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How to Register as a Barangay Micro Business Enterprise

(BMBE) in the Philippines
Apr 24, 2013 by Victorino Abrugar at Business, Small Business
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,

Thus you may want to visit your City or Municipality office to inquire more about this. So why exclude them? Anyway. So if you are a franchisee. Three passport size ID pictures Additional requirements for new applicants: A.001 to P3. may not have any money left to start an enterprise. partnership or association.000..000) and less – 1. 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. 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. subsidiary.gov. The business enterprise is not a branch. accountant. 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. 000) up to three million pesos (P3. or manufacturing of products.000.and potential to succeed in business. For those with assets worth three hundred thousand pesos (P300. Taxpayer Identification Number (TIN) 3. in connection with his or her exercise of profession. processing. etc. including agro-processing. is not a professional who is duly licensed by the government after having passed a government licensure examination (e. For those with assets worth more than three hundred thousand pesos (P300. a business or activity may be eligible to register as BMBE if they meet the following criteria: 1. in which the former have fewer requirements to be submitted than the latter. The business enterprise or service provider.000.1 2. Department of Trade and Industry (DTI) business name registration in the case of sole proprietorship) 2. an enterprise can only qualify for registration if it is not a branch. Securities and Exchange Commission (SEC) registration in the case of corporation.000. Basic requirements for new applicants and for BMBEs applying for renewal of registration: a. the DOF Department Order No. 4. Certificate of Registration from the Bureau of Internal Revenue (BIR) .g. as well as trading and services. Cooperative Development Authority (CDA) registration in the case of cooperative. franchises).g.00) 1. 17-04 also provides that. Registration as a business entity or enterprise from the appropriate government agency (e. you are not eligible to register as a BMBE. The business enterprise is engaged in production. The requirements for BMBE registration are different for those micro business enterprises with assets of P300. b. 3. In other words. subsidiary. professionals.ph website). Mayor’s Permit or City/ Municipal Business Permit B.e. Duly filled out application form (BMBE Form 01) in triplicate. doctor. Registration as a business entity as explained above in item A.000 and less and those with assets of P300. Besides. division or office of a large scale enterprise or it is not a franchisee. lawyer. signed by the owner or manager of the entity applying for registration (you may download BMBE Form 01 here which I got from Paranaque. having incurred a lot of money to review and pass the licensure exams..).

together with its attachments D. The application shall be processed within 15 working days upon submission. How much will it cost to register? According to Section 4 of the Act. Documents previously listed in item A. registration and issuance of the Certificate of Authority of the LGU is free of charge and shall be done promptly. the BMBE shall be deemed registered. Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR.000) and less – 1. Certified list of branches.00) – 1. Accomplish BMBE Form 01 in triplicate and submit to the Office of the Municipal or City Treasurer. Sworn Statement of Assets of the BMBE and/or its affiliates. The application is renewable every two years. Sworn affidavit executed by the sole proprietor or the President of the enterprise. to cover the administrative costs of registering and monitoring the BMBEs.000) up to three million pesos (P3.000. supported by pertinent documents c. Copy of the BMBE’s Certificate of Authority b. b. otherwise. Copy of Loan Contract/s. 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. Annual Information Return (for the year immediately preceding the renewal of registration) duly filed with the BIR. 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. places of production. For those with assets worth three hundred thousand pesos (P300. For those with assets worth more than three hundred thousand pesos (P300.1 for new applicants with assets worth three hundred thousand pesos and less 2. Mayor’s Permit or City/Municipal Business Permit 5.000. receivables and intangibles 8. Documents previously mentioned in item B. other than cash. warehouses and storage facilities d.4. Additional requirements for the renewal of BMBE registration: C. Pictures of the place of business and its assets. Certified list of affiliates e. effective for a period of two years. sales outlets. How to avail for the Income Tax Exemption? To avail with the income tax exemption. Latest audited Financial Statement or Account Information Form or its equivalent What document should be filed with BIR by an income tax exempt BMBE? .000. Income Tax Return (ITR). A registered BMBE shall be issued a Certificate of Authority as proof of registration. The Municipal or City Treasurer evaluates the application.00. However. c. Sworn Statement of Assets and Liabilities supported by pertinent documents 7.1-8 2. if any. and duly-notarized Certification of Amortization Payments on the Loan 9. as the case may be. the LGUs are allowed to charge a fee not exceeding P1. that the enterprise is barangay-based and micro-business in nature and scope 6.

Department of Finance Department Order No. Merger or consolidation with an entity which is not eligible to be a BMBE 6. DTI Department Administrative Order (DAO) No. 9178 5. However. while a registered BMBE could be exempt from income tax. 8. R.Instead of an income tax return. Revenue Memorandum . which contains data from its financial statement and Sworn Statement of Assets Owned and/or Used. 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. Value of its total assets exceeds P3M 3. For more information. Death of the registered individual owner of the BMBE. violation or noncompliance with the provisions of R. Revenue Memorandum Circular No. or cessation/suspension of operations for one year. 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. and 9. Reference: RA 9178. Voluntary surrender of the Certificate of Authority 4.A. 1. Retirement from business. Series of 2003. 9501. if it is a sole proprietorship without prejudice to the transferee applying for registration 7.A. Submission of fake or falsified documents. For questions and discussions. its Income Tax Exemption privilege may be revoked for any of the following reasons: 1. Sale or transfer of the BMBE. we can discuss this topic in our online business forums. an income tax exempt BMBE is required to submit an Annual Information Return. Transfer of place of business 2. 17-04. Making false or omitting required declarations or statements. 40-2004.