Erlinda L. Balauag

January 29, 2010 BIR RULING [DA-(OSL-001) 019-10] RA 9178; DA-442-2006 Erlinda L. Balauag Poblacion Occidental Consolacion, Cebu Madam : This refers to your undated letter 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, otherwise known as "An Act to Promote the Establishment of Barangay Micro Business Enterprise, Providing Incentives and Benefits Therefor, and for other Purposes," Talitha Purified Drinking Water Refilling Station was awarded the Certificate of Authority for Barangay Micro Business Enterprise last February 27, 2008 entitling Talitha Purified Drinking Water Refilling Station to all benefits and incentives subject to the terms and conditions set forth in the said law, which will expire on February 27, 2010. 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 above 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 BMBE's shall be exempt from income tax for income arising from the operations of the enterprise. ECaSIT 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 Talitha Purified Drinking Water Refilling Station is a registered BMBE and was awarded BMBE Certificate of Authority by the City of Pasay, 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 February 27, 2008 or until February 27, 2010. It is required, however, for you to register with the Revenue District Office having jurisdiction over you. (BIR Ruling No. DA-442-2006 dated July 19, 2006) 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.) GREGORIO V. CABANTAC Deputy Commissioner Legal and Inspection Group