Business Incentives for OFWS Act

TWENTIETH CONGRESS OF THE Senate REPUBLIC OF THE PHILIPPINES Office of the snitcharp First Regular Session SENAS 25 DEC -2 P3:33 S. No. — 10t RECEIVED BY. Introduced by Senator Camille A. Villar AN ACT PROVIDING INCENTIVES, BENEFITS AND TRAININGS TO OVERSEAS FILIPINO WORKERS INVESTING IN BUSINESS IN THE PHILIPPINES EXPLANATORY NOTE Overseas Filipino Workers' (OFWs) foreign exchange remittances have greatly contributed to the Philippine economy. According to the report by the Bangko Sentral ng Pilipinas, OFWs' personal remittances grew by 3.0% to an all-time high of USD3.73BILLION in December 2024, and a full-year level of USD38.3BILLION.1 Beyond record-breaking reports, however, OFWs are not without sacrifices. They left behind their families, endured homesickness and at times, substandard working conditions just to have money to remit to their loved ones. A lot of them would prefer to come home to the Philippines and try their chances at employment or in business. This bill gives former OFWs the benefits and incentives to engage in business and invest in the country. The measure endeavors to exempt OFW- owned business enterprises from their initial income tax, grants reduced real property tax, and tax and duty-free benefits on importation of raw materials, capital equipment, machineries and spare parts exclusively used in the operation of their business. They are also be given preferential access to financing from government financial institutions at rates below the market rates. 1 https://www.bsp.gov.ph/SitePages/MediaAndResearch/MediaDisp.aspx?ltemld=7426

Ultimately, this bill hopes to give appreciation to our modern-day heroes and the sacrifices they made through the course of their career abroad. Therefore, the approval of this bill is earnestly sought. Collies aar CAMILLE A. VILLAR

Sciate TWENTIETH CONGRESS OF THE Offier of the Buretary REPUBLIC OF THE PHILIPPINES First Regular Session DEC -2 P3:33 SENATE S. No. — 1563 RECEIVED BY: Introduced by Senator Camille A. Villar AN ACT PROVIDING INCENTIVES, BENEFITS AND TRAININGS TO OVERSEAS FILIPINO WORKERS INVESTING IN BUSINESS IN THE PHILIPPINES Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Short Title. - This Act shall be known as the "Business

2 Incentives for OFWs Act".

Sec. 2. Declaration of Policy. - It is the policy of the State to promote, at

4 all times, the welfare of its citizens whether in the country or overseas. Further, 5 the State recognizes the significant contribution of Overseas Filipino Workers 6 (OFWs) to the national economy through their foreign exchange remittances 7 and their valuable role as a partner of our nation's progress. At the same time, the State recognizes the role of business enterprises for employment generation resulting in economic growth and a strong development foundation 10 for the country. It is likewise hereby declared to be the policy of the State to pioneer and develop innovative means to provide incentives and other benefits to returning OFWs who shall engage in business and invest in the Philippines, in order to effectively aid their reintegration through the productive use of remittances and at the same time contribute towards the development of national and local economies and skills-transfer.

Sec. 3. Definition of Terms. - As used in this Act the following terms shall

mean:

a) "Overseas Filipino Worker (OFW)" is a person who is to be engaged, is engaged or has been engaged in a remunerated activity in a State of which the person is not a citizen or on board a vessel navigating the foreign seas other than a government ship used for military or non-commercial purposes or on an installation located offshore or in the high seas: Provided, That one whose employment overseas has ceased, by reason of expiration of such contract or otherwise, shall still be considered an OFW under this Act if the cessation took place not more than five (5) years before the filing of an application for registration provided for in Section 8 hereof; b) "Business Enterprise" is a duly registered business engaged in industry, agribusiness and/or services, whether a single proprietorship, cooperative, partnership or corporation. A business engaged in services shall exclude those rendered by (i) natural persons who are duly licensed by the government after having passed a government licensure examination, in connection with the exercise of their profession, and (ii) juridical persons such as partnerships or corporations engaged in consultancy, advisory and similar services where the performance of such services are essentially carried out through licensed professionals, likewise in connection with the exercise of their profession. c) "OFW-owned Business Enterprise" is a business enterprise that falls under one of the following categories: (i) a Sole Proprietorship owned by an OFW; ii) partnerships, more than fifty percent (50%) of the capital of which was contributed by one or more partners who are OFWs; or i) a stock corporation, more than fifty percent (50% of the outstanding capital stock of which is held by one or more OFWs.

Sec. 4. Tax Exemption. - An OFW-owned business enterprise shall be

2 exempt from the payment of income tax for a non-extendable period of five (5) years following registration. This exemption is without prejudice to any other 4 benefit or tax exemption granted to the enterprise by any other laws. All Local Government Units (LGUs) are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt an OFW-owned business enterprise from local taxes, fees and charges.

Sec. 5. Other Benefits and Incentives. - An OFW-owned business

9 enterprise may also avail of the following incentives: a) Fifty Percent (50%) reduction on real property taxes imposed on real property for the operation of the OFW-owned business enterprise; b) Tax and duty-free importation of raw materials, capital equipment, machineries and spare parts exclusively used in the operation of the OFW-owned business enterprise: Provided, that the OFW business shall not sell or re-sell the said equipment for a period of five (5) years from the time the exemption was granted; or c) Preferential access to financing from government financial institutions at rates below the market rates; Provided, That an OFW-owned business enterprise may avail of these incentives for a period of five (5) years following registration.

