4.2 – Minimum Wages and Taxes Concerns of Filipino Entrepreneurs

•Minimum Wage

• Minimum amount of compensation that an employer is required to pay its workers for work performed within a particular time

- Intended to protect employees from unreasonably small wage

National Wages and Productivity Commission (NWPC)

advise the President and Congress on salaries, profits, and growth. Decide by province and sector the minimum wage rates applicable

Wage Rationalization Act (R.A. 6727)

States that there should be different minimum wage rates per region

Migration to Urban Areas

High minimum wage rates in urban areas can create an influx of job seekers from neighboring cities who are seeking opportunities to have a higher paying job

• PROBLEMS IN DIFFERENT MINIMUM WAGE RATES

Fewer Businesses in Other Regions

• A higher minimum wage rate attracts not only job seekers but also business owners

• PROBLEMS IN DIFFERENT MINIMUM WAGE RATES

•Big Businesses

would rather be located in a big city where many people are working and earning than be in other regional municipalities with fewer people due to a higher purchasing power

Taxes

- Compulsory charges by the government to fund its different operations

- Levied on individuals, companies, and the goods people consume

Documentary Stamp Tax

• TYPES OF TAXES (4)

• Tax on papers, instruments, loan agreements, and documentation showing the approval, assignment, settlement, or change of a contract or right

•Donor’s Tax

• TYPES OF TAXES (4)

• Tax on a donation or gift and is imposed on the free transfer of property between two or more persons living at the time of the transfer

Estate Tax

• TYPES OF TAXES (4)

• Tax on the right of a deceased person to transfer their estate at the time of death to their rightful heirs and recipients

•Income Tax

• TYPES OF TAXES (4)

• Tax on personal income

  - Usually levied to employees and entities and is based on respective profit or income

5% tax

250,001 to 400,000 in excess

20%

400,001 to 800,000 in excess

25%

800,001 to 2,000,000 in excess

35%

above 8,000,000 in excess

30%

2,000,001 to 8,000,000 in excess

•Comprehensive Tax Reform Program (TRAIN Law)

• R.A. 10963 or Tax Reform for Acceleration and Inclusion (TRAIN)

• Revision towards a faster, fairer, and more effective taxation system

- Seeks to increase revenues to support the government’s programs and finance investments