A micro business or enterprise is defined as any business activity or enterprise engaged in industry, agribusiness and or services, whether single proprietorship, cooperative, partnership or corporation whose total assets, inclusive of those arising from loans but exclusive of the land on which the particular business entity’s office, plant and equipment are situated, must have value of not more than 3 million Pesos (Sec. 3. of R.A. 9501 otherwise known as the Magna Carta for Micro, Small and Medium Enterprises (MSMEs).
If your business or activity falls under the micro enterprise category, you might also be eligible to be registered as a BMBE (Barangay Micro Business Enterprise) which may avail of the following incentives provided by the government through R.A. 9178, otherwise known as the “Barangay Micro Business Enterprises Act of 2002:
1. Income tax exemption from income arising from the operations of the enterprise
2. 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)
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.
Sounds interesting, especially the income tax exemption? Let’s continue…
The “BMBEs Act of 2002”
The government, in its objective to strengthen Barangay Micro Business Enterprises in the country and provide more jobs, livelihood and a better quality of life for Filipinos, has enacted Republic Act 9178, otherwise known as the “Barangay Micro Business Enterprises Act of 2002”.
R.A. 9178 is “An Act to Promote the Establishment of Barangay Micro Business Enterprises (BMBEs), Providing Incentives and Benefits therefore, and for Other Purposes”
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.
What is BMBE and who are eligible to register as BMBEs?
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. These assets include those arising from loans but not the land on which the plant and equipment are located. However, services 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, Architects, Civil Engineers, etc.) shall not be included.
Is the government discouraging the professionals to start a micro business and want them to just get a job as an employee instead? I’m just asking. I think professionals also need aid from the government when it comes to entrepreneurship especially that they have the skills, knowledge, and potential to succeed in business. Besides, professionals, having incurred a lot of money to review and pass the licensure exams, may not have any money left to start an enterprise. So why exclude them? 🙂
Anyway, 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). So if you are a franchisee, you are not eligible to register as a BMBE.
In other words, a business or activity may be eligible to register as BMBE if they meet the following criteria:
1. The business enterprise is engaged in production, processing, or manufacturing of products, including agro-processing, as well as trading and services.
2. The business enterprise has total assets of P3 million or less including those arising from loans but excluding the land on which the plant and equipment are located.
3. The business enterprise or service provider, in connection with his or her exercise of profession, is not a professional who is duly licensed by the government after having passed a government licensure examination (e.g. accountant, lawyer, doctor, etc.).
4. The business enterprise is not a branch, subsidiary, division or office of a large scale enterprise or it is not a franchisee.
How to register as a Barangay Micro Business Enterprise (BMBE)?
The registration of BMBE in the Philippines is processed and done in the Office of the Treasurer of the city or municipality where the business is located. Thus you may want to visit your City or Municipality office to inquire more about this.
The requirements for BMBE registration are different for those micro business enterprises with assets of P300,000 and less and those with assets of P300,001 to P3,000,000, in which the former have fewer requirements to be submitted than the latter.
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 (you may download BMBE Form 01 here which I got from Paranaque.gov.ph website).
b. Three passport size ID pictures
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 (e.g., Securities and Exchange Commission (SEC) registration in the case of corporation, partnership or association; Cooperative Development Authority (CDA) registration in the case of cooperative; Department of Trade and Industry (DTI) business name registration in the case of sole proprietorship)
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 A.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
9. Income Tax Return (ITR).
Additional requirements for the renewal of BMBE registration:
C. For those with assets worth three hundred thousand pesos (P300,000) and less –
1. Documents previously listed in item A.1 for new applicants with assets worth three hundred thousand pesos and less
2. Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR, together with its attachments
D. 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 B.1-8
2. Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR, together with its attachments
Steps and procedures for registering as a BMBE
The following are the procedures for BMBE registration and getting the Certificate of Authority as a BMBE:
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?
According to Section 4 of the Act, registration and issuance of the Certificate of Authority of the LGU is free of charge and shall be done promptly. However, to cover the administrative costs of registering and monitoring the BMBEs, the LGUs are allowed to charge a fee not exceeding P1,000.00.
