Dear PAO,
I am a retired policeman and I am planning to put up a water refilling station in our house. I watch Facebook reels stating that barangay-level businesses such as sari-sari stores are exempted from paying income taxes and are not required to pay the minimum wage to employees. Is this true? If yes, how can I apply?
Ibram
Dear Ibram,
The answer to your query is governed by the provisions of Republic Act (RA) 9178, otherwise known as the Barangay Micro Business Enterprises (BMBEs) Act of 2002, which was approved on Nov. 13, 2002. The declared policy of the State under this statute is to accelerate national economic development by encouraging the establishment and growth of barangay micro business enterprises, and by granting them incentives and benefits designed to generate employment opportunities and alleviate poverty.
Pursuant to Section 3 of RA 9178, a Barangay Micro Business Enterprise (BMBE) is defined as “any business entity or enterprise engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services, whose total assets including those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, shall not be more than Three Million Pesos (P3,000,000.00).”
Section 7 of the same Act expressly provides that duly registered BMBEs shall be exempt from income tax on income derived from the operations of the enterprise. Moreover, local government units (LGUs) are encouraged either to reduce or exempt such enterprises from the payment of local taxes, fees, and charges.
In addition, Section 8 of RA 9178 states that BMBEs shall be exempt from the coverage of the Minimum Wage Law, provided, however, that employees of such enterprises shall remain entitled to statutory benefits accorded to regular employees, including, but not limited to, social security and health care benefits.
With respect to registration, an applicant seeking to avail of the benefits granted to BMBEs may file an application through any of the following modes: (1) by submitting online application through the Department of Trade and Industry (DTI) electronic BMBE portal; or (2) by personally filing the application with the nearest DTI Negosyo Center or the Office of the City or Municipal Treasurer having jurisdiction over the business.
The application shall be subject to evaluation by the DTI. Upon a finding of compliance with the statutory qualifications, a Certificate of Authority shall be issued, which shall remain valid for a period of two years, and may be renewed for another two years.
We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Thank you for your continued trust and support.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to dearpao@manilatimes.net
