Overview of Barangay Micro Business Enterprises (BMBEs)

Barangay Micro Business Enterprise

Refers to 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 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).

Certificate of Authority

The certificate issued granting the authority to the registered BMBE to operate and be entitled to the benefits and privileges accorded thereto.

Assets

Refers to all kinds of properties, real or personal, owned by the BMBE and used for the conduct of its business as defined by the SMED Council: Provided, That for the purpose of exemption from taxes and fees under this Act this term shall mean all kinds of properties, real or personal, owned and/or used by the BMBE for the conduct of its business as defined by the SMED Council.

Registration

Refers to the inclusion of BMBE in the BMBE Registry of a city or municipality.

Financing

Refers to all borrowings of the BMBE from all sources after registration.

Registration and Fees

The Office of the Treasurer of each city or municipality shall register the BMBEs and issue a Certificate of Authority to enable the BMBE to avail of the benefits under this Act.

Processing Time

Any such application shall be processed within fifteen (15) working days upon submission of complete documents. Otherwise, the BMBEs shall be deemed registered.

BMBE Registration Officer

The Municipal or City Mayor may appoint a BMBE Registration Officer who shall be under the Office of the Treasurer.

One-Stop-Business Registration Center

Local government units (LGUs) are encouraged to establish a One-Stop- Business Registration Center to handle the efficient registration and processing of permits/licenses of BMBEs.

Periodic Evaluation

LGUs shall make a periodic evaluation of the BMBEs' financial status for monitoring and reporting purposes.

Certificate of Authority Issuance

The LGUs shall issue the Certificate of Authority promptly and free of charge.

Administrative Fees

To defray the administrative costs of registering and monitoring the BMBEs, the LGUs may charge a fee not exceeding One Thousand Pesos (Pl,000.00).

Certificate of Authority Validity

The Certificate of Authority shall be effective for a period of two (2) years, renewable for a period of two (2) years for every renewal.

Bureaucratic Requirements

As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees and charges.

Eligibility to Register

Any person, natural or juridical, or cooperative, or association, having the qualifications as defined in Ser. 3(a) hereof may apply for registration as BMBE.

Transfer of Ownership

The BMBE shall report to the city or municipality of any change in the status of its ownership structure and shall surrender the original copy of the BMBE Certificate of Authority for notation of the transfer.

Exemption from Income Tax

All BMBEs shall be exempt from income tax for income arising from the operations of the enterprise.

Local Taxes Exemption

The LGUs are encouraged either to reduce the amount of local taxes, fees and imposed or to exempt the BMBEs from local taxes, fees and charge (Sec. 7, R.A. No. 9178).

Value-Added Tax Liability

Though the BMBEs are exempt from income taxes, they are still liable for value-added taxes, percentage taxes, and other local taxes which may be imposed upon them.

Income Tax Return Requirement

They are still required to file their Income Tax Return.

VAT Threshold

Section 4 (b) of the Tax Reform for Acceleration and Inclusion Law (TRAIN Law) or R.A. No. 10963 provides that self-employed individuals and/or professionals whose gross sales or gross receipts and other non-operating income which does not exceed the Value-Added Tax (VAT) Threshold of Three Million Pesos (Php3,000,000) shall have the option to avail of an eight percent (8%) tax in lieu of the graduated income tax rate.

Minimum Wage Law Exemption

The BMBEs shall be exempt from the coverage of the Minimum Wage Law Provided, that all employees covered under this Act shall be entitled to the same benefits given to any regular employee such as social security and healthcare benefits, (Sec. 8, R.A. No. 9178).

Leniency in Wage Setting

BMBEs are exempt from strict compliance with the Minimum Wage Law and can set a wage lower than that provided by law.

Employee Benefits Requirement

Nonetheless, the benefits given to regular employees such as SSS, and Philhealth benefits must still be given to them.

Special Credit Window

Upon the approval of this Act, the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBGFC), and the People's Credit and Finance Corporation (PCFC) shall set up a special credit window that will service the financing needs of BMBEs registered under this Act.

