July 27, 2019 at 07:10 pm
Manila Standard Business
P&A Grant Thornton, one of the country’s top auditing firms, said eight new laws passed during the 17th Congress will have a major impact on the cost of doing business in the Philippines.
“The fiscal burden for Philippine corporations varies depending on their business activities and registration. There are generous incentives alongside relatively high income tax rates, but reforms underway can definitely be a welcome development particularly as they emphasize ease of compliance,” said Maria Victoria Españo, chairperson and CEO of the local auditing firm.
She said among the eight new laws that could have a far-reaching impact on Philippine businesses is the Tax Amnesty Act (Republic Act No. 11213) which offers businesses with long-overdue tax liabilities a clean state—the first-ever amnesty on delinquencies in the country. The tax amnesty would allow businesses with delinquencies to pay only at least 40 percent of the tax assessed.
Second is the National Payment Systems Act (RA No. 11127) which requires payment system providers—which may include banks, credit card companies and online payment platforms—to seek prior authorization to operate from the Bangko Sentral ng Pilipinas.
This is expected to pave the way for the adoption of electronic receipts, invoices, digital signatures and boost digital payments in the government and private sector.
Telecommuting Act (RA No. 11165) remains voluntary for employers to offer telecommuting as a work option, but employers still have to pay full benefits and possibly even shoulder or subsidize the telecommunications cost of their employees, Españo said. A
Under the law, the terms and conditions for telecommuting should be mutually agreed upon by the employer and the telecommuting employee. Companies, however, have to provide access to company information and opportunities for their employees to meet with coworkers regularly.
The implementing rules and regulations from the Department of Labor and Employment provide a list of the contents of an employer’s telecommuting policy or agreement. “While this is a noteworthy development, the agency could provide more specific guidelines,” said Españo.
Fourth is the Social Security Act of 2018 (RA No. 11199) which mandates an increase in monthly contributions from 2019 to 2025, with varying rates vary every year. For accounting professionals, it is important to stay up-to-date on the applicable rates, said Españo. For human resource and payroll professionals, it is crucial to keep abreast of the increase in monthly SSS contributions since it falls under their responsibility, she added.
Fifth is the 105-Day Expanded Maternity Leave Law (RA No. 11210) which requires both government and private offices to give mothers 105 days of paid maternity leave. With employers having to provide full pay during the maternity leave and even grant additional days, depending on the circumstances, the cost of ensuring business continuity and possibly hiring temporary staff becomes steep, said Españo.
“Small businesses specifically bear the brunt as they potentially lack the human capital or financial resources to shoulder the long-term absence of female employees,” she said.
The New Central Bank Act (RA No. 11211) widens the BSP’s industry coverage to include money service businesses, credit-granting businesses as well as payment system operators. It also gives the BSP additional power to slap administrative and criminal sanctions as well as increased fines on erring financial services institutions, from a ceiling of P30,000 a day for every violation to P1 million “for each transactional violation.”
Seventh is Revised Corporation Code of the Philippines (RA No. 11232) which is a part of government efforts to ease the way of doing business in the country. The revision to the 38-year-old Corporate Code now permits forming one-person corporations or companies with only one stockholder instead of a minimum of five, making it easier for entrepreneurs to establish their own businesses. It also allows a perpetual corporate term for existing and future corporations, unless specified in the company’s articles of incorporation.
The new code also encourages using technology for corporate filing, stockholder meetings and board meetings, making it easier to administratively comply with the requirements of the Securities and Exchange Commission.
Finally, the Energy Efficiency and Conservation Act (RA No. 11285) is now a must for businesses, especially for automotive and real estate industry players. The new law paves the way for the employment of certified energy conservation officers, certified energy managers, energy service companies and energy labels. “This is welcome news for companies whose products or services seek to provide energy efficiency to end-users,” Españo said.
Despite the passage of these new laws, the road to implementing them can still be long and arduous. Españo cited RA No. 11127 or the National Payment Systems Act that mandates the BSP as the oversight body for all payment systems. While the law was enacted on October 30, 2018, the IRR is still in the draft stage and has yet to be issued by the BSP.
“The primary challenge is usually the long wait between the effectivity date and the release of the IRR,” she said.