BIR Ruling No. 260-11

July 27, 2011 BIR RULING NO. 260-11 Secs. 3 (a) & 7, R.A. 9178; BIR Ruling No. DA-356-2004; BIR Ruling No. DA-402-05 Rosemarie's Delicatessen 41-14th Street New Manila, Mariana, Quezon City Attention: Rosemarie S. Aguila Proprietress Gentlemen : This refers to your letter dated 18 August 2010 requesting for exemption from tax for income arising from operations of your enterprise. 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," ROSEMARIE'S DELICATESSEN was awarded the Certificate of Authority for Barangay Micro-Business Enterprise (BMBE) on 2 August 2010 by the Quezon City Office of the City Treasurer; and that this will have a term of two (2) years or until 2 August 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. TIDcEH 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 ROSEMARIE'S DELICATESSEN is a registered BMBE and was awarded a BMBE Certificate of Authority by the City of Quezon City, it is regarded as exempt from the payment of income tax and consequently, from withholding tax, for income arising from the operations of the enterprise for a period of two (2) years from 2 August 2010 until 2 August 2012. 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.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue