BMBE registration: income tax exemption for micro businesses

Who qualifies

RA 9178 sets the limit at total assets of not more than ₱3,000,000, not counting the land on which the office, plant and equipment sit. DTI's BMBE system states the same ₱3 million limit.^[2,1]

Services count, with one exclusion. RA 9178 says "service" excludes services rendered by anyone duly licensed by the government after passing a government licensure examination, in connection with the exercise of their profession. DTI's BMBE page gives accountants, lawyers and doctors as examples. So a licensed professional cannot register their professional practice as a BMBE.^[6,1]

If you hold a professional license and also run a different kind of business, ask the Negosyo Center how the exclusion applies to you before you apply.

Example only: a sari-sari store with ₱150,000 in stock, a ₱60,000 chest freezer and shelving, and a store built on the family's own lot. The stock and equipment count toward the ₱3 million; the lot under the store does not. Use your latest inventory and the cost of your equipment when you add it up.^[2]

What you get

The income tax exemption is in Section 7 of RA 9178 and on DTI's BMBE-Online page. The wage and credit benefits are from a May 2018 DTI news release.^[2,1,4]

The exemption covers income tax only. You still register with BIR, issue invoices and file your returns, including percentage tax if it applies to you. See BIR registration and percentage tax.

• Income tax exemption for income arising from the operations of the enterprise
• Exemption from the coverage of the minimum wage law, as described by DTI in 2018
• A special credit window from government financing institutions, as described by DTI in 2018

How to apply

BMBE-Online is DTI's web system for remote application and automated processing. Registration and issuance of the Certificate of Authority are free of charge. DTI is the sole agency that issues the Certificate of Authority at Negosyo Centers.^[1,3,5]

1. Register your business name firstWith DTI for a sole proprietorship, or SEC or CDA for other types. Your Certificate of Business Name Registration is a requirement.
2. Fill in the BMBE application formOnline on BMBE-Online, or at the nearest Negosyo Center or DTI office where your business is located.
3. Wait for DTI's evaluationDTI checks whether you qualify.
4. Receive the Certificate of AuthorityIf you qualify, DTI issues it. It is valid for two years from the date of issuance.

Renewing every two years

The Certificate of Authority is effective for two years from the date of issuance and is renewable. Mark the date: your income tax exemption depends on holding a valid certificate.^[1]

If your assets grow past ₱3 million, you no longer meet the definition. Plan for normal income tax from that point, and look at the 8% income tax option with your CPA.^[1]

Questions people ask

How much is BMBE registration?

Free. DTI states that registration and issuance of the Certificate of Authority are free of charge. RA 9178 once allowed LGUs to charge up to ₱1,000, but DTI now issues the certificate at no cost.

Does BMBE mean I pay no taxes at all?

No. The exemption is for income tax on income from the enterprise's operations. Other taxes and BIR filing duties are not covered by that exemption.

Can a doctor, lawyer or accountant register as a BMBE?

Not for their professional practice. RA 9178 excludes services rendered by anyone licensed by the government after passing a licensure exam, in connection with the exercise of their profession. DTI's BMBE page names accountants, lawyers and doctors as examples.

Can an online seller register as a BMBE?

DTI's BMBE pages set the test by total assets, not by where you sell. If your assets are within ₱3 million and you have a business name certificate, you can apply.

Where can I get help with my application?

Negosyo Centers assist micro enterprises with BMBE applications. DTI reported over 800 centers nationwide as of May 2018.