BIR Ruling [DA-532-04]

October 20, 2004 BIR RULING [DA-532-04] Galleon Appraisal & Corporate Services, Inc. 606 Vicente Madrigal Building Ayala Avenue, Makati City Attention: Mr. Olindo C. Garcia President Gentlemen : This refers to your letter dated April 20, 2004 requesting for a Certificate of Tax Exemption under the provisions of Republic Act (R.A.) No. 9178, otherwise known as the Barangay Micro Business Enterprise (BMBE). It is represented that you are duly registered with the BMBE under Certificate of Registration No. 00021 dated March 2, 2004 with Business ID No. 200301611. In reply thereto, please be informed that Sections 3 (a) and 7 of R.A. 9178 provides that "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. SaICcT xxx xxx xxx "Section 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." For purposes of availing of the tax incentives, the BMBE shall register as such BMBE with the BIR RDO where the principal office or place of business of the BMBE is located. (Rule 3, Sec. 3, Department Order No. 17-04) Inasmuch as you are registered as a BMBE and was awarded BMBE Certificate of Authority by the City of Makati, you are therefore exempt from the payment of income tax on income arising from the operations of the enterprise for a period of two (2) years from March 2, 2004 or until March 2, 2006. (BIR Ruling No. DA356-04 dated June 25, 2004) 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, (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group