Sec. 6. Access to Credit. - The Overseas Workers Welfare Administration

(OWWA) shall set aside a portion of its fund for reintegration for the purpose of establishing a credit facility for the start-up or expansion of an OF-owned business enterprise. The credit facility shall be managed by the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP).

Sec. 7. Eligibility of OFW-owned business enterprises. - To qualify for

the benefits and incentives provided to OFW-owned business enterprises under this Act, a business enterprise must fall under one of the following categories: i. A Sole Proprietorship owned by an OFW;

ii. A Partnership, more than fifty percent (50%) of the capital of which was contributed by one or more partners who are OFWs; or iii. A Stock Corporation, more than fifty percent (50%) of the outstanding capital stock of which is held by one or more OFWS.

Sec. 8. Registration and Issuance of Certificate. - To qualify for the

benefits and incentives under this Act, a business enterprise must apply for registration with the Bureau of Internal Revenue (BIR) as an OFW-owned business enterprise. Any such application shall be processed by the BIR free of charge within fifteen (15) working days upon submission of complete documents as provided in Section 9 of this Act. Otherwise, the OFW-owned business enterprise shall be deemed registered.

Sec. 9. Documentary Requirements. - The BIR shall require an OFW-

owned business enterprise to submit the following requirements in its application for the Certificate of Registration: a) Certificate from the Philippine Overseas Employment Administration (POEA) or the OWWA that the persons seeking registration hereunder of their business entity or enterprise are OFWs as defined in Section 3(a) of this Act or a copy of their overseas employment contract duly approved by the POEA; b) Taxpayer Identification Number (TIN); c) Documents of registration as a business entity or enterprise issued by the appropriate government agencies such as the Securities and Exchange Commission (SEC) for corporations and partnerships and the Department of Trade and Industry (DTI) for sole proprietorships; Provided, That in the case of micro enterprises as defined under applicable laws, registration with the office of the municipal or city treasurer shall be deemed sufficient compliance with this requirement; d) Articles of Incorporation in the case of new corporations; e) Partnership Agreement in the case of new partnerships;

f) General Information Sheet (GIS) in the case of existing corporations and partnerships. No other document shall be required for the processing of this 4 application.

Sec. 10. Financial Literacy Program for OFWs; Information

Dissemination. - To ensure that the incentives and benefits provided for under this Act shall be effectively harnessed and maximized, the Commission on Filipinos Overseas (CFO), the OWWA, and the National Reintegration Center of 9 OFWS (NCRO) shall institutionalize the conduct of financial literacy programs 10 and capacity building seminars on entrepreneurship and investment programs for OFWs: Provided, That in the conduct of pre-employment/pre-departure orientation seminars, post-arrival/reintegration seminars, the financial literacy programs shall likewise be incorporated as an integral part thereof: Provided, further, That the Department of Foreign Affairs (DFA), CFO, POEA, OWWA, and all other relevant government agencies with respect to overseas Filipinos, including all local government units, shall extensively carry out information dissemination on the benefits and program provided for in this Act.

Sec. 11. Business-Oriented Capacity-Building Training for OFWs. - The

Department of Labor and Employment (DOLE), in coordination with the DTI, shall provide training for OFWs who are seeking to set up their own businesses. The training shall focus on the following areas: 1) Business conceptualization and the conduct of feasibility studies; 2) Registration and all other administrative matters related to creating one's own business; 3) Safe and sustainable business financing; 4) Business promotion, advertising and marketing; and 5) Service or product delivery. The training shall assist OFWs in finding and connecting with mentors in the business sector, particularly those already established in the specific industry that an OFW would want to venture. Priority shall be given to those OFWs with no background in establishing or operating their own business.

Sec. 12. Fraud or Misrepresentation. - Any business entity found to have

committed fraud or misrepresentation for the purpose of qualifying for the benefits hereunder shall be immediately disqualified as a beneficiary hereof and its Certificate of Registration cancelled, without prejudice to the assessment and collection of back taxes for the period corresponding to its exemption, as well as to any administrative, criminal or civil liability under existing laws.

Sec. 13. Non-Transferability. - The benefits and incentives provided in

this Act cannot be transferred to any other person, association or business 9 entity.

Sec. 14. Cessation of Operations or Retirement of Business. - Any

enterprise registered hereunder that retires or otherwise ceases its business operations shall thereupon be excluded from the coverage of this Act. Within thirty (30) days therefrom, the enterprise shall report the fact of such retirement or cessation to the BIR, which shall then cancel the enterprise's 15 Certificate of Registration.

Sec. 15. Implementing Rules and Regulations. - The BIR in coordination

with the POEA, DTI, and SEC shall promulgate, not later than sixty (60) days upon the effectivity of this Act, the necessary rules and regulations for its effective implementation.

Sec. 16. Separability Clause. - If any provision of this Act is subsequently

declared invalid or unconstitutional, other provisions hereof which are not affected thereby shall remain in full force and effect.

Sec. 17. Repealing Clause. -All laws, presidential decrees, executive

order, issuances, presidential proclamations, rules and regulations or parts thereof which are contrary to and inconsistent with any provisions of this Act are hereby repealed, amended or modified accordingly.

Sec. 18. Effectivity Clause. - This Act shall take effect fifteen (15) days

after its complete publication in the Official Gazette or in two (2) newspapers of general circulation in the Philippines. Approved,