Thinking of starting a small business with dreaming of making it BIG Business one day??
But first do you know what kind of BIR registration are applicable? Nowadays, there are many small establishments in the country such us, sari- sari store, barber shop, food stalls, laundry shop, and other service businesses or seller of goods. There is a law that provides necessary assistance to small businesses at the barangay level. R.A. 9178, also known as the Barangay Micro Business Enterprises (BMBE) Act of 2002, was implemented in 2003. It is a law made to hasten the country’s economic development by encouraging the formation and growth of barangay micro business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents.
The benefits given to small businesses are:
- Allows micro-entrepreneurs to not have to pay minimum wage to their employees. The BMBE shall be exempt from the coverage of the Minimum Wage Law, but the employees shall nevertheless be entitled to the same benefits given to any regular employees like social security and PhilHealth benefits.
- Does not require the remitting of income tax for its first 2 years (renewable for a period of two 2 years for every renewal). All BMBEs shall be exempt from income tax for income from the operations of the enterprise. LGUs are also encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBE from local taxes, fees and charges.
- Technology Transfer, Production and Management Training, and Marketing Assistance. – A BMBE Development Fund shall be set up with an endowment of Three Hundred Million Pesos (P300,000,00) from the Philippine Amusement and Gaming Corporation (PAGCOR) and shall be administered by the SMED Council.
- Credit Delivery. – Upon the approval of this Act, the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBGFC), and the People’s Credit and Finance Corporation (PCFC) shall set up a special credit window that will service the financing needs of BMBEs registered under this Act
Here are the Basic Qualifications of the BMBE to qualify for income tax exemptions, exemption for minimum wage application, and other benefits:
- Barangay based which means that majority of its employees are residents of the municipality of the principal office location and the principal activity consist in the applicatin of a skill peculiar to the locality, or business operations confined to the LGU of the principal office location.
- Micro-enterprise in nature and scope which that its principal acitvity be primarily livelihood, or determined by DTI as priority are for development or government assistance, not a branch, sunsidiary or division of large – scale enterprise and its policies and business modus operandi are not determined by a large enterprise.
- Its total assets (real or personal) not more than P3,000,000 (3 million pesos), excluding the land of business location.
- Engaged in manufacturing, trading, or services other than practice of profession.
- Issued a Certificate of Authority by the LGU’s City Treasurer of principal office location within 15 days from filing complete application requirements and valid for 2 years and renewable for not more than 2 years in any instance. Details of the Certificate of Authority annotated in the BIR Certificate of Registration.
BMBE is exempt from income tax with respect to its income from operations and such,income payments to it is not subject to withholding taxes. It is however subject to business tax (3% percentage tax and 12% VAT, which ever is applicable), and other internal revenue taxes.