Barangay Micro Business Enterprise (BMBE)

RA 9 178, otherwise known as the "Barangay Micro Business Enterprises

Act. (BMBEs) of 2002", enc~urages th·e formation and growth of barangay micro
bu s mess enterprises by granting them incentives and other benefits. The Act
primarily aims to integrate micr~ enterprises . in the informal sector into the
mainstream of the economy. $trengthenfng BMBEs would mean more jobs and
livelihood, and a better quality of life for Filipinos.

The Act was signed into law by President Gloria Macapagal-Arroyo on

November 13, 2002. Its Implementing Rule_s and R~gulations (iRR) which was
issued on February 7, 2003.

Definition
· 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. For the p·urpose of the Act, "services" shall exclude those rendered
by any one, who is duly licens~d ' by the government after having passed a
. government licensure examination, in connection with the exercise of one's
profession (e.g ., Accountant, Lawyer, . Doctor, etc.). The DOF Department Order
No.
1 7 .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 polides
. odus operandi are not determined by a large scale enterprise or by
an d b usmess m · .
t owners or employees of the enterprise (i.e., franchises).
persons wh o are no . .

603
 BMB

Registration and Fees.

The Office of the Treasurer of each city or municipality shall regiSler th0
BMBEs and issue a Certificate of Authority to enable the BMBE to avail of th e
benefits under this Act. Any such application shall be processed wi th in fift en ( 15)
working days upon submission of complete documents. Ol herwise, th e BMBEs
shall be deemed registered. The Municipal or City Mayor may appoint a BMBE
Registration Officer who shall be under the Office of the Treasurer. Local
government units (LGUs) are ·encouraged to establish a One-Stop-Bu siness
Registration Center to handle the efficient registration and processing of
permits/licenses of BMBEs. Likewise, LG Us shall make a periodic evaluation of the
BMBEs'. financial ·status for monitoring and reporting purposes.

The LGUs shall issue the Certificate of Authority promptly and free of
charge. However, to defray the administrative costs of- registering and monitoring
the BMBEs, the LGUs may charge a fee not exceeding One Thousand Pesos
(P1 ,000). 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. As much as possible,
BMBEs shall be subject to minimal bureaucratic requirements and reasonable fees
and charges.

Who are Eligible to Register?

Any person, natural or juridical, or cooperative, or association , having the
qualifications provided under the law may apply for registration as BMBE.

Incentives of BMBEs
REGISTERED BMBES CAN AVAIL OF THE FOLLOWING INCENTIVES:
1. Income tax exemption from income arising from the operations of the enterprise.
To ava!I of the benefits and privileges of a BMBE, an applicant must s ur a
certificate. of authority to operate and be registered as a BMBE from the Offi
the Treasurer of the City or Municipality that has jurisdiction. Once the c rtifi
of Authority is secured, the applicant must submit the same to th BIR .nd
for Income Tax Exemption.
Generally, the income of BMBE from their op r tion ,1
• mpt, h n ,
excluded from gross incom subject to regul r incom t x. Only tt·i
in om from
related activities are exempted. In Ii u of IT , BMB 8fit
Annu tnfomi tfon
I
Return. For self-employed individuals, us BIR Form 1701 -AI F. For cor or tion

604
 BMBEs
and partnerships, as well as cooperatives, use BIR Form 1702-AIF.
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
Funding ~gencies designated to set-up special credit window for BMBEs
• Land Bank 'of the Philippines;
• Development Bank of the Philippines;
• Small Business Guarantee and Finance Corporation;
• People's Credit and Finance Corporation;
• Quedan and Rural Credit Guarantee Corporation;
• Government Service Insurance System (for members only); and Social Security System
(for members o~ly)
4. Technology transfer, production and management training, and _ marketing
assistance pmgrams for BMBE beneficiaries.
Agencies mandated to provide assistance in the areas of technology transfer, production and
management training, marketing assistance
• DepartmentofTradeandlndustry(DTI)
• Department .of Science and Technology (DOST)
• . University of the Philippines Institute for Small Scale Industries (UP-ISSI)
• CooperativeDevelopmentAuthority(CDA)
• Technical Education and Skills Development _Authority (TESDA)
• TechnologyandlivelihoodResourceCenter(TLRC)
s. The LGUs are also encouraged to either reduce the amount of local taxes,
fees, arid charges imposed or exempt the ~MBEs from local taxes, fees, and
charges.

Revocation of BMBE Tax Exemptions

■ Change of business address ·
■ Value of assets exceeds P3,000,000
■ Voluntary surrender of the Certificate of Authority
• Death of the sole proprietor ·
• Merger or consolidation with an entitY. not registered as BMBE
• Sale or transfer of the BMBE enterprise
■ Falsification of documents .
• Retirement from business, or cessation/suspension of operations for one year

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 . - .

CHAP.TER EXERCISES
the letter of the correct answer.

1. A _ _ _ _ is defin d as any business enterpri se engaged in _Production,

p es ing. or m nufacturing of product , including agro-processt~~' as well
s trading and s rvi es, with total assets of not more than P3 °:'Ilion. Such
s t hall in Jud those arising from loans but not the land on wh rch the plant
and quipment ar located.
a. E ,zon s
b. HHQs/ROHQs of MNCs
c. PEZA registered entities
d. Barangay Micro Business Enterprises (BMBEs)

2. Statement 1: "Services" offered by BMBEs s·hall exclude those rendered by any

one, who is duly licensed by the government after having passed a govemment
licensure examination, in connection with the exercise of one's profession such
as those .rendered by accountants, lawyers, and doctors.

Statement 2: An enterprise·can onl·y qualify for registration as BMBE rf ,it is no

a branch, subsidiary, division or office of a large scale enterprise and its poliicies
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).
a. Only statement 1 is correct
b. Only statement 2 is correct
c. Both statements are correct
d. Both statements are incorrect

3. Which of the following are th~ following incentives may be granted to B . 'BEs?
a. rncome tax exemption from income arising from the operations of • e
enterprise.
b. Exemption from the coverage of the Minim Wage Law.
c. Technology transfer, production and management training, a
marketing assistance programs·for BMBE beneficiaries.
d. All of the above
' .
4. Statem.ent ·1: Any person, cooperative, or association owning, . n e
that fits the description of a BMBE may reg.istar for the first tim .
registration with th.e Office of the Treasurer of the city or municip H
business is located.

Statement 2: For BMBE ., r . i tr tion __ bu. m , n r n

the appropriate governm nt a · ncy uch _C • OT
securing busiriess ,- ermit from ·ity/municipaflty i Hlr . \ir -d.