How to avail for the Income Tax Exemption?
To avail with the income tax exemption, the BMBE must register with the BIR Revenue District Office (RDO) where the principal office or place of business is located and submit the following documents:
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?
Instead 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.
However, while a registered BMBE could be exempt from income tax, its Income Tax Exemption privilege may be revoked for any of the following reasons:
1. Transfer of place of business
2. Value of its total assets exceeds P3M
3. Voluntary surrender of the Certificate of Authority
4. Death of the registered individual owner of the BMBE; violation or noncompliance with the provisions of R.A. 9178
5. Merger or consolidation with an entity which is not eligible to be a BMBE
6. Sale or transfer of the BMBE, if it is a sole proprietorship without prejudice to the transferee applying for registration
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.
For more information, please read DTI’s Handbook Guide to Republic Act (RA) 9178: BMBEs Act of 2002 which also includes the full text of RA 9178 and its implementing rules and regulations (IRR) including the supplementary guidelines or clarifications issued by concerned agencies.
For questions and discussions, we can discuss this topic in our online business forums.
Reference: RA 9178, R.A. 9501, DTI Department Administrative Order (DAO) No. 1, Series of 2003, Department of Finance Department Order No. 17-04, Revenue Memorandum Circular No. 40-2004, Revenue Memorandum Circular No. 52-2004
Victorino Q. Abrugar is a marketing strategist and business consultant from Tacloban City, Philippines. Vic has been in the online marketing industry for more than 7 years, practicing problogging, web development, content marketing, SEO, social media marketing, and consulting.
Peter Chan says
Question. since BMBE’s are exempt of income tax, what happens to the WTX imposed by clients who belong to the top 100? will I receive a rebate at the end of the year? or should I state to client that I am exempt of income tax?
Ms. A says
You should state to the client that your are exempt from income tax. As proof, you should give him a copy of your certificate of authority.
Mercy says
Hi,Am lending money with 3% interest.I have a total asset if 300k now.should I register?thanks
Alfredo Jr Dagondon says
Hi, my parents has a small eatery (carenderia), is this kind of business part of processing and manufacturing? Their assets are less 300k. So can they register?tnx
Aya says
Hi,
I am a CPA, and I have a laundry business. Our asset is below Php3M. Am I allowed to apply for BMBE? Also, I am currently employed in an auditing firm, how am I suppose to declare my income tax returns? Thanks!
John Michael Tan says
Hello po Ma’am/Sir,
Paank po pag nkaregister na sa BIR ang business..pwede la ba apply as BMBE?nameet po nmin lahat ng requirements for applicayion of BMBE. THANKS! Sana mag reply kau…
John Michael Tan says
Hello po Ma’am/Sir,
Paano po pag nkaregister na sa BIR ang business..pwede pa ba apply as BMBE?nameet po nmin lahat ng requirements for applicayion of BMBE. THANKS! Sana mag reply kau…
Diego says
Yes, you can still apply for BMBE. Application should be submitted in DTI office they will advise you the claiming of certificate. After that, you still need to update your 2303 in your RDO and the BIR will indicate the validity of your BMBE in your COR 2303.
John Michael Tan says
Hello po Ma’am/Sir,
Paano po pag nkaregister na sa BIR ang business..pwede pa ba apply as BMBE?nameet po nmin lahat ng requirements for applicayion of BMBE. THANKS! Sana mag reply kau…
Hazel says
I have the same question. Hope someone will reply
Denver says
Hi Sir,
Im planning to start a small pastries and café shop, is this type of business fall on production and can be accommodated using BMBE?
Leia says
Hi, I’m planning to launch an online store selling breastfeed and baby feeding related stuff. My capital is definitely below Php300,000.00. Can I apply as BMBE?
Hope you can help me. Thank you.
loys says
Good day! ask ko lang po if in the year 2010 i was able to register as BMBE with an assets lower than 3,000,000. then after several years let’s say 2016 my assets increased to 3000,000 and above. Am i still eligible to renew? kindly answer ASAP thank you in advance. 🙂
FLOR says
Can I register several micro enterprise business under one sole proprietorship registration?
