Building a business is certainly a good step into wealth creation. But with the hassles of getting the permits in the Philippines plus the hefty taxes, you might get discouraged before taking the leap of faith. But not known to many, there is a law that helps fledgling start-ups to get income tax and minimum wage exemptions! You heard it right!
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This has long been effective, but based on our observations, only few enterprises registered and availed of the same. Under the Department Order No. Barangay based which means a majority of its employees are residents of the municipality of principal office location, b principal activity consist in the application of a skill peculiar to the locality, or business operations confined to the LGU of principal office location.
Micro-enterprise in nature and scope which requires that a its principal activity be primarily for livelihood, or determined by SMED or DTI as priority are for development or government assistance, b not a branch, subsidiary or division of a large-scale enterprise, and c its policies and business modus operandi are not determined by a large enterprise.
Its total assets real or personal not more than P3M, excluding the land of business location. BIR Certificate of Registration; 3. Business Permit 4. Sworn Affidavit of Owner or President on being brgy. Pictures of the place of business and its assets, except cash; 7.
Copy of loan contracts and notarized certification of amortization payments, if any; 8. For existing business, BIR-filed income tax return, and 9. Duly filled out Application form with application fee of not more than P1, Taxwise, BMBE is exempt from income tax with respect to its income from operations and as such, income payments to it is not subject to withholding taxes.
While it is exempt from paying the minimum wage e. LGU of jurisdiction is likewise encouraged to provide reduced rates on local taxes. Income tax exemption is quite a good factor to consider and we suggest to consider becoming a BMBE. For the purpose, we further suggest to closely coordinate with your LGU of business location.
Presently, the BMBE law is at stake for legislative amendments tending to improve and enhance its provisions, but the details of such is not yet clearly determinable. They are now conducting public hearing on strategic places for the purpose. We hope and pray for the success of the team proposing the amendments. Disclaimer : This article is for general conceptual guidance only and is not a substitute for an expert opinion.
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How to get your micro business tax exempted
If your business falls under the micro business or enterprise category, then you might be eligible to register it as a Barangay Micro Business Enterprise BMBE. We have taken the most important information about BMBE and collected them all in this quick guide. Such assets shall include those arising from loans but not the land on which the plant and equipment are located. President Gloria Macapagal-Arroyo signed the Act into law on November 13, , to encourage the formation and growth of BMBEs by granting them incentives and other benefits. The country recognizes that small businesses are essential to the economic development of the country.
What You Need to Hear About the BMBE Law
Do you own a micro business or interested starting one soon? Apply for BMBE accreditation and enjoy its benefits. MSMEs are defined as registered businesses, enterprises, or startups that have total assets of less than P million in value and have at most employees. This is where Republic Act No. Enacted in , the BMBE Law aims to scale-up MSMEs — helping them drive the economy better — by giving them several benefits, such as tax exemption and market assistance, among others.
DTI urges micro enterprises to avail of benefits under BMBE law
First, remember that although BMBE certification exempts you from income tax and withholding tax, it does not exempt you from any other tax activities. So you still need to pay monthly taxes. If you have employees, freelancers, or landlords, you still need to withhold taxes from them and remit it to the BIR every month. What if you need to take out a loan, apply for a credit card, or return to regular employment and they ask for your ITR. If you ever need help with filling up your tax forms, you are far more likely to find someone who can help you fill out your ITR than your AIF. If you like filing expenses under the very convenient optional standard deduction OSD method, say goodbye to that convenience. We have users who are BMBE certified!
RA 9178 – “Barangay Micro Business Enterprises (BMBEs) Act of 2002.”
Begun and held in Metro Manila, on Monday, the twenty-second day of July, two thousand two. Section 1. Section 2. Declaration of Policy — It is hereby declared to be the policy of the State to hasten the country's economic development by encouraging the formation and growth of barangay micro business enterprises which effectively serve as seedbeds of Filipino entrepreneurial talents, and intergranting those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active granting of incentives and benefits to generate much-needed employment and alleviate poverty. Section 3. Definition of Terms — As used in this Act, the following terms shall mean:. For the purpose of this Act, "service" shall exclude those rendered by any one, who is duly licensed government after having passed a government licensure examination, in connection with the exercise of one's profession.