Chapter 5

SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

The aim of this chapter is to present the conclusions drawn from the results of the

analysis of the questionnaires and interviews and then make recommendations for further

research.

Summary

This research is all about the awareness of Micro, Small and Medium Enterprises

on the impact of Tax Reform for Acceleration and Inclusion Law. The hypothesis of this

study is there is no significant relationship between the profile of MSMEs and their level

of awareness on the impact of TRAIN law. Necessary activities were done to gather an

enough amount of important data to prove the hypothesis. For the statistical treatment of

data gathered and collected, the frequency count and percentage distribution were used.

Majority of the respondents that participated are managers of the shop and the

reason behind this result is because they are ultimately responsible for the day-to-day

operation (or management) of a retail store. They showed abundant interest on answering

and providing the necessary information for this study. Most of the MSMEs who became

this research’s subject has an average gross sales of P100,000 to150,000, taxable income

ranging from P25,000.00 to P50,000.00 and a net asset of P3,000,000 and below.

The results on profile of the 93 Micro, Small and Medium Enterprises

respondents in Dagupan City showed that most of them has a business type of “other

service activities” which includes commercial, industrial, or professional activities. Their

capital in peso has an amount ranging from P100,000 to 500,000 and years of operation

of three to five years. It is clearly seen that taxable income, capital in peso, net asset and

gross sales are directly proportional with each other. The increase of one will also be an

increase to other variables.

Since the TRAIN law was recently implemented by the present administration in

the Philippines, the first objective of this research is to find the effect of the implemented

law to the stability and profitability to Small Retail Shops. There is a big difference

between the respondents who agreed and disagreed about their level of awareness on the

newly implemented TRAIN Law. One objective of this research is to find the link

between the compliance of the taxpayers, specifically the small retail shop owners, and

their unawareness of the taxes mandated to them.

There is a small difference between the percentage of respondents who are well

knowledgeable in terms of what taxes they pay, how they are going to pay and how these

taxes affect how they run their business. The result showed that majority of them

searched or inquired on tax mandates to businesses before operating the business. And

this is important because if you are operating your business and ignorant that you need to

register your business and pay taxes annually, failure to comply will have you pay

penalties. But some business owners don’t personally know this because according to

some of them, they assigned someone to the job for them like they hire bookkeepers or

expert in that area.

A majority of respondents agreed that one of the reason for unfamiliarity on

TRAIN Law is the lack of information coming from the management. One of the
objectives of the Train Law is to simplify the processes and reduce the complexity of

taxes here in the Philippines. But according to our results, many still find tax complex.

But, contrary to this, many also said that the unawareness came from the lack of concern

of the business owners. So many are ignorant, because they chose not to know about it at

all or give it a chance to be understood. From the recent webinar held by the Junior

Philippine Institute of Accountants, Phinma University of Pangasinan, the Bureau of

Internal Revenue RDO004 staffs together with their team supervisor, they told that their

office is conducting free seminars for those who are interested in understanding what are

the processes of registering and the obligations of the taxpayers explained in the simpler

way possible. We can infer that from these results, the management are lacking in

notifying their taxpayers of their programs, and people lack the curiosity in this topic.

From this results, the people, majority of the respondents agreed that the

authorities from Department of Trade and Industry of Bureau of Internal Revenue should

initiate giving out or handing out booklets or pamphlets that will explain the processes

and their obligations as a taxpayer.

Summing up, the reason for the unawareness of the small retail shop owners is

because the authorities are still lacking in informing their taxpayers and engaging people

that it is vital to be knowledgeable in the taxes they pay and its processes. But some of

the shop owners have their own bookkeepers so some of them don’t feel the need to

understand the tax mandates.

On the second objective, the result showed that here is a small difference between

the percentages of MSMEs who said that their profit have increased or decreased after the
implementation of TRAIN law. Some MSMEs experienced an unstable income but most

of them confirmed that TRAIN law helped them to have a higher annual profit. This is an

indication that this law affects the profitability of MSMEs in diverse ways because they

differ on the products they sell, meaning that some goods became a little expensive and

or cheaper thus affecting their income and retailing performance.

