Incentives for Barangay Micro Business Enterprises (BMBEs)

There have been moves to encourage micro, small and medium enterprises. For “micro business enterprises,” there is a move under Republic Act No. 9178, also known as the “Barangay Micro Business Enterprises (BMBEs) Act of 2002.”

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 (“services” exclude those rendered by any one, who is duly licensed by the government after having passed a government licensure examination, in connection with the exercise of one’s profession), 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). This definition, however, is subject to review and upward adjustment.

Any qualified person, natural or juridical, or cooperative, or association, may apply for the 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 of Authority, which is valid for 2 years and renewable at 2-year intervals, enables the BMBE to avail of the benefits under the law. These benefits include:

  • Exemption from Taxes and Fees. All BMBEs shall be exempt from income tax for income arising 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 BMBEs from local taxes, fees and charges.
  • Exemption from the coverage of the Minimum Wage Law. The BMBEs 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 employee, e.g., social security and healthcare benefits.
  • Technology transfer, production and management training, and marketing assistance.
  • Credit Delivery. Certain goverrnment-owned or controlled corporations — the Land Bank of the Philippines (LBP), the Development Bank of the Philippines (DBP), the Small Business Guarantee and Finance Corporation (SBGFC), and the Peoples Credit and Finance Corporation (PCFC) — are required by law to set up a special credit window, which services the credit needs of BMBEs, either through retail or wholesale lending, or both. The Government Service Insurance System (GSIS) and the Social Security System (SSS) are also required to set up special credit window that will serve the financing needs of their respective members who may wish to establish a BMBE. Private banking and other financial institutions are also encouraged to lend to BMBEs.

These benefits are meant to achieve the purpose of the law, which is to encourage the formation and growth of barangay micro business enterprises that effectively serve as seedbeds of Filipino entrepreneurial talents, and integrating those in the informal sector with the mainstream economy, through the rationalization of bureaucratic restrictions, the active intervention of the government specially in the local level, and the granting of incentives and benefits to generate much-needed employment and alleviate poverty.


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