Aya says
Good day!
I’m a registered professional and planning to open an online shop. My capital is below 100,000php, can I register for BMBE? Hope someone can help me.
Adelina T. Ortiz says
Patulong nman po, 3 yrs ago p po aq nag open ng maliit n comshop d2 s bahay nmin 9pc ksma server. Mga 100T po capital, n register q s dti at me bus.permit din, ako at ung anak ko lng ang salitang nagbabantay nid ko din po b ikuha ng BIR (BMBE)?
Wilfred Ko says
Hi, if I am to start a small carinderia am I also required to apply for a business license/permit? can this be included in the BMBE?
Thanks
arnold villaflor says
Ask lang po water Refilling station pwedi ba ma register as bmbe?
Hindi sya franchise?…
Maryjane says
Good day!
I’m planning to open small Computer store selling IT products .My capital is below 200,000php, can I register for BMBE? Hope someone can help me. thank you so much…
Jing says
yes it is easier to apply now than before, di mo na kailangan dumaan sa Munisipyo or City hall as part of requirement, the DTI itself can approve na. and once approve you should update you COR in BIR to update your registration.
myrna matira says
hi. one of the requirements is a mayor’s permit. but you said pwede nang hindi dumaan sa munisipyo o city hall. is this being done in all cities and municipalities? medyo may kamahalan ang mayor’s permit. this will ease newly opened BMBE of the burden, if ever.
carlo says
Hi, i’m planning to open my digital printing shop. Total of assets below 300k. Can i register it for BMBE? Thank you for the reply!
Business Tips says
Hi, your micro business may be registered as BMBE as long as its total assets, excluding land, shall not be more than P3 million. BMBEs can now directly register their businesses, free of charge, at the Department of Trade and Industry (DTI) through the agency’s Negosyo Centers. Please visit the nearest DTI Negosyo Center in your area to have some consultations.
Mona liza Ramos says
hi…. I’m planning to open a small bake shop in pjlippines and my budget was around 500,000. can I register it for BMBE? thank you and I’m waiting for a reply
Business Tips says
Hi. As stated in the article, In general, micro businesses whose total assets, excluding land, shall not be more than P3 million can register as BMBE. Barangay Micro-Business Enterprises (BMBEs) can now directly register their businesses, free of charge, at the Department of Trade and Industry (DTI) through the agency’s Negosyo Centers. You may visit the nearest DTI Negosyo Center in your place to inquire for more.
Carol says
Hi,
I’m selling handmade products online. I intend to register in BMBE. Shall I still be needing invoices, official receipts? Will I need to remit or submit income reports monthly to BIR? Will I still need to prepare and file ITR?
Hoping for your reply. Thank you.
Vic says
Hello Carol, businesses registered as BMBE can enjoy benefits such as exemption from paying income tax, but, they are still required to be registered with the BIR, have official receipts/invoices, books of accounts, file income tax return (not pay if exempted), and file /pay annual registration and business taxes (percentage tax/VAT), withholding taxes if any.
Carla says
Hi,
Hope this site is still active, BIR is asking for SALN when I submitted the BMBE to their office.
How can I provide this SALN? Isnt it for public official and employees only?
Business Tips says
Hello. Yes, SALN is for public officials and employees only. Are you one of them? If not, maybe BIR is requiring you to submit ITR or maybe Account Information Form — BIR Form No. 1701-AIF (for individuals) or BIR Form No. 1702-AIF (for corporations).
val says
kung tax exempt na ang BMBE, paano makakapag issue ng receipt ang business sa mga client or customers?
Business Tips says
Hello Val, BMBE may only be exempted in paying income tax, but they are not exempted on registering with the BIR, registering books of accounts, registering official receipts and invoices, and filing tax returns. This means BMBE still need to register with the BIR, obtain official receipts/invoices, issue those receipts/invoices, and file income tax returns and other required BIR returns. Income tax exempt entities, may not pay income tax, but they still need to file income tax return (without payment). Take note that filing ITR is different from paying ITR.
