Unlocking the Power of Small Businesses: A Closer Look at the Barangay Micro business Enterprise (BMBE) Act of 2002

The Barangay Micro Business Enterprise (BMBE)

Did you know that starting and running a business in the Philippines can be quite challenging, especially for small and micro-entrepreneurs?

But there’s good news! The government has a law that can help these entrepreneurs. It is called the Barangay Micro Business Enterprise or BMBE for short, which was established through Republic Act 9178.

So what is Republic Act 9178exactly?

Well, it’s a law that aims to encourage and support the growth of small and micro enterprises in the country. BMBEs are businesses with assets worth up to P3 million or less, excluding the value of the land. They are also eligible for various incentives such as tax exemptions, priority in government programs and services, and access to financing.

Let’s look back at RA 9178 with a short quiz:

RA 9178, also known as the Barangay Micro Business Enterprises (BMBE) Act of 2002, is a Philippine law that seeks to promote and support the growth of micro business enterprises in the country.

Test your knowledge on RA 9178, also known as the Barangay Micro Business Enterprises (BMBE) Act of 2002, with this quiz.

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Definition and Nature of BMBE

A Barangay Micro-Business Enterprise (BMBE) is a business or enterprise that produces, processes, and manufactures products, services, agro-processing, and trading with total assets of up to Three Million Philippine Pesos.

These assets include those arising from loans, but not the land on which the plant and equipment are located.

However, services will not include those rendered by anyone who is properly certified with the government after taking and passing a state licensure exam related to their profession (e.g., accounting, law, medicine, engineering, or architecture).

Who qualifies to become a BMBE (Barangay Micro Business Enterprise) Member?

According to Republic Act 9178 or the Barangay Micro Business Enterprise (BMBE) Act of 2002, micro and small enterprises with assets worth up to P3 million or less, excluding the value of land, are eligible to register as BMBEs.

In addition to the asset limit, BMBEs must also meet the following criteria:

1. The enterprise must be registered with the Department of Trade and Industry (DTI) or the Cooperative Development Authority (CDA), or with the Securities and Exchange Commission (SEC) for corporations.
2. The enterprise must be engaged in production, processing, manufacturing, trading, or services.
3. The enterprise must be operated by a Filipino citizen.
4. The enterprise must be located in the barangay where it is registered, or in the municipality or city where the barangay is located.
5. The enterprise or service provider, in connection with the exercise of a profession, is not a professional who is duly licensed by the government after having passed a government licensure examination (eg, CPA, lawyer, physician, engineer)
6. It is not a branch, subsidiary, division, or office of a large-scale enterprise. It is also not a franchisee.

How Do I register as a BMBE?

If you are a micro or small enterprise with assets worth up to P3 million or less, excluding the value of land, and you meet the criteria set by Republic Act 9178, you can register as a Barangay Micro Business Enterprise (BMBE).

Here are the steps to register as a BMBE:

1. Prepare the necessary documents, which include:

• Accomplished BMBE Application Form 01 (in triplicate with three passport size ID pictures signed by the owner or manager
• Barangay Clearance
• Mayor’s Permit
• Business Permit or DTI Certificate of Registration
• Financial Statements or Income Tax Return for the past year

2. Submit the documents to the Office of the Municipal or City Treasurer where your business is located for evaluation.

3. Wait for the BMBE Certificate of Authority to be issued, which usually takes 15 days or less.

4. Once you have the BMBE Certificate of Authority, you can now enjoy the benefits and incentives of being a registered BMBE, such as tax exemptions and priority in government programs and services.

It’s important to note that BMBE registration is valid for two years and can be renewed every two years thereafter. Also, keep in mind that while BMBE registration offers various benefits, it also comes with responsibilities, such as complying with tax laws and regulations. Therefore, it’s essential to seek guidance from a lawyer or a tax professional to ensure compliance with legal and tax requirements.

