BUSINESS FINANCIAL
ASSISTANCE
REPUBLIC OF THE PHILIPPINES
QUESTION :
IS THERE ANYONE WHO CAN HELP YOU FINANCIALLY IN SETTING UP
A
BUSINESS?
ANSWER :
YES, THE BARANGAY MICRO BUSINESS ENTERPRISE LAW
QUESTIONS & ANSWERS
Republic Act No. 9178
Barangay Micro
Business Enterprises
(BMBEs) Act of 2002
THIS IS A COPY FROM THE EMAIL SENT BY THE DEPARTMENT
OF TRADE AND INDUSTRY ON APRIL 15, 2013
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 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.
1. Basic requirements for new applicants and for
BMBEs applying for renewal of registration:
a.
Duly filled out application form (BMBE Form 01) in triplicate, signed by the
owner or manager of the
entity applying for registration; and,
b.
Three passport size ID pictures.
2. Additional requirements for new applicants:
a.
For those with assets worth three hundred thousand pesos (P300,000) and less –
1. Registration as a business entity or enterprise from the
appropriate government agency
1.1 Securities and Exchange Commission (SEC) registration in the case of
corporation,
partnership or association;
1.2 Cooperative Development Authority (CDA) registration in the case of
cooperative;
1.3 Department of Trade and Industry (DTI) business name registration in
the case of sole
proprietorship; and
2.
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.
Registration as a business entity as explained above in item no.7.2a.1
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; and
9.
Income Tax Return (ITR).
3. Additional requirements for the renewal
of BMBE registration:
a.
For those with assets worth three hundred thousand pesos (P300,000) and less –
1. Documents previously listed in item 7.2a for new
applicants with assets worth three
hundred thousand pesos and less; and BMBE Publication.
2. 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. Documents previously mentioned in item 7.2b (1-8); and
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?
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.
CONTACT PERSONS:
Income Tax Exemption
Atty. Elenita
Quimosing
Chief of
Staff
Operations
Group
Bureau
of Internal Revenue
Tel.
no.: (02) 981.7234
Fax no.:
(02) 928.3562
Ms. Ma. Lourdes Recente
Director,
Research and Information Office
Department
of Finance (RIO-DOF)
Mr. Ronnie Buenviaje
Officer-in-Charge,
Research and
Liaison
Division, RIO-DOF
Tel.
no.: (02) 526/6968
Fax no.:
(02) 526.8462
Credit and/or Guarantee
Assistance
Mr. Liduvino Geron
Assistant
Vice President
Land
Bank of the Philippines
Tel.
no.: (02) 405.7309
Fax no.:
(02) 528.8545
Ms. Marissa Caparaz
Officer-In-Charge,
Corporate Services Cluster,
Quedan
and Rural Credit Guarantee Corporation
Telefax
: (02) 373.9712
Mr. Melvin Abanto
Vice
President
Small
Business Guarantee and Finance Corporation
Tel.
no.: (02) 751.1888
Fax no.:
(02) 813.5720
Ms. Julia Valdez
Vice
President
People’s
Credit and Finance Corporation
Tel.
no.: (02) 897.8521 loc. 106
Fax no.:
(02) 325.0448/49
Mr. Jack Galvezon
Assistant
Vice President
Advocacy
Unit, SME Department
Development
Bank of the Philippines
Tel.
no.: (02) 818.9511 loc. 2529
Fax no.:
(02) 894.4927
Ms. Livia Ramos
Vice
President, Investment Management Office
Government
Service Insurance System (GSIS) -for members only
Tel.
no.: (02) 891.6161 loc. 4323
Fax no.:
(02) 891.6152
Ms. Adelwisa Carandang
Program
Supervisor
Social
Security System (SSS) for members only
Tel.
no.: (02) 926.1644
Fax no.:
(02) 927.8249
