A LAWMAKER has filed a bill seeking to exempt micro, small and medium enterprises (MSMEs) from the minimum corporate income tax (MCIT), saying the measure would ease the tax burden on small businesses and help them expand operations amid economic headwinds.
Senate Bill No. 2362 proposes amending the National Internal Revenue Code to exempt qualified MSMEs, as defined under the Magna Carta for MSMEs, from the MCIT, allowing them to retain more capital for business expansion, innovation and job creation.
Senator Mark A. Villar said the proposal aims to support MSMEs, which account for 99.63 percent of all registered business establishments in the Philippines as of 2024. The sector also contributes an estimated 35.7 percent of gross domestic product and employs 63.19 percent of the country’s workforce, making it a major driver of economic activity.
Despite their role in the economy, Villar said many MSMEs continue to face higher production costs, persistent inflation and other economic pressures that have strained their operations.
“Our MSMEs are the backbone of the Philippine
economy. They provide livelihood to millions of Filipinos, fuel local industries, and keep our communities economically active,” Villar said in
a statement.
He said exempting MSMEs from the MCIT would enable them to reinvest more of their earnings into business
expansion, improve productivity and create more jobs.
The proposed measure comes as small businesses continue to recover from rising operating costs and elevated inflation, which peaked at 7.2 percent in April 2026 during the national energy emergency.
If enacted, the bill is expected to improve the competitiveness and resilience of MSMEs by reducing their tax obligations while encouraging investment and entrepreneurship.
“When our small businesses succeed, more Filipinos benefit through new jobs, stronger local economies, and increased opportunities for families,” Villar said, adding that the measure seeks to ensure economic growth reaches more communities nationwide. / KOC