BUSINESS/INVESTMENT INCENTIVES AND BENEFITS
THE BARANGAY MICRO-BUSINESS ENTERPRISE
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.
Under Republic Act 9178, otherwise known as the “Barangay Micro Business Enterprises (BMBEs) Act of 2002, provides the following incentives and benefits to qualified applicants:
? 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.
How does one register as a BMBE?
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 , City Hall, Dipolog City.
1.0 Basic requirements for new applicants and for BMBEs applying for renewal of registration:
1.1 Duly filled out application form (BMBE Form 01) in triplicate, signed by the owner or manager of the entity applying for registration; and,
1.2 Three passport size ID pictures.
2.0 Additional requirements for new applicants:
2.1 For those with assets worth three hundred thousand pesos (P300,000) and less
2.1.1 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); and
2.1.2 Mayor’s Permit or City/ Municipal Business Permit.
2.2 For those with assets worth more than three hundred thousand pesos (P300, 000) up to three million pesos (P3, 000,000.00)
2.2.1 Registration as a business entity as explained above in item no.7.2a.1
2.2.2 Taxpayer Identification Number (TIN);
2.2.3 Certificate of Registration from the Bureau of Internal Revenue (BIR);
2.2.4 Mayor’s Permit or City/Municipal Business Permit;
2.2.5 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;
2.2.6 Sworn Statement of Assets and Liabilities supported by pertinent documents;
2.2.7 Pictures of the place of business and its assets, other than cash, receivables and intangibles;
2.2.8 Copy of Loan Contract/s, if any, and duly-notarized Certification of Amortization Payments on the Loan; and
2.2.9 Income Tax Return (ITR).
3.0 Additional requirements for the renewal of BMBE registration:
3.1 For those with assets worth three hundred thousand pesos (P300,000) and less –
3.1.1 Documents previously listed in item 7.2a for new applicants with assets worth three hundred thousand pesos and less; and
3.1.2 Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR, together with its attachments.
3.2 For those with assets worth more than three hundred thousand pesos (P300,000) up to three million pesos (P3,000,000.00) –
3.2.1 Documents previously mentioned in item 7.2b (1-8); and
3.2.2 Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR, together with its attachments.
1. Accomplish BMBE Form 01 in triplicate and submit to the Office of the Municipal or City Treasurer.
2. 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.
3. 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.
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?
1. Copy of the BMBE’s Certificate of Authority
2. Sworn Statement of Assets of the BMBE and/or its affiliates, supported by pertinent documents
3. Certified list of branches, sales outlets, places of production, warehouses and storage facilities
4. Certified list of affiliates
5. 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
The City Government is providing worthwhile incentive packages to businessmen/investors who chose to locate their businesses in Dipolog City. Preferred / priority investment areas include:
a) Tourism Facilities;
b) Property Development;
c) Environmental Protection and Enhancement Projects;
d) Manufacturing Industries; and
e) Educational and other Learning Institutions.
The qualifications of a New Enterprise are:
1) Completion of all requirements mandated under local and national laws;
2) The location is within the territorial jurisdiction of Dipolog City;
3) The investment must be among the approved “preferred/priority areas of investment”;
4) The investment must provide majority employment to bonafide residents of Dipolog City, at least seventy percent (70%) of its total workforce; and
5) Initial capitalization should be at least PhP 50,000,000.
The Qualifications of an Existing Enterprise are:
1) Completion of all requirements mandated under local and national laws;
2) The expansion / diversification must be among the approved “preferred/priority areas of investments”;
3) The existing enterprise is expanding its operations/facilities or constructing new buildings and other civil works or improvements; and
4) Total cost of expansion/diversification is at least P50,000,000.
Incentives of Enterprises Registered under the Dipolog City Economic and Investment Program:
a) Full exemption from the payment of building permit fees, sanitation fees and other fees and charges;
b) Pay only thirty percent (30%) of the assessed Mayor’s business permit fees, business sales tax, and other fees and charges on the first year of the start of commercial operations; fifty percent (50%) on the second year; and seventy percent (70%) on the third year; and
c) Pay only Fifty percent (50%) of the basic real property tax due to the City, excluding the barangay share, on the first year of the accrual of the real property.