WHAT IS BARANGAY MICRO BUSINESS ENTERPRISE/ BMBE?

QUESTION: CAN WE RUN A BUSINESS WITHOUT PAYING INCOME TAX, LEGALLY?

ANSWER: YES

QUESTION: HOW?

ANSWER: REGISTER AS A BARANGAY MICRO BUSINESS ENTERPRISE (BMBE)

REPUBLIC ACT 9178, BARANGAY MICRO BUSINESS ENTERPRISES ( BMBE’S) ACT OF 2002

WHAT IS THIS LAW ABOUT?

The BMBE’s Act of 2002 encourages the formation and growth of Barangay Micro Business Enterprises by granting them incentives and benefits.

WHAT ARE THE BENEFITS AND INCENTIVES OF REGISTERED BMBE’S?   

1.      Income tax exemption from income arising from the operations of the enterprise.

2.       Exemption from coverage of the Minimum Wage Law BUT BMBE employees will still receive the same social security and health care benefits like other employees.

3.       Priority to a special credit window set up specifically for financing requirements of BMBE’s

4.       Technological transfer, production and management training, and marketing assistance programs for BMBE’s beneficiaries.

WHAT IS BARANGAY MICRO BUSINESS ENTERPRISE (BMBE)?

Under Republic Act No. 9178 or the BMBE’s Act of 2002, a BMBE is referred to as any business entity or enterprises engaged in the production, processing or manufacturing of products or commodities, including agro-processing , trading and services whose total assets excluding land, shall not be more than P 3 million. Such assets shall include those arising from loans but not the land on which the plant and equipment are located.

SO, what exactly is a MICRO BUSINESS?

A micro business or enterprise is defined as any business activity or enterprise engaged in industry, agribusiness and or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of land on which the particular business entity’s office, plant and equipment are situated, must have value not more than three (3) million pesos. ( Sec. 3 of R.A. 9501 otherwise known as the Magna Carta for Micro, Small, Medium Enterprises. (MSMEs)

Total Asset  (exclusive of land) = 2.5 M

Land(where office, plant & equipment are situated ) = 4M

_______________________________

MICRO BUSINESS

Total Asset (exclusive of land)  = 4M

Land (where office, plant & equipment are situated ) = 1M

_______________________________

NOT MICRO BUSINESS

If your business or enterprise falls under micro business category, you MAY  BE eligible to be registered as a Barangay Micro Business Enterprise (BMBE) and enjoy the benefit and incentives of the “ Barangay Micro Business Enterprise Act of 2002 also known as R.A. 9178.

WHERE TO REGISTER AS A BMBE?

BARANGAY MICRO BUSINESS ENTERPRISE  (BMBE’S) CAN NOW REGISTER THEIR BUSINESSES, FREE OF CHARGE , AT THE DEPARTMENT OF TRADE AND INDUSTRY (DTI) THROUGH THE AGENCY’S NEGOSYO CENTERS.

GREAT!!! NEXT QUESTION!!

HOW DOES ONE REGISTER AS A BMBE?

Based on the revised guidelines issued by DTI, any person, natural or juridical, such as partnership, corporation, association and cooperation, having the qualification and none of the disqualifications shall be eligible to register as BMBEs.

A person applying  to be registered as a BMBE shall meet the following qualifications:                   

1.       With an asset f not more than three million pesos ( P 3,000,000.00) excluding land

2.       Engaged in the production , processing or manufacturing of products or commodities, including agro – processing , trading and services.

3.       Registered with the Department of Trade and Industry for Sole proprietorships, for juridical persons: with the Securities and Exchange Commission (SEC)  for corporation, partnerships and associations; and with the Cooperative Development Authority for cooperatives.

Applications for BMBE Certificate of Authority shall be filed with the Negosyo Centers established in each province, city or municipality, or in the DTI offices where Negosyo Centers have not been set up.

