Legal and Tax Aspects of Business Organizations

AGOSILA, MAUREEN THERESE G.
2004003916
LEGAL AND TAX ASPECTS OF BUSINESS ORGANIZATIONS

(DR. FERNANDEZ)
1. Cite at least three methods CURRENTLY used by the Philippine

Government to attract more investors into the Country? Be specific.
 Through the Corporate Recovery and Tax Incentives for

Enterprises (CREATE) Act, the regular corporate income tax rates
were reduced to 25% for large enterprises and 20% for small and
medium enterprises. Moreover, there are temporary reductions in
certain tax rates such as the minimum corporate income tax (MCIT)
rate from 2% to 1% and percentage tax from 3% to 1%, both
running until June 30, 2023 only;
 The government also provides fiscal incentives, such as tax relief
and preferential tax treatment, to companies whose activities fall
within the government’s Investment Priorities Plan. If qualified, a
foreign investor may register its business with an Investment
Promotion Agency (IPA) which is tasked with positioning the
country as a prime destination for investment and with approving
the incentives, unless the proposed project or activity exceeds an
investment capital threshold of P1 billion. In this case, the Fiscal
Incentives Review Board (FIRB) will be the approving entity for the
application;
 Moreover, through the CREATE Act, longer incentives will be
given to activities in more advanced sectors and less developed
areas, with periods of up to 17 years. The first four to seven years
could be granted an income tax holiday, while the remaining five
to 10 years could see operations enjoying either an enhanced
deduction or a 5% special corporate income tax (for export
enterprises only) on gross income earned, depending on the option
taken by the IPA-registered enterprise;
 The Ease of Doing Business and Efficient Government Service
Delivery Act (RA 11032) which was signed into law in 2018 aims to
improve the country’s global competitiveness ranking through: (1)
faster processing of business permits and licenses; (2) standard
turnaround time for government transactions depending on the
complexity of the task; (3) automated business registration
processes to minimize graft and corruption; (4) establishment of a
citizen’s charter detailing the requirements for each type of
transaction, the person responsible, lead time, fees, and procedures
for filing; and (5) accountability of agency heads and other officials;
 The establishment of the Anti-Red Tape Authority (ARTA) also
helped in giving confidence to investors in doing business in the
Philippines because it monitors and ensures compliance with the
national policy on anti-red tape and ease of doing business in the
country;
2. In your assessment, are these CURRENT methods effective or not?

Explain why or why not. How can you improve these CURRENT
methods?
Yes, the current methods used by the government are effective. I have
experienced registering a business with the Department of Trade and
Industry and with the Securities and Exchange Commission through
their online platforms. Payments for registration fees were likewise
done online and the business certifications were sent through email. It
was convenient especially during pandemic because people are not
required to personally transact in the government offices plus the turn
over time was faster.
However, there are still room for improvements. The government needs
to simplify more the process to accommodate those entrepreneurs who
are not technology-savvy, including the senior citizens. While they may
proceed to the government offices to process their business transactions,
I suggest that satellite offices be opened so that people need not to travel
to the regional offices.
Another aspect to improve is the accessibility to hotline numbers and

emails. The government should create a working hotline that would
immediately accommodate the concerns of the businessmen. Based on
my experience, no one answers the call and/or the email, or if they did,
it was after more than a month.
3. If you are the Chief Executive of this Country, what would be your
recommended NEW methods, cite at least three, to attract foreign
investments and businesses into the Country? Be specific and exclude
existing methods used.
If I were the Chief Executive, I would mandate that for the first three (3)
months, the government would shoulder the SSS, Pag-IBIG, and
PhilHealth contributions of a newly-registered business employing at
least 11 employees.
4. In the aspect of taxation, how can the Legislative branch of the

Philippine Government use NEW TAX LAWS to incentivize investors,
both local and foreign, into opening new business(es), or into
expanding their existing business(es) in the Country? Cite at least
three. Be specific with your proposed Tax provisions. Exclude dole-
outs and existing income tax holidays.
The legislative branch may increase the de minimis value from

P10,000.00 to P50,000.00 considering the inflation in our country brought
about by the pandemic and the Russia-Ukraine war.
For the first three (3) years, the expatriates of the new businesses, other
than those employed in the regional or area headquarters of
multinational companies, regional operating headquarters of
multinational companies, offshore banking units, and petroleum service
contractor and subcontractors, may be taxed at lower rates, i.e. 15% of
gross compensation income, than the regular income tax rates given to
resident aliens in the Philippines.
5. In this time of COVID-19 pandemic, would you rather push for the re-
opening of business establishments, or would you rather the people
quarantine themselves to avoid the further spread of the virus?
Explain why. What factors did you considered?
I would certainly push the opening of business establishments in order

to help our economy recover. The financial challenges that Filipinos
have been suffering since March 2020 are already too much to handle
which, for me, are even worse than suffering from the virus. Due to
closure of their business, a lot of businessmen have experienced
depression, and worse, some have committed suicide.
But if we open business establishments, both employers and employees
would have income to sustain their needs, including medicines and
vitamins to fight the virus. Besides, the government has no other way to
extend financial help to the business owners.

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AGOSILA, MAUREEN THERESE G.

LEGAL AND TAX ASPECTS OF BUSINESS ORGANIZATIONS

1. Cite at least three methods CURRENTLY used by the Philippine

 Through the Corporate Recovery and Tax Incentives for

2. In your assessment, are these CURRENT methods effective or not?

Another aspect to improve is the accessibility to hotline numbers and

4. In the aspect of taxation, how can the Legislative branch of the

The legislative branch may increase the de minimis value from

I would certainly push the opening of business establishments in order

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