BIR Ruling No. 332-11

September 2, 2011 BIR RULING NO. 332-11 Sections 3 (a) and 7 of R.A. 9178; BIR Ruling [DA-(OSL-026) 409-09] dated July 27, 2009; BIR Ruling [DA-(OSL-001) 026-09] dated January 27, 2009; BIR Ruling [DA-(OSL-029) 434-09] dated Aug. 3, 2009; and; BIR Ruling No. 356-2004 dated June 25, 2004 Blue Eagle Laundry Solution 42 Andres Abellana St., Guadalupe, Cebu City, Philippines Attention: Ms. Liza Tiu Siady President Gentlemen : This is to acknowledge receipt of your letter dated 8 September 2010, requesting for exemption from income tax and other benefits enjoyed by Barangay Micro Business Enterprise (BMBE) under Department Order No. 17-2004. It is represented that Eaglegate Corporation, with principal place of business at 42 Andres Abellana St., Guadalupe, Cebu City, owns and operates Blue Eagle Laundry Solutions (BELS); that on December 3, 2009, BELS was granted a BMBE Certificate of Authority (No. 46-09-12-03) by the local government of Cebu City pursuant to Republic Act No. 9178; and that the BMBE Certificate of Authority will expire on December 3, 2011. 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 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. EaSCAH 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 BELS is a registered BMBE and was awarded BMBE Certificate of Authority by the Office of the City Treasurer of Cebu 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 3 December 2009 until 3 December 2011. (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, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue