Promote development of microfinance NGO in the country – solon


A lawmaker has filed a bill seeking to provide greater financial opportunities to the marginalized sectors by promoting the participation of microfinance institutions in the development of the country.

Rep. Maria Evita Arago (3rd District, Laguna), proponent of House Bill 6655, said microfinance can provide financial assistance and other services to the poor including, but not limited to, savings, insurance and loans.

Arago said microfinance as defined under the bill is a credit and saving mobilization program exclusively for the poor to improve the asset base of household and expand the access to saving the poor.

“It involves the use of viable alternative credit schemes and saving programs including the extension of small loans, simplified loan application procedures, group character loans, collateral-free arrangements, alternative loan repayments, minimum requirements for savings and small denominated saver’s instruments and insurance schemes,” Arago explained.

Arago said the measure will provide the qualified microfinance NGOs with tax incentives that contribute to their institutional growth.

“It is crucial that microfinance institutions be accorded the policy support and framework that would provide them the encouragement to enhance their service to finance deserving individuals or groups,” Arago said.

Arago said it is the declared policy of the State to prioritize the alleviation of poverty in the country.

“It is vital that financial services be made accessible to the disadvantaged in our country.  A liberalized and market oriented economy through entities such as non-government organizations play a significant role in alleviating poverty,” Arago stressed.

Under the proposed “Microfinance NGOs Development Act,” all non-stock, non-profit Bureau of Internal Revenue (BIR) accredited non-government organizations (NGOs) or foundations engaged primarily in the provision of microfinance services are covered by this Act, provided that these NGOs or foundations are qualified to gain a donee institution status.

A donee institution as defined under the bill, is a non-stock, non-profit corporation or non-government organization, to which donations are wholly tax deductible from gross income of the donor or exempt from donor’s tax in accordance with Section 34(h) and 101 of Republic Act 8424 otherwise known as “Tax Reform Act of 1997″.

Arago said to automatically be given a donee institution status, microfinance NGOs or foundation shall be first accredited by the Philippines Council on NGO Certification (PCNC) and the BIR.

Under the bill, a general amnesty on all taxes past due and unremitted, including penalties, as of the date of approval of this Act, shall be granted to non-stock, non-profit BIR accredited microfinance NGOs or foundations.

The Department of Finance (DOF) is mandated to set the guidelines for screening evaluation and approval of tax incentives for microfinance NGOs based on established industry standards for microfinance operations.

Likewise, the DOF shall determine performance criteria which serve as conditions for withdrawing the tax incentives as well as the donee institution status from microfinance NGOs.

Furthermore, it may deputize private sector tertiary organization for assistance in carrying out its functions.

The BIR shall issue a certification of donee institution status, as well as a certificate of tax amnesty/exemption from liability as may be applicable to these NGOs or corporation arms.


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