As part of proposed legislation which targets the development of microfinance institutions (MFIs), the Microenterprise Development Institution Bill contains a provision which would replace all local and national government taxes on MFIs with a single 2% gross income tax. The reduced income tax provision would be available to only accredited MFIs and therefore would exclude other entities that operate in the microfinance sector, including thrift banks, rural banks and cooperatives. Fiscal authorities, such as the Department of Finance (DOF), have reacted with ambivalence towards the proposed income tax reduction as it would result in varying tax regimes for different industries, cause administrative burdens for the Bureau of Internal Revenue and likely cause other entities that operate in the microfinance sector to jockey for the same tax treatment.

About Department of Finance (DOF):

Established in 1897 by the Philippines Revolutionary Government, the Department of Finance (DOF) formulates the nation’s fiscal policy.  Its functions include: to supervise the national public debt, to supervise all revenue operations of government entities and to manage the fiscal resources of the national government. DOF website: http://www.dof.gov.ph/

Bibliography:

http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Philippines+Department+of+Finance+%28DOF%29

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[1] Original article: http://www.philstar.com/Article.aspx?articleId=530026&publicationSubCategoryId=66