BIR Ruling No. 398-11

October 25, 2011 BIR RULING NO. 398-11 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 Crestsaver Store G/F Unit 2, Alcantara Park Apt., Tatlonghari St., Barangay Market Area City of Sta. Rosa, Laguna 4026 Attention: Eduardo B. Angeles Gentlemen : This is with regard to your letter dated May 10, 2011, 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 Crestsaver Store is located at the Ground Floor, Unit 2, Alcantara Park Apartment, Tatlonghari Street, Barangay Market Area, City of Sta. Rosa, Province of Laguna; that on April 28, 2011, Crestsaver Store was granted a BMBE Certificate of Authority (No. 2011-001) by the local government of Sta. Rosa, Laguna, pursuant to Republic Act No. 9178; and that the BMBE Certificate of Authority will expire on April 27, 2013. 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. 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 Crestsaver Store is a registered BMBE and was awarded BMBE Certificate of Authority by the Office of the City Treasurer of Sta. Rosa, Laguna, 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 28 April 2011 until 28 April 2013. (BIR Ruling No. 356-2004 dated June 25, 2004) IcDESA 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