The Barangay Micro Business Enterprise Program (BMBE) or Republic Act No. 9178 of the Department of Trade and Industry (DTI) started way back 2002 which aims to help people to start their small business by providing them incentives and other benefits.
If you have a small business that belongs to manufacturing, production, processing, trading and services with assets not exceeding P3 million you can benefit from BMBE Program of the government.
Benefits include:
If you have a small business that belongs to manufacturing, production, processing, trading and services with assets not exceeding P3 million you can benefit from BMBE Program of the government.
Benefits include:
- Income tax exemption from income arising from the operations of the enterprise;
- Exemption from the coverage of the Minimum Wage Law (BMBE 1) 2) 3) 2 employees will still receive the same social security and health care benefits as other employees);
- Priority to a special credit window set up specifically for the financing requirements of BMBEs; and
- Technology transfer, production and management training, and marketing assistance programs for BMBE beneficiaries.
Here are some Question and Answers regarding BMBE Program of the DTI:
What is the law all about?
The “BMBEs Act of 2002” encourages the formation and growth of barangay micro business enterprises by granting them incentives and other benefits. The Act was signed into law by President Gloria Macapagal-Arroyo on November 13, 2002. Its Implementing Rules and Regulations (IRR) which was issued on February 7, 2003, as DTI Department Administrative Order No. 1, Series of 2003, was published twice in the February 11 and 26, 2003 issues of the Manila Bulletin.
A BMBE is defined as any business enterprise engaged in production, processing, or manufacturing of products, including agro-processing, as well as trading and services, with total assets of not more than P3 million. Such assets shall include those arising from loans but not the land on which the plant and equipment are located. For the purpose of the Act, “services” shall exclude those rendered by any one, who is duly licensed by the government after having passed a government licensure examination, in connection with the exercise of one’s profession (e.g., Accountant, Lawyer, Doctor, etc.).
The DOF Department Order No. 17-04 also provides that, an enterprise can only qualify for registration if it is not a branch, subsidiary, division or office of a large scale enterprise and its policies and business modus operandi are not determined by a large scale enterprise or by persons who are not owners or employees of the enterprise (i.e., franchises).
What is the objective of the law?
BMBEs are essential to the country’s economic development since they effectively serve as seedbeds of Filipino entrepreneurial talent. Thus, the Act primarily aims to integrate micro-enterprises in the informal sector into the mainstream of the economy. Strengthening BMBEs would mean more jobs and livelihood, and a better quality of life for Filipinos.
What are the incentives that BMBEs will be receiving?
Registered BMBEs can avail of the following incentives:
- Income tax exemption from income arising from the operations of the enterprise;
- Exemption from the coverage of the Minimum Wage Law (BMBE). Employees will still receive the same social security and health care benefits as other employees);
- Priority to a special credit window set up specifically for the financing requirements of BMBEs; and
- Technology transfer, production and management training, and marketing assistance programs for BMBE beneficiaries.
- The LGUs are also encouraged to either reduce the amount of local taxes, fees, and charges imposed or exempt the BMBEs from local taxes, fees, and charges.
What are the agencies mandated to provide assistance in the areas of technology transfer, production and management training, marketing assistance?
The agencies concerned are the following:
- Department of Trade and Industry (DTI)
- Department of Science and Technology (DOST)
- University of the Philippines Institute for Small Scale Industries (UP-ISSI)
- Cooperative Development Authority (CDA)
- Technical Education and Skills Development Authority (TESDA)
- Technology and Livelihood Resource Center (TLRC)
What are the funding agencies designated to set up the special credit window for registered BMBEs? The following government financial institutions will provide a special credit window for BMBEs:
- Land Bank of the Philippines;
- Development Bank of the Philippines;
- Small Business Guarantee and Finance Corporation;
- People’s Credit and Finance Corporation;
- Quedan and Rural Credit Guarantee Corporation;
- Government Service Insurance System (for members only); and
- Social Security System (for members only)
Who may avail of the special credit window for BMBEs?
Only registered BMBEs may take advantage of the credit facility and other benefits granted under the law. This means that the enterprise must first have a Certificate of Authority which authorizes it to operate as a BMBE.