The following shall be submitted in support of the duly filled up BMBE application form:

A.      Certificate of Business Name Registration from the Department of Trade and Industry (DTI) or

B.      Certificate of Registration from the Securities and Exchange Commission (SEC) or

C.      Certificate of Registration from the Cooperative Development Authority (CDA).

WHAT IS THE PROCEDURE FOR REGISTRATION?

The applicant shall follow the steps herein enumerated in applying for BMBE Certificate of Authority (CA):

1.       Accomplish and file the application form for BMBE Certificate of Authority;

2.       The DTI , through the Negosyo Center, evaluates the application for purposes of determining the eligibility and qualification as a BMBE;

3.       The DTI after finding the applicant to be eligible and qualified, issues the BMBE Certificate of Authority within fifteen  (15) working days from receipt  of application with complete requirements;  otherwise, the BMBE CERTIFICATE OF AUTHORITY shall be deemed approved ( where in such a cases it becomes ministerial on the part of DTI to issue the BMBE Certificate of Authority).

WHAT IS THE VALIDITY PERIOD OF THE BMBE CERTIFICATE OF AUTHORITY REGISTRATION?

The BMBE Certificate  Authority shall be effective for a period of two (2) years commencing from the date of issuance. The CA may be renewed for the same period of two years (2) and every two years  thereafter subject to the applicant’s continued compliance with the eligibility requirements prescribed by law and DTI DAO No. 16-01 Series of 2016.

HOW MUCH WILL IT COST TO REGISTER?

The registration and issuance of the CA shall be FREE OF CHARGE

HOW CAN A BMBE AVAIL OF THE EXEMPTION FROM COVERAGE OF THE  MINIMUM WAGE LAW?

Once a BMBE is registered and issued with a Certificate of Authority, it is automatically EXEMPTED from the minimum wage law.

FINALLY!!

WHAT ARE THE STEPS IN AVAILING OF THE INCOME TAX EXEMPTION?

The  BMBE registers with the BIR Revenue District Office ( RDO) where the principal office or place of business is located and it’s submission of the necessary documents.

The ff are the documents to be submitted to BIR to avail of Income Tax Exemption:

1.       Copy of the BMBE’s Certificate of Authority

2.       Sworn Statement of Assets of the BMBE and/or its affiliates, supported by pertinent documents

3.       Certified list of branches, sales outlets, places of production, warehouses and storage facilities

4.       Certified list of affiliates

5.       Latest audited Financial Statement or Account Information Form .

WHAT DOCUMENT SHOULD BE FILED WITH BIR BY AN INCOME TAX EXEMPT BMBE?

Instead of an income tax return, an income tax exempt BMBE is required to submit an Annual Information Return. This is filed on or before the 15th day of the 4th month after the close of the

taxable year with an Account Information Form, which contains data from its financial statement and Sworn Statement of Assets Owned and/or Used.

CAN MY INCOME TAX EXEMPTION BE REVOKED?

YES!

YOUR INCOME TAX EXEMPTION CAN BE REVOKED FOR ANY OF THE FF REASONS:

1.       Transfer of place of business

2.       Value of its total assets exceeds P3M

3.       Voluntary surrender of the Certificate of Authority

4.       Death of the registered individual owner of the BMBE; violation or noncompliance with the provisions of R.A. 9178

5.       Merger or consolidation with an entity which is not eligible to be a BMBE

6.       Sale or transfer of the BMBE, if it is a sole proprietorship without prejudice to the transferee applying for registration

7.       Submission of fake or falsified documents;

8.       Retirement from business, or cessation/suspension of operations for one year; and

9.       Making false or omitting required declarations or statements

There you go, STEPS ON HOW TO REGISTER AS A BMBE for you to be exempted from income tax.  Good luck in your business.  We would like to hear from you. Please email us your experience in applying for your Certificate of Authority. Send it to  ione.mejia@gmail.com. Thank you.