Business Incentives for OFWS Act

oriente TWENTIETH CONGRESS OF THE ) REPUBLIC OF THE PHILIPPINES First Regular Session 25 JUL 21 A10:35 SENATE RECLIVED S. No. Introduced by Senator FRANCIS N. PANGILINAN AN ACT GRANTING BENEFITS AND INCENTIVES TO OVERSEAS FILIPINO WORKERS INVESTING IN BUSINESS IN THE PHILIPPINES EXPLANATORY NOTE According to the Bangko Sentral ng Pilipinas (BSP), the cumulative cash remittances in 2024 from Overseas Filipino Workers (OFWs) amounted to $34.49 billion or around P2.23 trillion. The BSP highlights the benefits of remittances as they serve as a "catalyst for economic activity in supporting growth and development in the receiving country." Remittances can be utilized to bring more benefits through investments, one of those comes in the form of business ventures. At present, the government has programs that support aspiring entrepreneurs to enable ordinary Filipinos in the Philippines to become productive business owners. However, there is no program that grants OFWs benefits and incentives when they choose to invest in businesses in the Philippines. This bill seeks to combine financial literacy programs and capacity building seminars on entrepreneurship and investment. Furthermore it seeks better incentives for OFWs to spur local development and yield higher impact to the economy.

In view of the foregoing, the approval of this bill is earnestly sought. FRANCIS N. RANGILINAN Senator

ottier si TWENTIETH CONGRESS OF THE ) First Regular Session JUL 21 A10:35 SENATE RECLA S. No. 732 Introduced by Senator FRANCIS N. PANGILINAN AN ACT GRANTING BENEFITS AND INCENTIVES TO OVERSEAS FILIPINO WORKERS INVESTING IN BUSINESS IN THE PHILIPPINES Be it enacted by the Senate and the House of Representatives of the Philippines in Congress assembled:

SECTION 1. Title. - This Act shall be known as the "Business Incentives for OFWS

2 Act. "

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

times, the welfare of its citizens whether in the country or overseas. Further, the State recognizes the significant contribution of Overseas Filipinos Workers to the national economy through their foreign exchange remittances 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 for the country. Pursuant to these policies, 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 migrants 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 contributed 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 Workers- 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 on 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 the registration provided for in Section 5 hereof. b. Business Enterprise - 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 is essentially carried out through licensed professionals, likewise in connection with the exercise of their profession. c. OFW-owned Business Enterprise - a business enterprise that falls under one of the following categories: (i) a sole proprietorship owned by an OFW; (ii) a partnership, more than fifty (50) percent of the capital of which was contributed by one or more partners who are OFWs; or (iii) a stock corporation, more than fifty (50) percent 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 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 benefit or tax exemption granted to the enterprise by any other law. 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 enterprise may

also avail of the following incentives: a. Fifty (50) percent reduction on real property taxes imposed on real property used 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; 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 11 for a period of five years following registration.

Sec. 6. Eligibility of OFW-owned Business Enterprises. - To qualify for the

13 benefits and incentives provided to OFW-owned business enterprises under this Act, 14 a business enterprise must fall under one of the following categories: (i) a sole proprietor owned by an OFW; (ii) a partnership, more than fifty (50) percent of the capital of which was contributed by one or more partners who are OFWs; or (li) a stock corporation, more than fifty (50) percent of the outstanding capital stock of which is held by one or more OFWs.

Sec. 7. Registration and Issuance of Certificate. - To qualify for the benefits and

20 incentives under this Act, a business enterprise must apply for registration with the 21 Bureau of Internal Revenue (BIR) as an OFW-owned business enterprise. Any such 22 application shall be processed by the BIR free of charge within fifteen (15) working 23 days upon submission of complete documents as provided in Section 8 of this Act. Otherwise, the OFW-owned business enterprise shall be deemed registered.

Sec. 8. Documentary Requirements. - The BIR shall require an OFW-owned

business enterprise to submit the following requirements in its application for the 27 Certificate of Registration: a. Certificate from the Philippine Overseas Employment Administration (POEA) or the Overseas Workers Welfare Administration (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 microenterprises as defined herein, 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 the application.

Sec. 9. 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 Filipino Overseas (CFO), the OWWA, and the National Reintegration Center of OFWs (NRCO) shall institutionalize the conduct of financial literacy programs and capacity building seminars on entrepreneurship and investment programs for Overseas Filipinos Workers. Provided, That in the conduct of pre-employment/pre-departure orientation seminars, post-arrival/reintegration seminars, the financial literacy programs shall 22 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 information dissemination on the benefits and program provided for in this Act.

Sec. 10. Fraud or Misrepresentation. - Any business entity found to have

committed fraud or misrepresentation for the purpose of qualifying for the benefits 29 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, 32 criminal or civil liability under existing laws.

Sec. 11. Non-Transferability. - The benefits provided in this Act cannot be

2 transferred to any other person, association or business entity.

Sec. 12. Cessation of Operations or Retirement of Business. - Any enterprise

4 registered hereunder that retires or otherwise ceases its business operations shall 5 thereupon be excluded from the coverage of this Act. Within thirty (30) days 6 therefrom, the enterprise shall report the fact of such retirement or cessation to the 7 BIR, which shall then cancel the enterprise's Certificate of Registration.

Sec. 13. Implementing Rules and Regulations. - The BIR in coordination with

9 POEA, DTI, and SEC shall promulgate not later than sixty (60) days upon the effectivity 10 of this Act the necessary rules and regulations for its effective implementation.

Sec. 14. Separability Clause. - If any provision of this Act is declared invalid or

unconstitutional, the other provisions not affected by such declaration shall remain in full force and effect.

Sec. 15. Repealing Clause. - All laws, executive orders, administrative orders,

and rules and regulations inconsistent with this Act are hereby repealed or amended accordingly.

Sec. 16. 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. Approved,