BIR Ruling No. 009-12

January 4, 2012 BIR RULING NO. 009-12 R.A. 9178; BIR Ruling No. 397-2011; BIR Ruling No. 398-2011 707 Specialty Bakery 194 F. Blumentritt St. San Juan City Attention: Leonarda C. Umali President Gentlemen : This refers to your undated letter requesting for exemption from the payment of income tax pursuant to the provisions of Republic Act (RA) 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", All Seasons Auto Service Center was awarded the Certificate of Authority for Barangay Micro-Business Enterprise (BMBE) last August 23, 2010; and that this will have a term of two (2) years or until August 23, 2012. In reply, please be informed that Sections 3 (a) and 7 of R.A. 9178 provide, 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. HcDSaT 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 707 Specialty Bakery is a registered BMBE and was awarded BMBE Certificate of Authority by the City of San Juan, 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 23, 2010 or until August 23, 2012. (BIR Ruling No. 397-2011 dated October 25, 2011 and BIR Ruling No. 398-2011 dated October 25, 2011) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue