BIR Ruling No. 414-12

June 15, 2012 BIR RULING NO. 414-12 Sections 3 (a) & 7 of Republic Act No. 9178; BIR Ruling No. 476-11; BIR Ruling No. 397-11 Atty. Maria Lourdes R. Reyes 131 F. Manalo Street San Juan, Metro Manila Madam : This refers to the letter dated December 9, 2010 requesting on behalf of your client, Casa Reyes, Inc., for exemption from the payment of income tax pursuant to the provisions of Republic Act (R.A.) No. 9178. It is represented that Casa Reyes, Inc. is a domestic corporation duly registered with the Securities and Exchange Commission (SEC) under SEC Registration No. CS200616615 with TIN 006-527-914; that it is primarily organized to "establish, maintain and operate restaurants, snack shops, coffee shops, refreshment parlor, food delivery outlets, fastfood, and other kinds of food establishments; to make, manufacture, cook, arrange, package, serve, cater and deliver food, drinks, refreshments and other food items or commodities commonly served in such establishments; to engage in food service and catering business and allied pursuits; to acquire, establish, own maintain, operate, manage, promote, take on lease, sell, mortgage, lease or otherwise deal in any of the: hotels, resorts, amusement places, restaurants, cafeterias, sandwich stands, delicatessens, tea shops, coffee shops, soda fountains, refreshment parlors, candy stores, bakeries, confectionaries and other similar establishments and to offer such other services to the public in connection with the operation of said restaurant and fast food enterprise and to do and perform such other acts and things necessary or incidental to the accomplishment of the foregoing corporate business and objects insofar as may be allowable by applicable laws and rules and regulations." aEHASI that pursuant to Republic Act No. 9178, otherwise known as "An Act to Promote the Establishment of Barangay Micro Business Enterprise, Providing Incentives and Benefits Therefor, and for Other Purposes," that Casa Reyes, Inc. was awarded the Certificate of Authority for Barangay Micro Business Enterprise entitling it to all benefits and incentives subject to the terms and conditions set forth in the said law, which will expire on December 4, 2012. In reply thereto, 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 enterprises 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) 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 BMBE's 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 Casa Reyes, Inc. 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, i.e. , operation as a restaurant establishment, for a period of two (2) years from December 4, 2010 or until December 4, 2012. (BIR Ruling Nos. 397-11 dated October 25, 2011; 497-11 dated December 15, 2011) 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. HCTDIS Very truly yours, (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue