Senators Push for Broader Tax Exemptions to Support Workers and MSMEs 

Senators are proposing a series of tax reforms aimed at boosting the income of Filipino workers and supporting micro, small, and medium enterprises (MSMEs). Key measures include income tax exemption for bonuses, service charges, and MSME earnings. 

The proposed legislation is part of a broader effort to provide financial relief amid rising costs of living and help businesses recover and expand. 

Highlights of the Proposed Tax Reforms 

Here’s a quick look at what the Senate proposals aim to cover: 

• The Ginhawa Act by Sen. Sherwin Gatchalian 
• Income tax exemption for those earning ₱400,000 or less annually 
• Tax-free bonuses up to ₱150,000 
  (Corrected from an earlier reported figure of ₱250,000.) 
• No income tax on service charges, which are often voluntarily given as tips 
• Tax exemption for: 
• Night differential pay 
• Overtime pay 
• Holiday pay 
  (Extended to include workers earning above the minimum wage) 

“Service charges are voluntary tips given to waiters and should not be taxed,” Gatchalian emphasized. 

• MSME Tax Relief by Senate President Francis Escudero 
  • 3-year income tax exemption for MSMEs 
  • 25% labor cost deduction from taxable income 
  • Reduced optional tax on gross sales from 8% to 5% 
  • Streamlined withholding tax rates: 
  • 1% for goods and property purchases 
  • 2% for services 
• Mandatory credit allocation for MSMEs by all lending institutions for 10 years 

“These reforms will help MSMEs survive, create more jobs, and possibly expand,” said Escudero. 

Why This Matters 

The combined proposals aim to: 

• Increase take-home pay for employees 
• Boost cash flow and access to financing for MSMEs 
• Simplify tax processes and reduce administrative burdens 

For workers, more income means better financial security. For MSMEs, lower tax obligations and easier loan access mean growth opportunities and improved resilience in tough markets. 

What You Can Do Next 

• Employees: Track updates on the Ginhawa Act—your income and bonuses might be taxed less in the future. 
• MSME Owners: Prepare for potential tax breaks and consider how this can support your hiring, expansion, and financing needs. 
• Accountants & HR Teams: Start reviewing compensation structures to comply quickly if these changes become law. 

Stay Tax-Ready with UNA 

At UNA Tax and Accounting Services, we stay on top of tax changes so you don’t have to. Whether you’re managing payroll, MSME finances, or withholding taxes—we’ve got you covered. 

Book your FREE 15-minute consultation today or email us at sales@una-acctg.com  
 

Source: ABS-CBN