Business Workshop Inc.

April 25, 2007 BIR RULING [DA-258-07] DA-356-2004; Secs. 3 (a) & 7, R.A. 9178 Business Workshop Inc. 17 Dexter Road Toro Hills Quezon City Attention: E.G. Quiambao Vice-President Gentlemen : This refers to your letter dated January 6, 2006, requesting exemption from the payment of 2% withholding tax pursuant to the provisions of Republic Act No. 9178. It is represented that pursuant to Republic Act No. 9178, otherwise known as "An Act to Promote the Establishment of Barangay Micro Business Enterprises (BMBEs), Providing Incentives and Benefits Therefor, and for other Purposes," Business Workshop, Inc. (BWI) was awarded the Certificate of Authority for Barangay Micro-Business Enterprise (BMBE) on June 22, 2005; and that this will have a term of two (2) years or until June 22, 2007. In reply, please be informed that Sections 3(a) and 7 of R.A. 9178 provides, viz: "SEC. 3. Definition of Terms . As used in the Act, the following terms shall mean: (a) "Barangay Micro Business Enterprise," hereinafter referred to as BMBE, 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 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. xxx xxx xxx SEC 7. 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 charges imposed or to exempt the BMBEs from local taxes and charges." Inasmuch as BWI is a registered BMBE and was awarded a BMBE Certificate of Authority by the City of Quezon City, it is regarded as exempt from the payment of income tax and consequently, from withholding tax, for income arising from the operations of the enterprise for a period of two (2) years from June 22, 2005 until June 22, 2007. ACHEaI This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation it will be disclosed that the facts are different, then this ruling shall be considered null and void. Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service