You might have heard of it, may even have applied for it but what is it really and how does it work?
What is Barangay Micro Business Enterprise (BMBE)?
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.
What incentives can you get when you are registered as a BMBE?
- Income tax exemption from income arising from the operations of the enterprise;
- Please take note that what it only exempts is a tax on INCOME and therefore does not include other taxes such as Other Percentage Taxes or Value Added Taxes (which are based on sales and/or collections), withholding taxes on compensation, expanded withholding taxes, documentary stamp taxes (if applicable to your business) -Check your BIR Form 2303
- Also please take note for individual taxpayers (those registered as sole proprietors) once you chose to be registered to be a BMBE entity you CANNOT avail of the 8% flat tax rate.
- 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.
Who again are qualified for the above incentives?
- Any business entity hence be it:
- Sole proprietorship (those business registered with the Department of Trade and Industry or DTI);
- Corporations and/or partnerships(those registered with Securities and Exchange Commission or SEC) and
- Cooperative (those registered with Cooperative Development Authority)
- EXCEPT licensed professionals (those rendered by anyone, who is duly licensed by the government after having passed government licensure examination, in connection with the exercise of one’s profession e.g., Accountant, Lawyer, Doctor, etc.).
- The above business entity must NOT HAVE MORE THAN Php 3 million in ASSETS. Such assets shall include those arising from loans but not the land on which the plant and equipment are located.
Once an entity has been given a BMBE Certificate, is the exemption from income tax automatic?
No. The entity in order to avail of the exemption from income tax MUST:
- The person or its duly authorized representative must go to the Revenue District Office where the business is located.
- Fill up BIR Form 1905 -Update and Correction
- Present a copy of the BMBE Certificate
- Surrender the original Certificate of Registration – BIR Form 2303 (if one has already been issued).
- Await the release of an updated where it expressly indicates that the taxpayer has availed of the income tax exemption
- Note the tax type “INCOME TAX” shall not be deleted since the BMBE registered shall still be required to file an income tax return however will have a zero tax due.
Is the exemption from the minimum wage law automatic?
Yes, once a BMBE Certificate has been issued to the entity the exemption to the minimum wage law automatic.
Am I still required to file Income Tax Returns even after I have registered my BMBE Certificate with the BIR?
Yes or else you will be facing penalties for open cases.
Is the exemption from the minimum wage law retrospective?
No. 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.
Read more about BMBE here:
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