BARANGAY MICRO BUSINESS ENTERPRISES (BMBEs) R.A.

9178

A. DEFINITION OF TERMS

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 loans but exclusive of 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).
▪ The above definition shall be subject to review and upward adjustment by the SMED
Council, as mandated under Republic Act No. 6977, as amended by Republic Act No.
8289.
▪ For the purpose of this Act, "services" shall exclude those rendered by anyone who is
duly licensed by the government after having passed a government licensure
examination, in connection with the exercise of one's profession.

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.

B. REGISTRATION OF BMBEs

Registration and Fees

1. 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.
2. Any such application shall be processed within fifteen (15) working days upon submission of
complete documents. Otherwise, the BMBEs shall be deemed registered.
3. The Municipal or City Mayor may appoint a BMBE Registration Officer who shall be under the
Office of the Treasurer.
4. 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.
5. Likewise, LGUs shall make a periodic evaluation of the BMBEs' financial status for monitoring
and reporting purposes.
6. The LGUs shall issue the Certificate of Authority promptly and free of charge.
7. However, to defray the administrative costs of registering and monitoring the BMBEs, the
LGUs may charge a fee not exceeding One Thousand Pesos (P1,000.00).
8. 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.
9. As much as possible, BMBEs shall be subject to minimal bureaucratic requirements and
reasonable fees and charges. (Sec. 4, R.A. No. 9178)

Who are eligible 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. Sec. 5, R.A. No. 9178 .

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. (Sec. 6, R.A. No. 9178)

C. FISCAL INCENTIVES TO BMBEs

Exemption from Taxes and Fees

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

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. They
are still required to file their Income Tax Return. 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. This is favorable to BMBEs because it means
lower tax to pay and simplified computation.

Exemption from the coverage of the Minimum Wage Law

▪ 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).
 BMBEs are exempt from strict compliance with the Minimum Wage Law. They can set a
wage lower than that provided by law considering that they are small-scale businesses
hence, the law is lenient. Nonetheless, the benefits given to regular employees such as
SSS, and Philhealth benefits must still be given to them.

Credit Delivery
▪ 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
consistent with the Bangko Sentral ng Pilipinas (BSP) policies, rules and regulations. 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.

Those who plan to set up a micro business can get help from the abovementioned
agencies and entities for their financing needs. Special Credit Window for each agency
are available to cater to the financial concerns of small-scale entrepreneurs to help them
get started. However, to avail of all the incentives, and benefits mentioned above, the
BMBE must be registered.

▪ 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, which
will in turn, directly provide credit support to BMBEs.
▪ 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.
▪ 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.
▪ Any existing laws to the contrary notwithstanding, interests, commissions and discounts
derived from the loans by the LBP, DBP, PCFC and SBGFC granted to BMBEs, as well as
loans extended by the GSIS and SSS to their respective member-employees under this
Act, shall be exempt from gross receipts tax (GRT).
▪ To minimize the risks in lending to the BBEs, the SBGFC and the Quedan and Rural Credit
Guarantee Corporation (QUEDANCOR) under the Department of Agriculture, in case of
agribusiness activities, shall set up a special guarantee window to provide the necessary
credit guarantee to BMBEs under their respective guarantee programs.
▪ The LBP, DBP, PCFC, SHGFC, SSS, GSIS, and QUEDANCOR shall annually report to the
appropriate Committees of both Houses of Congress on the status of the
 implementation of this provision. The BSP shall formulate the rules for the
implementation of this provision and shall likewise establish incentive programs to
encourage and improve credit delivery to the BMBEs. (Ser. 9, R.A. No. 9178)

Technology Transfer, Production and Management Training, and Marketing Assistance

▪ A BMBE Development Fund shall be set up with an endowment of Three Hundred Million
Pesos (P300,000,000.00) from the Philippine Amusement and Gaming Corporation
(PAGCOR) and shall be administered by the SMED Council.
▪ The Department of Trade and Industry (DTI), the Department of Science and Technology
(DOST), the University of the Philippines Institute for Small Scala Industries (UP ISSI),
Cooperative Development Authority (CDA), Technical Education and Skills Development
Authority (TESDA), and Technology and Livelihood Resource Center (TLRC) may avail of
the said Fund for technology transfer, production and management training and
marketing assistance to BMBEs.
▪ The DTI, in coordination with the private sector and non-government organizations
(NG0s), shall explore the possibilities of linking or matching-up BMBEs with small,
medium and large enterprises, and likewise establish incentives therefor.
▪ The DTI, in behalf of the DOST, UP ISSI, CDA, TESDA and TLRC shall he required to
furnish the appropriate Committees of both Houses of Congress a yearly report on the
development and accomplishments of their projects and programs in relation to
technology transfer, production and management, financing and marketing assistance
extended to BMBEs. (Sec. 10, R.A. No. 9178)

Trade and Investment Promotion

The data gathered from business registration shall be made accessible to and shall be utilized by
private sector organizations and non-government organizations for purposes of business
matching, trade and investment promotion. (Sec. 11, R.A. No. 9178)

Information Dissemination
The Philippine Information Agency (PIA), in coordination with the Department of Labor and
Employment (DOLE), the DILG and the DTI, shall ensure the proper and adequate information
dissemination of the contents and benefits of this Act to the general public, especially to its
intended beneficiaries specifically the barangay level. (Sec. 12, R.A. No. 9178)

Penalty
Any person who shall willfully violate any provision of this Act or who shall in any manner
commit any act to defeat any provision of this Act shall, upon conviction, be punished by a fine
of not less than Twenty-five Thousand Pesos (P25,000.00) but not more than Fifty Thousand
Pesos (P50,000.00) and suffer imprisonment of not less than six (6) months but not more than,
two (2) years. In case of non-compliance with the provisions of Sec. 9 of this Act, the BSP shall
impose administrative sanctions and other penalties on the concerned government financial
institutions, including 2 fine of not less than Five Hundred Thousand Pesos (P500,000.00). (Sec.
13, R.A. No. 9178)