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.
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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! The two most onerous expenses exempted! What is this God-sent law, you ask? This law is enacted in to help grow small businesses by giving them several benefits.
Benefits like income tax exemption, exemption from paying minimum wages and market assistance such as credit priority from financial institutions and growth assistance from DTI Negosyo Centers and DOST, among others are enjoyed by the registered BMBE.
But you still need to pay for percentage taxes and give out SSS, Philhealth, and Pag-ibig contributions for your employees. This law will certainly ease the financial burden on your company. Before you get really excited, determine first if you qualify as a BMBE. Under this law, a BMBE is any business enterprise that: produces, processes or manufactures goods, including processing of agricultural. They can also be engaged in selling or trading goods and services.
It can either be a sole proprietorship, partnership, corporation or cooperative. The business should also have total assets of not more than 3 Million excluding the land on which the enterprise is located.
Take note, services provided by professional practitioners, such as medical clinics, accounting services, consulting services, and the like are not included. Furthermore, it should be the main business. In essence, no bigger corporation or business entity should be setting the standard as to how the business should be operated. This might be done to prevent big corporations from circumventing the tax laws. Now that you qualify, you just need to go to the Office of the Treasurer of the city or municipality where your business is located.
These are the requirements. There are additional requirements if you have more than P , worth of assets. They are as follows:. A sworn affidavit executed by the sole proprietor or the President of the enterprise that the enterprise is barangay-based and micro-business in nature and scope.
Pictures of the place of business and its assets, other than cash, receivables, and intangibles. After lodging, the treasurer will evaluate the application. It shall be processed within 15 working days upon submission of complete documents. Afterward, you will receive a Certificate of Authority effective for two years. You can just renew it for another two-year period after it expires. After getting your Certificate of Authority, you still have one step. Just bring the following:.
Certified list of the branches, sales outlets, factories, warehouses, and storage? After passing the requirements, you will receive an updated COR usually at the day itself indicating that you are exempted from income tax.
You can show your COR to your customers also to avoid withholding your income from their payments. With that, you are ready to operate with the benefits that can certainly grow your business. I hope you find your way to financial freedom! Good luck! Get the latest content straight to your inbox. He believes in building multiple Location-Independent Sources of Income.
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How to get your micro business tax exempted
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! The two most onerous expenses exempted! What is this God-sent law, you ask? This law is enacted in to help grow small businesses by giving them several benefits.
RA 9178 – “Barangay Micro Business Enterprises (BMBEs) Act of 2002.”
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. If you are thinking of applying, here are some benefits your business enterprise may get upon being accredited as a BMBE:. Being an MSME, however, does not automatically qualify your business enterprise to enjoy these benefits.
The Solopreneur’s Guide to Starting a Microbusiness in the Philippines
By Liza Agoot May 19, , pm. Tibaldo said formalizing micro businesses would benefit not only the small entrepreneurs, but also Filipinos seeking employment and the entire national economy. The benefits under the BMBE are: 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 of BMBEs; and technology transfer, production and management training, and marketing assistance programs for BMBE beneficiaries. Local government units may also reduce the amount of local taxes, fees, and charges, or even exempt BMBEs from local taxes, fees, and charges. The DTI said about a third of all the country's establishments are micro, small, and medium enterprises.