How does one register as a BMBE?
Based on the guidelines issued by the DTI under DTI DAO No. 01-03 and DOF under the DOF D.O. No. 17-04 (as amended by DO No. 31-05) any person, cooperative, or association owning an enterprise that fits the 4) 5) 6) 7) 3 description of a BMBE may register for the first time or renew its registration with the Office of the Treasurer of the city or municipality where the business is located.
Basic requirements for new applicants and for BMBEs applying for renewal of registration:
b. Three passport size ID pictures.
Additional requirements for new applicants:
a. For those with assets worth three hundred thousand pesos (P300,000) and less –
- Registration as a business entity or enterprise from the appropriate government agency (e.g., Securities and Exchange Commission (SEC) registration in the case of corporation, partnership or association; Cooperative Development Authority (CDA) registration in the case of cooperative; Department of Trade and Industry (DTI) business name registration in the case of sole proprietorship); and
- Mayor’s Permit or City/ Municipal Business Permit.
b. For those with assets worth more than three hundred thousand pesos (P300, 000) up to three million pesos (P3, 000,000.00) –
1.a- Registration as a business entity or enterprise from the appropriate government agency (e.g., Securities and Exchange Commission (SEC) registration in the case of corporation, partnership or association; Cooperative Development Authority (CDA) registration in the case of cooperative; Department of Trade and Industry (DTI) business name registration in the case of sole proprietorship); and
b. Mayor’s Permit or City/ Municipal Business Permit.
2. Taxpayer Identification Number (TIN);
3. Certificate of Registration from the Bureau of Internal Revenue (BIR);
4. Mayor’s Permit or City/Municipal Business Permit;
5. Sworn affidavit executed by the sole proprietor or the President of the enterprise, as the case may be, that the enterprise is barangay-based and micro-business in nature and scope;
6. Sworn Statement of Assets and Liabilities supported by pertinent documents;
7. Pictures of the place of business and its assets, other than cash, receivables, nd intangibles;
8. Copy of Loan Contract/s, if any, and duly-notarized Certification of Amortization Payments on the Loan; and
9. Income Tax Return (ITR).
7.3 Additional requirements for the renewal of BMBE registration: a. For those with assets worth three hundred thousand pesos (P300,000) and less –
A. Registration as a business entity or enterprise from the appropriate government agency (e.g., Securities and Exchange Commission (SEC) registration in the case of corporation, partnership or association; Cooperative Development Authority (CDA) registration in the case of cooperative; Department of Trade and Industry (DTI) business name registration in the case of sole proprietorship); and
B. Mayor’s Permit or City/ Municipal Business Permit
b. Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR, together with its attachments.
b. For those with assets worth more than three hundred thousand pesos (P300,000) up to three million pesos (P3,000,000.00) –
1. a. Registration as a business entity or enterprise from the appropriate government agency (e.g., Securities and Exchange Commission (SEC) registration in the case of corporation, partnership or association; Cooperative Development Authority (CDA) registration in the case of cooperative; Department of Trade and Industry (DTI) business name registration in the case of sole proprietorship); and
b. Mayor’s Permit or City/ Municipal Business Permit
2. Taxpayer Identification Number (TIN);
3. Certificate of Registration from the Bureau of Internal Revenue (BIR);
4. Mayor’s Permit or City/Municipal Business Permit;
5. Sworn affidavit executed by the sole proprietor or the President of the enterprise, as the case may be, that the enterprise is barangay-based and micro-business in nature and scope;
6. Sworn Statement of Assets and Liabilities supported by pertinent documents; 7. Pictures of the place of business and its assets, other than cash, receivables and intangibles;
8. Copy of Loan Contract/s, if any, and duly-notarized Certification of Amortization Payments on the Loan
2. Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR, together with its attachments.
Procedures:
a. Accomplish BMBE Form 01 in triplicate and submit to the Office of the Municipal or City Treasurer.
b. The Municipal or City Treasurer evaluates the application. The application shall be processed within 15 working days upon submission; otherwise, the BMBE shall be deemed registered.
c. A registered BMBE shall be issued a Certificate of Authority as proof of registration, effective for a period of two years.
