Question & AnswerQ&A (DTI ADMINISTRATIVE ORDER NO. 01, s. 2003)
The policy of the State under R.A. 9178 is to hasten the country's economic development by encouraging the formation and growth of barangay micro business enterprises, integrating those in the informal sector with the mainstream economy through rationalization of bureaucratic restrictions, active government intervention especially at the local level, and granting incentives to generate employment and alleviate poverty.
A BMBE is any business entity or enterprise engaged in production, processing, manufacturing, trading, or services whose total assets including loans but excluding land do not exceed Three Million Pesos (P3,000,000.00). It includes individuals, partnerships, cooperatives, corporations, or associations registered with the city or municipal treasurer.
To be eligible, a business must have assets not exceeding Three Million Pesos (excluding land) and be engaged in the business activities defined under the law such as production, processing, manufacturing, trading, or services excluding government licensed professional services.
The applicant must submit a duly accomplished BMBE Form 01 in triplicate to the Office of the Municipal or City Treasurer. The Treasurer evaluates the application and must process it within fifteen (15) working days. If not processed within this period, the BMBE is deemed registered. Upon registration, a CA is issued valid for two years and renewable thereafter.
The Certificate of Authority is issued promptly and free of charge, but the Local Government Unit may charge a fee not exceeding One Thousand Pesos (P1,000.00) to cover administrative costs.
All BMBEs are exempted from income tax on income arising from their operations. Local Government Units are encouraged to reduce or exempt local taxes, fees, and charges on BMBEs.
No, BMBEs are exempt from the Minimum Wage Law, but their employees are entitled to social security, healthcare, and other benefits given to any regular employee.
Designated financial institutions such as LBP, DBP, SBGFC, PCFC, GSIS, and SSS must set up special credit windows for BMBEs. Loans granted under the Act count double for compliance with certain agricultural and SME laws, with interest from these loans exempt from gross receipts tax. Guarantee institutions provide credit guarantees to minimize lending risks.
A fine of not less than Twenty-five Thousand Pesos (P25,000.00) but not more than Fifty Thousand Pesos (P50,000.00) and imprisonment of six months to two years. Additionally, government financial institutions violating certain provisions may be fined at least Five Hundred Thousand Pesos (P500,000.00).
The Philippine Information Agency (PIA), in coordination with DOLE, DILG, and DTI, is responsible for ensuring the proper and adequate dissemination of information about the law's contents and benefits, especially at the barangay level.
The BMBE Development Fund, with an initial endowment of Three Hundred Million Pesos (P300,000,000.00) from PAGCOR, is administered by the SMED Council and may be used by agencies like DTI, DOST, UP ISSI, CDA, TESDA, and TLRC for technology transfer, production, management training, and marketing assistance to BMBEs.