BIR Ruling [DA-583-06]

September 27, 2006 BIR RULING [DA-583-06] R.A. 9178; DA-356-2004 I.F.K. Water Station 2 Diamond St., Emapalicio Homes Talon 1, Las Pias City Attention: Ms. Ivyleeh Fernandez Kasing Proprietor Gentlemen : This refers to your letter dated May 10, 2006 requesting for exemption from the payment of income tax pursuant to the provisions of Republic Act No. 9178. It is represented that pursuant to Republic Act No. 9178, "An Act to Promote the Establishment of Barangay Micro Business Enterprises (BMBEs), Providing Incentives and Benefits Therefor, and for other Purposes," I.F.K. Water Station (IFK) was awarded the Certificate of Authority for Barangay Micro-Business Enterprise (BMBE) last April 7, 2006; and that this will have a term of two (2) years or until April 1, 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: DAEIHT "(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 IFK is a registered BMBE and was awarded BMBE Certificate of Authority by the Office of the City Treasurer, Las Pias City, it is therefore exempt from the payment of income tax for income arising from the operations of the enterprise for a period of two (2) years from April 7, 2006 or until April 1, 2008. (BIR Ruling No. 356-2004 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, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service