SDCA Journal of Accountancy

Abstract

The pandemic brought a significant change to different business industries around the world. One of the most affected sectors in this crisis is micro, small, and medium enterprises (MSMEs). Due to the risk of spreading the virus within the workplace and the limited number of customers, these businesses were forced to temporarily cease their operations. Having limited resources, such as working capital, the prolonged closure of its operation brought serious financial losses, resulting in temporary closures, the retrenchment of employees, and a decrease in their productivity. Companies had to open up their reserved funds to continuously operate despite the pandemic. Other arrangements were also made to minimize the risk of exposing the workers to the virus. Several measures were implemented to support MSMEs and help them bounce back to their active operations. The recent enactment of tax reform is one of the measures expected to help small businesses lessen the negative impact of the pandemic. It provides for lower tax rates and higher tax exemptions for different sectors. Although it is expected that the tax relief will lessen the source of government revenue, this tax reform aims to offset the loss by increasing investments, employment, and active business operations. This study aims to analyze the impact of the tax reform on small establishments in the midst of the crisis. The salient provisions of the reform programs will be compared to the previous tax laws and will be applied to the data gathered. With the information collected, the study will provide a better understanding of the effects of tax reform on the financial performance of MSMEs.

Keywords: Micro, small and medium enterprises (MSMEs); Pandemic; Tax reform.