Small businesses often earn relatively small – just enough to support owner/s’ day to day expenses, employees’ salaries and small profit. So if business owners still have to pay taxes, they might not be able to sustain operation, considering the limitations on movement brought about by the COVID-19 pandemic unless they mainly operate online. Thus, applying for income tax exemption is one of the best options and one way is by applying as Barangay Micro Business Enterprise (BMBE) with the Department of Trade and Industry (DTI).
Yes, you read it right! By applying as a BMBE, small businesses (including online stores directed by the BIR to register) can save in taxes. But wait, there’s more! Not only BMBE are exempt from taxes, they also enjoy other benefits to help them grow their businesses.
Benefits of a Barangay Micro Business Enterprise
BMBE law is not new as it is enacted in 2002 under President Gloria Macapagal-Arroyo’s administration. In fact, the short title of the law is “Barangay Micro Business Enterprises (BMBE’s) Act of 2002”. It’s just becoming popular nowadays because of the Bureau of Internal Revenue (BIR)’s mandate to strictly enforce tax administration to the digital economy which affects smalls businesses.
The benefits of a BMBE are as follows:
- Exemption from income tax arising from the operations of the enterprise.
- Local government units are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt BMBEs from local taxes, fees and charges.
- Exemption from the coverage of the Minimum Wage Law, provided, that all employees covered under the Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits.
- Access to financial assistance by designated financial institutions.
- Access to technology transfer, production and management training and marketing assistance by the government.
- Trade and investment promotions
Who are qualified to register as BMBE?
You may apply for Certificate of Authority as a BMBE if all of the following criteria are met:
- Any person, natural or juridical, cooperative or association, or business entity or enterprise
- Engaged in production, processing, manufacturing of products or commodities, including agro-processing, trading and services
- Have a total asset value of not more than Three Million Pesos (P3,000,000.00) (including those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated)
However, it must be noted that entities exercising their professions cannot qualify as a BMBE.
How to apply for a BMBE Certification?
In order to secure a BMBE Certification, the following must be submitted:
1. Duly filled up and signed BMBE Application Form and
2. DTI registration for sole proprietorship; SEC registration for corporations, partnerships or association; CDA registration for cooperatives, learn now why tiktok is good for your business,
Pertinently, the registration and issuance of a Certificate of Authority as a BMBE is free of charge.
These documents must be filed with the Department of Trade & Industry (DTI), through the Negosyo Center. The DTI Negosyo Center should issue the Certificate of Authority within fifteen (15) working days upon submission of complete documents.
Validity of a BMBE Certificate
The Certificate of Authority shall be effective for a period of two (2) years. It is renewable for a period of two (2) years thereafter for every renewal.