In terms of compliance, the outcome of this research correspondingly showed that

MSME owners are in full recommendation that the TRAIN law must be permanently

implemented because according to them the tax mandate exercised to their city is

reasonable. But on the other hand, many MSME owners also conveyed that taxes are still

considered as a burden and majority of them are paying their taxes voluntarily not

because of public pressure but because of the applied penalties that they might have if

they will not comply. A large amount of respondents also claimed that their tax

compliance is proportional to the benefits they gain from the government. This leads

them to admit that they cannot condemn anyone who is making tax evasion as a practice.

According to the result of this research, even after the implementation of TRAIN

law, tax mandates is still benefiting the rich more than the average earners like them. It

seems like the outcome contradicts each other but the link between these results means

that TRAIN law became very helpful for other “smaller shops” who has an income of

P250,000.00 and below because they are completely exempted in paying personal income

tax and this aid from the government should not be questioned. But to MSMEs who are

known to be an “average earners”, the benefit is not equally distributed to them. They

believe that their shops are just earning an enough amount for living and they are still
responsible to pay personal income tax. This proposes that the TRAIN law should still

exist but needs some necessary amendments that will exclusively help the smaller MSME

owners as well.

It is said that TRAIN law simplified the system and made it fairer and more

equitable by restructuring the Personal Income Tax (PIT), removing unnecessary Value

Added Tax (VAT) exemptions, and adjusting the excise tax rates on petroleum products

and automobiles. And accurately, majority of the MSME owners think that yes, the

implementation of TRAIN law is created for the benefit of smaller shops, but the thing is,

it is not successful in reaching its objective. This result is supported by their answer that

TRAIN law is not evident to Dagupan City.

Lastly, the researchers is finding the connection between the tax mandates and the

decision making of the owners in terms of setting their prices, is it affecting the quality of

their products and choosing the kind of products they sell. Referring to the results,

majority agreed that the tax mandates affects their prices. When the taxes they are paying

is too high, as it is considered as expenses of the business, their prices are affected too

because their profits are affected if they will not set their prices higher.

Many said that it doesn’t affect the quality of the product they sell, they opt to

maintain the standard quality of their product so that their patrons will still buy to them.

In terms of choosing the products they sell, majority agreed that they choose what

products they should sell because some products have higher taxes to pay. So for many

businesses, they prefer to choose products that will cost them lesser tax to pay.
 In summary using the correlation formula, the hypothesis is proved that there is

no Significant Relationship between Profile of the Respondents and Level of Awareness

on the Impact of TRAIN Law. But there are two variables that disproved the hypothesis;

there is a significant Relationship between Type of Business and Unawareness on TRAIN

Law due to Management and there is a significant Relationship between Years of

Operations and Respondents should have a copy of TRAIN Law.

Recommendations

In the light of the significant findings and conclusion drawn, the following

information are offered:

The researchers recommends the distribution of guidelines in TRAIN Law to the

small retail shop is beneficial and must be implemented.

The researchers recommend that MSMEs should consider the effects of Tax

mandates of Train Law in establishing or continuing business. It must be routinely

exercises in order to test the profitability of the commerce. The researchers also

recommend that the MSME owners should know the importance of Train law with its

advantages and disadvantages and how does it really affects them.

On conducting this study, the researcher noted that time and our situation right

now, the pandemic is the major limiting factor. Given the nature of the study,

confidentiality hinders the researchers also to gather very important details. The

researcher asserted that small retail shop owners are very liable to unforeseen social
dynamics and therefore if the time frame of the study is prolonged findings are likely to

be affected by unexpected events. With this reason, the researcher recommends that

further studies should be carried out in other City Councils and Municipalities in the

country. It would be insightful if such studies cover wider areas of the country and

produce much more accurate findings.

Lastly the researchers recommend that future researchers who will conduct the

same or similar study from this should have a margin of error of 5% instead of 10% to

further insure its accuracy.