BARANGAY MICRO

BUSINESS ENTERPRISE
ACT of 2002(B.M.B.E.)
JOHN CARMELO C. APILADO
MDA-BA

WHAT IS B.M.B.E.?
The BMBEs Act of 2002 encourages the formation and growth of
barangay micro business enterprises by granting them incentives and
other benefits.
The Act was signed into law by President Gloria Macapagal-Arroyo on
November 13, 2002. Its Implementing Rules and Regulations (IRR) which
was issued on February 7, 2003, as DTI Department Administrative Order
No. 1, Series of 2003, was published twice in the February 11 and 26,
2003 issues of the Manila Bulletin.
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.

WHAT IS B.M.B.E.?

The Barangay Micro Business Enterprises Act of 2002, or RA

9178, is a law that (theoretically) allows businesses with assets
worth less than 3 million pesos to be exempted from paying
income tax.
Aside from a few other benefits, BMBE also exempts you from
the minimum wage law.

Who is qualified to apply for BMBE

Certification?
1) For those engaged in production, processing, or
manufacturing of products: do your total assets including
business loans amount to less than P3 million? If yes, then that
makes up a major requirement as a BMBE applicant.
2) If your business involves trading and services, youre eligible
to be certified as long as the services you offer do not require
you to pass a government licensure examination.

Whats in it for us?

Registered BMBEs can avail of the following incentives:
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
requirements of BMBEs
Technology transfer, production and management training, and marketing
assistance programs for BMBE beneficiaries

Agencies Mandated to assist

BMBEs
Department of Trade and Industry (DTI)
Department of Science and Technology (DOST)
University of the Philippines Institute for Small Scale Industries
(UP-ISSI)
Cooperative Development Authority (CDA)
Technical Education and Skills Development Authority (TESDA)
Technology and Livelihood Resource Center (TLRC)

Funding agencies offering special

credit window for BMBEs

Land Bank of the Philippines;

Development Bank of the Philippines;
Small Business Guarantee and Finance Corporation;
Peoples Credit and Finance Corporation;
Quedan and Rural Credit Guarantee Corporation
Government Service Insurance System (for members only); and
Social Security System (for members only)

Who is qualified to apply for BMBE

Certification?

Practicing professionals like doctors, lawyers, engineers and etc.

are not eligible to apply for a BMBE Certification.
Only Main Branches or Offices can apply for a BMBE Certification.
Branches/Franchises can not.

How to apply for a BMBE

Certification?

BMBE REGISTRATION ST
EPS
BMBE REGISTRATION FO
RM
BMBE Certification

How much will it cost to register?

Registration and issuance of the Certificate of
Authority of the LGU is free of charge and shall
be done promptly. However, to defray the
administrative
costs
of
registering
and
monitoring the BMBEs, the LGUs are allowed to
charge a fee not exceeding P1, 000.00.

More facts about BMBE

Well, first, BMBE applications are approved by the municipal hall, but tax
exemptions are approved by the BIR. Just because you are approved as a
BMBE by the municipal/city hall does not necessarily mean you will be
granted income tax exemption by the BIR. The DTI knows this situation, and
apparently, it's not illegal for the BIR to do that.
Now even if the BIR does grant you income tax exemption, it only means you
won't have to payincometax anymore. You still have to pay the 3% monthly
percentage tax.
If you are operating a very small business with an annual gross income not
exceeding P100,000, you are exempted from paying the monthly percentage
tax of 3%.
The Certificate of Authority is effective for two years and renewable for
another two years for every renewal.

ECONOMIC BENEFITS OF BMBE

BMBEs are essential to the countrys economic development

since they effectively serve as seedbeds of Filipino
entrepreneurial talent. Thus, the Act primarily aims to integrate
micro enterprises in the informal sector into the mainstream of
the economy. Strengthening BMBEs would mean more jobs and
livelihood, and a better quality of life for Filipinos.

LOOPHOLES and DISADVANTAGES

of BMBE

Prone to fraudulent applicants

Can be abused by people on authority
Poor implementation of the law
Poor information dissemination

Poor coordination of concerned agencies

Requires heavy monitoring on BMBE Certified entrepreneurs
Certified BMBEs and its employees will have a hard time on settling their
wages because of a BMBEs exemption on minimum wage
If not monitored properly it may lower a municipalitys revenue in the long run