang trabaho sa bansa at may dagdag-kita upang
makatulong guminhawa ang pamilya,” Angara said.

In the Doing Business report of the World Bank, the Philippines slipped to
113th this year from 99th last year among 190 countries.

The World Bank said to start a business in the Philippines, an entrepreneur

would need to make 20 different tax and contribution payments and visit
multiple agencies in person.

https://www.gmanetwork.com/news/money/companies/637816/doing-business-easier-for-
small-entrepreneurs-with-train-angara/story/
It is safe to assume that all Filipinos are familiar with the “sari-sari store,” the ubiquitous Filipino
establishment found on almost every street in every barangay in the Philippines. The appeal of the
sari-sari store lies mainly in its ability to sell goods on a retail basis (i.e., ¼ kilo of sugar, 8 ounces of
cooking oil) that would otherwise have been tedious for the bigger grocery stores.

Sari-sari stores are actually considered as “Micro, Small and Medium Enterprises” (MSMEs) under
Republic Act (RA) No. 6977, “The Magna Carta for Small Enterprises”, as amended by RA No. 8289.
Depending on the amount of its total assets, a sari-sari store may be considered as either micro (P1.5
million or less); small (P1,500,001 to P15 million); or medium (P15,000,001 to P60 million).

Just over a year ago, sari-sari stores were under the close scrutiny of the Bureau of Internal Revenue
(BIR), as the bureau planned to target sari-sari stores with the goal of increasing the taxpayer base for
tax collection purposes. According to BIR Commissioner Caesar R. Dulay, bringing the tax collection
drive to the grassroots level is one of the bureau’s programs designed to further improve tax
enforcement activities and voluntary compliance.

Now, with the advent of the Tax Reform for Acceleration and Inclusion (TRAIN) Law or RA No.
10963, the BIR’s goal of increasing the taxpayer base may be closer to reality, as MSMEs will now
find it less burdensome to declare their income and pay the proper taxes under the administration’s tax
reform law.

Actually, according to new research by several firms, MSMEs are the biggest winners in the
government's tax reform program.

Experts said the most important change was the raising of the tax threshold from ₱1.5 million to ₱3
million. MSMEs with gross sales below the threshold can opt to pay a flat tax of just 8% instead of
paying the regular income tax.

Under the tax reform, all self-employed and businesses earning below P300-million yearly should pay an 8
% tax, or through a graduated income tax rate.
The effect of the 8 percent flat income tax rate option on MSMEs is clearly seen when we compare how
MSMEs were taxed under the old provisions of the Tax Code. Under the old graduated personal income
tax rates [Section 24(A)(2)], a sari-sari store with gross sales/receipts of P350,000 for the year would be
subject to income tax of P80,000 (P50,000 plus 30 percent of the excess over P250,000).
Under the provisions of the TRAIN Law, the same sari-sari store will have the option to be taxed at P8,000
(8 percent of P100,000), or P20,000 (20 percent of the excess over P250,000). With either of the options
(P8,000 or P20,000), the benefits under the TRAIN Law are clearly seen over the old graduated personal
income tax rates (P80,000).
“Your gross receipts is 8%, it’s easier. You should file. You will not worry if you will collect it and keep
your gross receipts. Another option is the gross receipts you collect, and it has deduction,” BIR Asst.
Commissioner Atty. Marissa Cabreros said.
The BIR said the process has been easier under the TRAIN law that’s why they are expecting more tax
payments.
For Maricar Cruz, who owns a laundry shop, she is happy with the tax reform the government implements.
She vows to always pay her taxes on time.
“The 8% tax is okay. I hope it could help for the progress of the country,” Cruz said.
The BIR said everyone might feel burdened because of the tax reform, but notes that many will benefit in
the long run.
The agency said additional taxes collected from the tax reform will be allocated to the projects of the
government that will further improve the Philippine economy.

The simplified tax procedures should also benefit MSMEs that often
don't have the time or money to hire accountants to go over their books,
Abrea Consulting Group President Mon Abrea said in an interview.

The TRAIN law cut down the income tax returns from 12 pages to four. It
also extended the deadline for taxpayers to pay the second installment
of their tax liabilities from July 15 to October 15.

"I think that's the ultimate objective of the TRAIN law, simplifying the
rules to encourage compliance for small businesses," Abrea said.

"I don't think the government should run after the few taxes of the small
businesses. We just want them to comply so they be part of the formal
economy."
 MSMEs are big winners in TRAIN 1
It is safe to assume that all Filipinos are familiar with the “sari-sari store,” the ubiquitous Filipino
establishment found on almost every street in every barangay in the Philippines. Sari-sari stores are
actually considered as “Micro, Small and Medium Enterprises” (MSMEs) under Republic Act (RA) No.
6977, “The Magna Carta for Small Enterprises”, as amended by RA No. 8289. Depending on the
amount of its total assets, a sari-sari store may be considered as either micro (P1.5 million or less);
small (P1,500,001 to P15 million); or medium (P15,000,001 to P60 million).

According to BIR Commissioner Caesar R. Dulay, bringing the tax collection drive to the grassroots
level is one of the bureau’s programs designed to further improve tax enforcement activities and
voluntary compliance.

Now, with the advent of the Tax Reform for Acceleration and Inclusion (TRAIN) Law or RA No. 10963,
the BIR’s goal of increasing the taxpayer base may be closer to reality, as MSMEs will now find it less
burdensome to declare their income and pay the proper taxes under the administration’s tax reform
law.

Actually, according to new research by several firms, MSMEs are the biggest winners in the
government's tax reform program.

Under the tax reform, all self-employed and businesses earning below P300-million yearly should pay
an 8 % tax, or through a graduated income tax rate.

The effect of the 8 percent flat income tax rate option on MSMEs is clearly seen when we compare
how MSMEs were taxed under the old provisions of the Tax Code. Under the old graduated personal
income tax rates [Section 24(A)(2)], a sari-sari store with gross sales/receipts of P350,000 for the year
would be subject to income tax of P80,000 (P50,000 plus 30 percent of the excess over P250,000).

Under the provisions of the TRAIN Law, the same sari-sari store will have the option to be taxed at
P8,000 (8 percent of P100,000), or P20,000 (20 percent of the excess over P250,000). With either of
the options (P8,000 or P20,000), the benefits under the TRAIN Law are clearly seen over the old
graduated personal income tax rates (P80,000).

The simplified tax procedures should also benefit MSMEs that often don't have the time or money to
hire accountants to go over their books, Abrea Consulting Group President Mon Abrea said in an
interview.

The TRAIN law cut down the income tax returns from 12 pages to four. It also extended the deadline
for taxpayers to pay the second installment of their tax liabilities from July 15 to October 15.

"I think that's the ultimate objective of the TRAIN law, simplifying the rules to encourage compliance
for small businesses," Abrea said.

The BIR said everyone might feel burdened because of the tax reform, but notes that many will
benefit in the long run.