Pinoybisnes Resource Center

August 24, 2007 BIR RULING [DA-471-07] R.A. 9178 DA-582-2004 Pinoybisnes Resource Center 3 Bendix, Liberty Homes, Alabang Muntinlupa City Attention: Mr. Marlo Sanchez Gentlemen : This refers to your letter dated April 10, 2006 requesting exemption from the 1% automatic withholding taxes being imposed by National Book Store, Abacus Book & Card Corporation, and Power Books, Inc. in connection with your book sales with them. It is represented that pursuant to Republic Act No. 9178, otherwise known as "An Act to Promote the Establishment of Barangay Micro Business Enterprises, Providing Incentives and Benefits Therefor, and for other Purposes", you were awarded the Certificate of Authority for Barangay Micro-Business Enterprise last January 27, 2006 entitling you to all benefits and incentives subject to the terms and conditions set forth in the said law, which will expire on January 27, 2008. 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, fees and charges." Inasmuch as PINOYBISNES RESOURCE CENTER is a registered BMBE and was awarded BMBE Certificate of Authority by the City of Muntinlupa, it is therefore exempt from the payment of income tax and from the 1% withholding tax for income arising from the operations of the enterprise for a period of two (2) years from January 27, 2006 or until January 27, 2008 imposed by National Book Store, Abacus Book & Card Corporation, and Power Books, Inc. in connection with your book sales with them. It is required, however, for you to register with the Revenue District Office having jurisdiction over you. 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