MFIs seek tax incentive from Congress

DAVAO CITY (MindaNews/07 July) – A network of microfinance institutions (MFI) is urging members of the 15th Congress to file anew the bill that would make MFIs pay only two-percent tax remittance to the national government instead of the 12-percent value added tax.

Ruben de Lara, president of the Microfinance Council of the Philippines, Inc., said they will push for the passage of House Bill 7138 or the “Micro-Enterprise Development Institution Act of 2010.”

The bill proposes that “no taxes, local and national, shall be imposed on ‘Micro-Enterprise Development Institutions’ (MEDI) duly accredited by the Accrediting Entity and registered with the BIR.”

It added:  “In lieu therefore, two percent (2%) of the gross income derived by the MEDls shall be remitted to the national government.”

De Lara also explained that the two percent contribution shall go to the People’s Development Trust Fund, which was established under Republic Act No. 8425 otherwise known as the “Social Reform and Poverty Alleviation Act”.

The passing of the bill was stalled in the middle of election fever, he said.

He added that they will recommend to the government that all non-government organizations (NGOs) that are into micro-financing shall only pay the two-percent tax.

De Lara is also asking the government, particularly the Bureau of Internal Revenue (BIR), to reclassify the MFIs in its tax payment scheme.

He pointed out that MFIs should not be classified as profit organizations paying 35-percent corporate taxes.

He stressed that the members of these MFINGOs are mostly the poor who avail of loan portfolios of at least P3,000 each.

The BIR, he said, recently has been gradually imposing the 35-percent corporate tax and prioritized the collection of the 12-percent value-added tax.

“Who will pay for this tax but the poor,” he said, adding this is the reason the MCPI is pushing for the reclassification of MFIs as non-profit organizations.

“We will have to start from square one just to have this bill passed in both Houses of Congress,” he said.

MCPI is the national association of 46 Filipino institutions that strive together to enable MFIs to attain and maintain certain standards of practice for the welfare of clients, the sustainability of operations and for the eradication of poverty in the Philippines. (Keith Bacongco / Mindanews)

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