Additional requirements for new applicants

Aside from the BMBE Form 01, the following documents are also required to be submitted:

For those with assets worth P300,000.00 and below:

1. Registration as a business entity or enterprise from the appropriate government agency –

• SEC – for corporation/partnership/association
• CDA – for cooperatives
• DTI – for sole proprietorship

2. Mayor’s Permit or City/Municipal Business Permit

For those assets worth more than PHP 300,000.00 but not more than PHP 3 Million Pesos

1. Registration as a business entity and Mayor’s/Business Permit
2. Taxpayer Identification Number (TIN)
3. Certificate of Registration from the Bureau of Internal Revenue (BIR)
4. Sworn affidavit executed by the sole proprietor or the President of the enterprise, as the case may be, that the enterprise is a barangay-based micro-business in nature and scope
5. Sworn Statement of Assets and Liabilities supported by pertinent documents.
6. Pictures of the place of business and its assets, other than cash, receivables, and intangibles.
7. Copy of Loan Contract/s, if any, and duly notarized Certificate of Amortization Payments on the Loan
8. Income Tax Return (ITR)

How long will the application take?

Upon submission of all required documents, the application shall be processed within fifteen (15) working days; if not, the BMBE will automatically be deemed registered.

What is the BMBE Certificate of Authority?

The BMBE Certificate of Authority is the certificate issued granting the authority to the registered BMBE to operate and be entitled to the benefits and privileges given to a BMBE.

Role of the Local Government

1. The Municipal or City Mayor can appoint a BMBE Registration Officer who’ll be under the Office of the City Treasurer.
2. Local Government Units (LGUs) are encouraged to establish a One-Stop-Shop Business Registration Center where you can get all your permits and licenses processed efficiently.
3. LGUs shall also periodically evaluate the financial status of BMBEs for monitoring and reporting purposes.
4. BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees and charges.

What are the Incentives and Benefits if you are registered as a BMBE?

As a registered BMBE, you will be entitled to to the following incentives and benefits:

1. Income tax exemption from income on operation of the enterprise\
2. Exemption from the coverage of the Minimum Wage Law. However, employees shall still be entitled to social security and health care benefits.
3. Priority to a special credit window set up specifically for the financing requirements of BMBEs.
4. Technology transfer, production, and management training, and marketing assistance programs for BMBE beneficiaries.

How can a BMBE avail of the Income Tax exemption?

To avail of the income tax exemption, a BMBE must register with the BIR Revenue District Office (RDO) where the principal office or place of business is located.

The following documentary requirement must be submitted:

1. Copy of the BMBE’s Certificate of Authority
2. Sworn Statement of Assets of the BMBE and/or affiliates, supported by pertinent documents
3. Certified list of branches, sales outlets, places pf production, warehouses, and storage facilities
4. Certified list of affiliates
5. Latest audited Financial Statement or Account Information Form or its equivalent.

Important:

An income tax-exempt BMBE is required to submit an Annual Information Return on or before the 15th day of the 4th month of the close of the taxable year (April 15) with an Account Information Form which contains data from its financial statements and Sworn Statement of Assets Owned and/or Used.

Can a BMBE’s exemption from income tax be revoked?

While a registered BMBE could be exempt from income tax, such exemption may be revoked on any of the following grounds:

1. Transfer of place of business,
2. Value of its total assets has exceeded PHP 3 Million,
3. Voluntary surrender of the Certificate of Authority,
4. Death of the registered individual owner of the BMBE; violation or non-compliance with the provisions of RA 9178,
5. Merger or consolidation with an entity which is not eligible to a BMBE,
6. Sale or transfer of the BMBE,
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.

Conclusion

Registering with the BMBE is a smart move for small entrepreneurs like you who are looking to start or grow their businesses. The benefits and privileges that come with being a registered BMBE can make a significant difference to the success of your business, allowing you to focus on what matters most – serving your customers and growing your business.

With its support and incentives, you can turn your business dreams into reality, and who knows, you might even be the next big thing in the Philippine business scene!