Thousands of women entrepreneurs did a historic act on Wednesday when they gathered at the Senate to ask lawmakers not to repeal the Microfinance Act which grants lower tax to nongovernment organizations (NGOs) engaged in small-scale business.

About 10,000 microentrepreneurs, mostly women, held a rally to appeal to President Rodrigo Duterte and the senators to save Republic Act (RA) 10693 from being repealed because this would be “detrimental to the microenterprise sector.”

They expressed concern over the impact on the microenterprise sector of House Bill 304 (Passive Income and Financial Intermediary or Pifita Bill), which seeks to repeal Section 20 of RA 10693.





The rallyists represent the 6.5-million microfinance members being served by the NGOs operating nationwide and who are part of the Alliance of Philippine Partners in Enterprise Development (Append Inc.) and Microfinance Council of the Philippines, Inc. (MCPI).

They said the “most important provision in the Act (Section 20) is the preferential tax treatment specifically for NGOs that operate as microfinance for the poor and low-income individuals, wherein a duly registered and accredited microfinance NGO shall pay a two percent tax — in lieu of all national taxes — based on gross receipts from microfinance operations.”

“Taking away this preferential tax treatment will remove the community services that the microfinance NGOs normally provide to their members,” the entrepreneurs said.

If RA 10693 is repealed, it will “deprive the enterprising poor with essential non-financial services but the interest rates they will pay on their microfinance loans will also increase,” they added.

RA 10693 recognizes the work that microfinance NGOs are doing for the past 38 years to foster local enterprise development and assist the government in achieving its goal of poverty eradication.

Prior to the passage of the law in 2015, all microfinance NGOs were required to pay higher taxes.

Append Board Chairman Angel de Leon Jr. said both the microfinance NGOs and the microentrepreneurs benefit from the preferential tax rate under RA 10693 because it translates into more savings.

“This enables them to fulfill their mission in helping the micro-entrepreneurs not only with livelihood loans but with sustained community development services such as values formation, enterprise training, educational assistance, health and social projects, and relief operations,” de Leon said.

Jeng Juan, Append president, said when RA 10693 became a law, the microfinance NGOs “were able to increase the amount spent on community services by P476.6 million, which is 82 percent growth for a three year period.”

“On the other hand, the number of microentrepreneurs reached and the amount of microfinance loans given to the enterprising poor grew by 62 percent and 103 percent respectively,” said Allan Robert Sicat, MCPI executive director.

“The higher the interest rates on borrowings paid by the microentrepreneurs, the lesser income retained, the lesser amount of food on the table and the ability to send their children to school will likewise be affected,” he added.