The application is renewable every two years.
How much will it cost to register?
Registration and issuance of the Certificate of Authority of the LGU is free of charge and shall be done promptly. However, to defray the administrative costs of registering and monitoring the BMBEs, the LGUs are allowed to charge a fee not exceeding P1, 000.00.
How can a BMBE avail of the exemption from the coverage of the minimum wage law?
Once a BMBE is registered and issued with a Certificate of Authority by the Municipal or City Treasurer, it is automatically exempted from the minimum wage law.
What is the effect of the law on wages of existing/newly hired employees?
Existing employees shall continue to receive their wages, allowances, and other benefits. On the other hand, wages of employees hired by BMBEs after the latter’s registration shall be exempted from the coverage of the minimum wage law. BMBE workers shall continue to be covered by applicable labor laws and regulations, including the non-diminution rule on existing wages and benefits.
Is the exemption from the coverage of the minimum wage law prospective in nature?
Yes. The rule is that laws shall have prospective application only. Thus, an enterprise’s exemption from the coverage of the minimum wage law can only be applied to employees hired after its registration as a BMBE.
How much should a BMBE worker be paid for his services?
It depends between the employer and the worker. They shall mutually agree on the acceptable wage rate.
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 its submission of the necessary documents.
What are the documents to be submitted to the BIR to avail of Income Tax Exemption?
What document should be filed with BIR by an income tax exempt BMBE?
In lieu 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.
Is the Income Tax Exemption privilege of a BMBE irrevocable?
No.
The income tax exemption privilege of a BMBE may be revoked for any of the following reasons:
Registration and issuance of the Certificate of Authority of the LGU is free of charge and shall be done promptly. However, to defray the administrative costs of registering and monitoring the BMBEs, the LGUs are allowed to charge a fee not exceeding P1, 000.00.
How can a BMBE avail of the exemption from the coverage of the minimum wage law?
Once a BMBE is registered and issued with a Certificate of Authority by the Municipal or City Treasurer, it is automatically exempted from the minimum wage law.
What is the effect of the law on wages of existing/newly hired employees?
Existing employees shall continue to receive their wages, allowances, and other benefits. On the other hand, wages of employees hired by BMBEs after the latter’s registration shall be exempted from the coverage of the minimum wage law. BMBE workers shall continue to be covered by applicable labor laws and regulations, including the non-diminution rule on existing wages and benefits.
Is the exemption from the coverage of the minimum wage law prospective in nature?
Yes. The rule is that laws shall have prospective application only. Thus, an enterprise’s exemption from the coverage of the minimum wage law can only be applied to employees hired after its registration as a BMBE.
How much should a BMBE worker be paid for his services?
It depends between the employer and the worker. They shall mutually agree on the acceptable wage rate.
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 its submission of the necessary documents.
What are the documents to be submitted to the BIR to avail of Income Tax Exemption?
a. Copy of the BMBE’s Certificate of Authority
b. Sworn Statement of Assets of the BMBE and/or its affiliates, supported by pertinent documents
c. Certified list of branches, sales outlets, places of production, warehouses and storage facilities
d. Certified list of affiliates
e. Latest audited Financial Statement or Account Information Form or its equivalent
What document should be filed with BIR by an income tax exempt BMBE?
In lieu 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.
Is the Income Tax Exemption privilege of a BMBE irrevocable?
No.
The income tax exemption privilege of a BMBE may be revoked for any of the following reasons:
a. Transfer of place of business;
b. Value of its total assets exceeds P3M;
c. Voluntary surrender of the Certificate of Authority;
d. Death of the registered individual owner of the BMBE; violation or noncompliance with the provisions of R.A. 9178;
e. Merger or consolidation with an entity which is not eligible to be a BMBE;
f. Sale or transfer of the BMBE, if it is a sole proprietorship without prejudice to the transferee applying for registration;
g. Submission of fake or falsified documents;
h. Retirement from business, or cessation/suspension of operations for one year; and
i. Making false or omitting required declarations or statements.
To those who are interested, just go to the nearest DTI Office or Negosyo center near you and fill up the application form.
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