Government Financing Support

The Government Service Insurance System (GSIS) and Social Security System (SSS) shall likewise set up a special credit window that will serve the financing needs of their respective members who wish to establish a BMBE.

Financial Assistance for Micro Businesses

Those who plan to set up a micro business can get help from the abovementioned agencies and entities for their financing needs.

Wholesale Funding Encouragement

The concerned financial institutions (Fis) are encouraged to wholesale the funds to accredited private financial institutions including community-based organizations such as credit, cooperatives, non government organizations and people's organizations.

Credit Support Provision

These organizations will in turn, directly provide credit support to BMBEs.

Loan Compliance with Agri-Agra Law

All loans from whatever sources granted to BMBEs under this Act shall be considered as part of alternative compliance to Presidential Decree No. 717 otherwise known as the Agri-Agra Law, or to Republic Act No. 6977, known as the Magna Carta for Small and Medium Enterprises, as amended.

Loan Computation for Compliance

For purposes of compliance with Presidential Decree No. 717 and Republic Act No. 6977, as amended, loans granted to BMBEs under this Act shall be computed at twice the amount of the face value of the loans.

Gross Receipts Tax (GRT)

Interests, commissions and discounts derived from loans granted to BMBEs by LBP, DBP, PCFC, and SBGFC, as well as loans extended by GSIS and SSS to their member-employees, are exempt from GRT.

Special Guarantee Window

A mechanism set up by SBGFC and QUEDANCOR to provide credit guarantees to BMBEs for agribusiness activities.

BMBE Development Fund

A fund with an endowment of Three Hundred Million Pesos (P300,000,000.00) from PAGCOR, administered by the SMED Council for supporting BMBEs.

Technology Transfer

The process of sharing technology and knowledge to improve production and management practices for BMBEs.

Production and Management Training

Training programs aimed at enhancing the production capabilities and management skills of BMBEs.

Marketing Assistance

Support provided to BMBEs to help them promote and sell their products effectively.

Business Matching

The process of linking BMBEs with small, medium, and large enterprises to foster partnerships.

Information Dissemination

The act of distributing information about the contents and benefits of the BMBE Act to the public, especially at the barangay level.

Penalty for Violation

A fine of not less than Twenty-five Thousand Pesos (P25,000.00) and imprisonment of not less than six (6) months for willful violation of the Act.

Administrative Sanctions

Penalties imposed by the BSP on government financial institutions for non-compliance with the provisions of the Act.

Maximum Fine for Non-Compliance

A fine of not less than Five Hundred Thousand Pesos (P500,000.00) for non-compliance with the provisions of Sec. 9 of the Act.

Annual Reporting

The requirement for LBP, DBP, PCFC, SBGFC, SSS, GSIS, and QUEDANCOR to report annually to Congress on the implementation of the Act.

Incentive Programs

Programs established by the BSP to encourage and improve credit delivery to BMBEs.

Coordination with NGOs

The DTI's collaboration with private sector organizations and NGOs to enhance support for BMBEs.

Yearly Report Requirement

The obligation of DTI, DOST, UP 1551, CDA, TESDA, and TLRC to provide a yearly report on their projects related to BMBEs.

Department of Trade and Industry (DTI)

The government agency responsible for promoting trade and industry, including support for BMBEs.

Philippine Information Agency (PIA)

The agency tasked with ensuring proper information dissemination about the BMBE Act.

Department of Science and Technology (DOST)

The agency involved in technology transfer and support for BMBEs.

Technical Education and Skills Development Authority (TESDA)

The agency responsible for providing training and education to enhance the skills of individuals, including those in BMBEs.

Cooperative Development Authority (CDA)

The agency that supports the development of cooperatives, including those involved with BMBEs.

Quedan and Rural Credit Guarantee Corporation (QUEDANCOR)

An organization that provides credit guarantees specifically for agribusiness activities.