From the same Philippine senator who authored the Go Negosyo bill comes another proposal in aid of new companies. This is the Senate Bill No. 2217 or “An Act Exempting Start-up Enterprises from Taxes Arising From the First Two Years of Operation” as introduced by Senator Bam Aquino.
What is good about this proposed bill? Well, let the numbers speak for themselves. In a country where micro enterprises—or those with assets of less than PhP3 million—comprise 90 percent of businesses, it does not take much brainpower to figure out that the bill can provide the lifeline to fund-strapped wannabe entrepreneurs.
The Startup Business Bill, in a nutshell, hopes to incentivize new businesses by exempting them from ALL national and local taxes during the first two years of their operation. The bottomline is to “provide incentives and remove constraints to the startup, incubation and development of enterprises.” Let us further break down this sentences into digestible chunks:
- Startup – the bill defines this as “newly registered businesses engaged in industry, agribusiness and/or services, whether single proprietorship, cooperative, partnership or corporation.”
- Incubation – the process of providing a nurturing environment to a new business, be this by providing shared office spaces and services, access to finance, access to experts and mentors and everything else needed to make the startup grow.
- Incubator – long known as either a device used to keep eggs warm before they hatch or an equipment where weak babies are kept to for special care. Similarly, when applied to business, an incubator is either an organization or a facility whose main purpose is to nurture the startup during its infancy stage.
Startup=Tech Companies Only?
The term “startup” has long been associated with tech companies. This does not have to be necessarily so. Startups, aside from having recently set up its operations, connote that they have some potential to grow. Often, they are able to scale up quickly by turning to technology such as internet software or mobile phone apps to solve a business problem, but they do not have to be technology companies.
Thus, Senator Bam’s definition of a startup above implies that it covers all forms of companies as long as they are newly operational. Meanwhile, the Philippine Roadmap for Digital StartUps for 2015 and Beyond of the Information and Communications Technology (ICT) Office – Department of Science and Technology (DOST) gives a more detailed definition of a Philippine startup:
- any business entity that is less than five years old,
- registered with the financial regulatory authorities of any country,
- majority of its team is operating and residing in the Philippines.
- should have at least one (1) founder who is working full time.
In both definitions though, it is clear that the term refers to an entity in any industry. A digital or internet startup, therefore, may just be a subcategory.
The Future of Internet-related Startups
Based on the ICT Office’s definition, there are currently 100 Philippine digital startups (excluding private ones) as of 2015.
An internet-related (or digital) startup, can offer products in any industry. For example, former-startup Level Up pioneered the online gaming in the Philippines, but another former startup, Sulit (now Olx), is engaged in buy and sell. I-Remit, now listed in the Philippine Stock Exchange, offers money transfer services.
The Philippine government aims for digital startups to grow the existing number to 500 by 2020, valued at US$2 billion and with 8,500 highly skilled jobs created.
Of course, part of the goal is to produce the next billion-dollar startup from the Philippines.