Micro enterprises abound in the economy. You see them as backyard producers, kitchen-based food ventures, vendors, hawkers, sari-sari store and carinderia owners, street repair and service shops.
Many micro businesses belong to the informal sector of the economy. This means they are not registered with proper government agencies (the Department of Trade Industry, the Mayor’s office, the Bureau of Internal Revenue, etc.).
While unlicensed micro business may enjoy an edge in that they don’t have to issue receipts and pay taxes, they are also missing out on many growth opportunities that registered businesses enjoy. Government and even the private sector offer support and assistance services to micro and small businesses, including easy loans, technology assistance, marketing support, trade fair exposure, training and counseling services.
But one cannot obviously avail of these benefits if his or her business is nameless, faceless, unlisted, unrecognized.
The Barangay Micro Business Enterprise (BMBE) Law was enacted in 2002 as Republic Act 9178 to encourage those in the informal sector to come out from “underground” and be integrated with the mainstream economy.
It does this through the rationalization of bureaucratic restrictions, active intervention of government specially in the local level, and the granting of incentives and benefits so that micro businesses can help generate employment and alleviate poverty.
The main attraction in availing of the BMBE is that it exempts micro enterprises from taxes and fees for a number of years.
Here are the major provisions of the BMBE law:
· A barangay micro business enterprise (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 shall not be more than P3 million pesos.
· Any qualified person, natural or juridical, or cooperative or association, may apply for inclusion in the BMBE Registry of a city or municipality. A Certificate of Authority is issued by the office of the treasurer of each city or municipality. This certificate, which is valid for two years and renewable at two-year intervals, enables the BMBE to avail of benefits under the law.
· The benefits that a registered BMBE may avail of are:
o Exemption from taxes and fees. All BMBEs shall be exempt from income tax for income from the operations of the enterprise. LGUs are also encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBE from local taxes, fees aned charges.
o Exemption from minimum wage law. The BMBE shall be exempt from the coverage of the Minimum Wage Law, but the employees shall nevertheless be entitled to the same benefits given to any regular employees like social security and PhilHealth benefits.
o Technology transfer, production, and management training, and marketing assistance
o Credit delivery. Certain government institutions – the Land Bank of the Philippines, the Development Bank of the Philippines, the Small Business Corporation, and the Peoples Credit and Finance Corporation are required by law to set up a special credit window, to service the credit needs of BMBEs, either through retail or wholesale lending, or both. The Government Service Insurance System and the Social Security System are also required to set up special credit programs that will serve the financing needs of their respective members who may wish to establish a BMBE. Private banking and financial institutions are also encouraged to lend to BMBEs.
Micro enterprises have good potentials to grow, provide income to the owners, create jobs, and contribute to the national economy — with a little help from support agencies. But first, they have to come forward and be recognized.
(Click here to read or download a complete copy of the BMBE law.)
Photo: from www.tenpesos.com