Dennis says
Please help. Mag bubukas po sana ako ng isang motor parts shop. Around 500k capital plus mga rentals nlang ng stall. Pwde po kaya ako dun sa BMBE. Malapit sa palengke ung area sana.
salamat ng maraami sa pag tugon.
Business Tips says
Hello. You may be eligible to register as BMBE if you meet the criteria listed above. To make sure, visit the nearest DTI Negosyo Center in your area to check if your business meets the requirements, and also so you can ask for consultation and assistance from them.
Marc Bituagan says
Hi. I have registered as BMBE at our local DTI office and have been granted the Certificate of Authority. So do I go to straight to BIR for update to my COR? Do I still need to go to our municipal treasury office as well to register as BMBE?
Business Tips says
Hi. You can submit the BMBE Certificate of Authority to the BIR as a requirement to apply for income tax exemption. You may also submit it to other government agencies where your business was registered to avail other BMBE benefits such as Minimum Wage Law coverage exemption and assistance in technology, training and marketing from certain government agencies such as DTI, DOST, UP-ISSI, CDA, TESTA and TLRC.
Michael says
Hi!
Are BMBE still get to pay the business permit? Malaki kasi ang binabayad dito.
Business Tips says
Hello. Yes, Mayor’s business permit fee and BIR registration fee may still be required for BMBE. Please see the list of incentives that a BMBE may avail in the article above.
JD says
Thank you for this very informative and easy to understand guide! Just one question: I am planning to start a small food stall/ take-out counter/cart (my own concept, not a franchise). Initial capital including the cart itself is unlikely to exceed 50k. Can I register it as a BMBE, then? Thank you! 🙂
Business Tips says
Hello. Yes, you can apply it as a BMBE. Please visit the nearest DTI Negosyo Center in your area for more inquiries and to assist you.
Claire Oliveros says
Hi, I am planning to put up a photo booth business, some of the equipment are personal na gamit like camera & laptop and konti lang yung naging capital like less than 50k. Can I register it as a BMBE, then? Thank you!
Daniel says
Hi I’m currently working as a nurse and I’m planning to open up a business am I not eligible for this tax exemption? Thank you !
Mark john baluzo says
If i were to plan to register and the same time to avail the benifit of BMBI san po ako magsstart sa dti, bir or offce of the treasure in mayors office.i have a farm with less than 1k assests excluded the land
Lito Almajose says
Hi! I have a BMBE registered eatery business. Unfortunately I am planning to suspend the eatery business soon. Considering my exemption from the minimum wage law, do I need to give separation pay to my 2 employees? Thank you.
Business Tips says
Hello Lito. In my opinion, they will still be entitled to separation pay despite that your business is BMBE. The BMBE law gives micro businesses benefits such as the exemption to the minimum law but they are still required to provide their employees the basic benefits, such as SSS, Philhealth, Pag-ibig contributions, 13th month pay, and separation pay as applicable. The essence of labor laws in the Philippines is to ensure that all employees will have benefits after they are separated from their employers for reason beyond their control, such as business closure.
Sheila says
Hi. Meron po kasi ako 1 car for grab Eligible po ba ito at pede ba iregister for BMBE?
Angie says
Hello. Thanks for this very informative article. I’m not sure if you still respond to questions, but will just ask anyway. I run a small online retail business, but people come to my house to get the goods so it has become sort of a ‘shop’ too. Capital is less than 300k. Question is, do I still qualify for BMBE though the business is online-based? Thanks in advance~
Business Tips says
Hi Angie,
Please find the answer in our forum
https://businesstips.ph/forum/whats-your-problem/do-i-still-qualify-for-bmbe-though-the-business-is-online-based/
We will disable comments on the posts and don’t answer the questions here. If you have a question, please post it to our forum. Thank you.
Alex Guevara says
Hi, I think this might need an upgrade already since BMBEs are processed not (no longer?) through the LGUs but through the DTI Negosyo Centers, based on other sources I’ve read, including DTI.