Plastic Hub Trading

August 3, 2009 BIR RULING [DA-(OSL-029) 434-09] R.A. 9178; DA-356-04 Plastic Hub Trading 116 Bulusan St., La Loma Quezon City Attention: Nelson Enriquez Proprietor Gentlemen : This refers to your letter dated November 10, 2008 requesting 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 Enterprises (BMBEs), Providing Incentives and Benefits Therefor, and for other Purposes", Plastic Hub Trading (TIN 914-458-351) was awarded a BMBE Certificate of Authority last August 4, 2008; and that this will have a term of two (2) years or until August 4, 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 asset 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. EcDSTI 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 Plastic Hub Trading is a registered BMBE and was awarded BMBE Certificate of Authority by Quezon 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 August 4, 2008 or until August 4, 2010. 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