BUREAU OF INTERNAL REVENUE

Revenue District Office No. 098

Cagayan de Oro City

TAX SEMINAR
(Barangay Micro Business Enterprises (BMBEs)
under R.A. 9178)
W
HO
HAT
HERE
HEN
HY
WHO can register as BMBE?
A business entity or enterprise, whether
operated as a sole proprietorship or a
corporation, partnership, cooperative
or association, organized/incorporated
and existing under Philippine laws:
WHO can register as BMBE?
A.Engaged in the production, processing or manufacturing
of products or commodities, including agro-processing,
trading and services, and which activities are barangay-
based and micro-business in nature and scope.

B.Whose total assets, real or personal, inclusive of 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)
WHO can register as BMBE?
Barangay-based
a) The majority of its employees are residents of the
municipality where its principal place of business is
located; or
b) its principal activity consists in the application/use of
a particular skill peculiar to the locality or of raw
materials predominantly sourced from the area; or
c) its business operations are confined within the
territorial jurisdiction of the municipality or LGU in
which its principal place of business is located
WHO can register as BMBE?
Micro-business in nature and scope
a) Its principal activity is primarily for livelihood; or
determined by the SMED Council or DTI as a priority
area for development or government assistance;
b) The enterprise is not a branch, subsidiary, division
or office of a large-scale enterprise; and
c) its policies and business modus operandi are not
determined by a large-scale enterprise or by persons
who are not owners or employees of the enterprise
WHO CANNOT register as BMBE?
A. Services rendered by natural persons who are duly
licensed by the government after having passed a
government licensure examination in connection
with the exercise of one’s profession; and

B. Juridical persons such as partnerships or

corporations engaged in consultancy, advisory and
similar services where the performance of such
services are essentially carried out through licensed
professionals.
GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION
A duly registered BMBE shall be
exempt from income tax on income
arising purely from its operations
GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION
All other forms of passive income
and income from revenues not
effectively connected with or arising
from operations of the BMBEs are
NOT included in the Income Tax
Exemption.
 Passive income and other revenues
not subject to exemption:

1. Interest income from bank deposits

2. Royalties
3. Prizes and other winnings
4. Cash and/or property dividends
5. Capital gains tax from the sale of share of stocks
6. Capital gains tax from sale of real property
7. Income from the practice of profession
8. Compensation Income
9. All other forms of income not connected with or
arising from operations as BMBE.
GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION

For purposes of availing of the tax incentives,

the BMBE shall register as such BMBE with the
BIR RDO where the principal office or place of
business of the BMBE is located.
GUIDELINES IN THE AVAILMENT OF INCOME
TAX EXEMPTION
DOCUMENTARY REQUIREMENTS:
1. Copy of the BMBE’s Certificate of Authority duly authenticated by the DTI
2. Sworn Statement of the values of assets owned and/or used/to be used by the
BMBE and/or its affiliates reflecting the current values thereof. The Sworn
Statement shall be supported by pertinent information and documents such as:
a) Acquisition cost, date of acquisition and depreciated value for existing
assets;
b) Invoices and/or official receipts for newly-acquired assets not yet
depreciated;
c) Duly-notarized copy of Contract of Lease for assets used in the conduct of
business covered by lease agreement; and
d) Copy of Loan Contract/s, if any, and Duly-Notarized Certification of
Amortization Payments on the Loan
GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION
DOCUMENTARY REQUIREMENTS:
3. Certified list of branches, sales outlets, places of production,
warehouse and storage places, or such other facility owned
and/or operated by the BMBE indicating their respective
addresses, whether located in the same municipality or city
where the principal place of business is located, or elsewhere;
4. Certified list of affiliates, indicating addresses, line of business
and responsible officers thereof;
5. Latest Audited Financial Statement, or Account Information
Form or its equivalent containing data lifted from audited
financial statements
GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION
If the BMBE is currently registered with the BIR under
or pursuant to existing registration rules and
regulations, its registration as a BMBE shall be duly
recorded by the BIR in the pertinent registration file
of the BMBE, and its registration certificate be
accordingly AMENDED to reflect its registration
likewise as a BMBE.
GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION
If the BMBE has not been registered under or pursuant to
existing registration, the BMBE SHALL register for each
type of internal revenue tax applicable, except income
tax, but INCLUDING withholding taxes for which it is liable.

A BMBE shall be subject to all other taxes and compliance

requirements prescribed under the National Internal
Revenue Code (NIRC) of 1997, as amended, and its
implementing rules and regulations.

*ONLY INCOME TAX IS EXEMPT

GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION
For purposes of exemption from the creditable
withholding tax on income payments, the BMBE
shall furnish its customers with a certified true
copy of its amended BIR registration certificate.
GUIDELINES IN THE AVAILMENT OF
INCOME TAX EXEMPTION
 If a BMBE is also entitled to exemption from income tax under any law
other than the Act, it shall so state this fact in its registration form and
indicate whether it shall avail itself thereof or the privilege under the
Act.
 The choice so made shall bind the BMBE for the entire period of validity
of its registration with the BIR.
 No BMBE shall be allowed double or multiple availment of income tax
exemption privileges.

Note: The Certificate of Authority (CA) shall be effective for a period

of two years and renewable for a period of two (2) years for every
renewal
Revocation of Income Tax
Exemption Privilege
The BIR shall revoke the income tax exemption privilege of a BMBE
for any of the following:
1. When the BMBE transfers its place of business to another
locality;
2. When the value of its total assets as determined pursuant to this
Order exceeds Three Million Pesos (P3,000,000.00);
3. When the BMBE voluntarily surrenders its Certificate of
Authority to the Office of the City or Municipal Treasurer
4. In case of death of the registered individual owner of the BMBE,
if it is a sole proprietorship;
Revocation of Income Tax
Exemption Privilege
5. In case of merger or consolidation with an entity which is not
eligible to be a BMBE;
6. In case of sale or transfer of the BMBE, if it is a sole
proprietorship, without prejudice to the transferee applying
for registration should it be qualified under the terms of this
Order;
7. Submission of fake or false or falsified documents;
8. In case of retirement from business, or cessation/suspension
of operations for one year; and
9. Making false or omitting required declarations or statements;
REGISTRATION CHECKLIST under
Revenue Memorandum Circular
No. 57-2020
WHAT NEXT?

Submit COMPLETE requirements

to your RDO
Attend taxpayer’s briefing at the
RDO.
Once registered, you will
receive:
 CERTIFICATE OF REGISTRATION (COR)
 ASK FOR RECEIPT SIGNAGE
 AUTHORITY TO PRINT INVOICES
 APPROVED BOOKS OF ACCOUNTS
WHERE to register?

 Find the Revenue

District Office (RDO)
that has jurisdiction
over your principal
place of business.
WHEN to register?

 ON OR BEFORE THE
START OF BUSINESS
OPERATION
(Sec. 236 of the Tax Code)
WHY should you register with the BIR?

Reasons include, but not limited to, the ff.:

 It is a mandate of the government
 To avoid penalties
 To issue valid receipts/invoices
SELF-EMPLOYED INDIVIDUALS /
PROFESSIONALS
TAX DUE FORM TO BE DEADLINE
USED
1. Annual 0605 ON OR BEFORE JAN 31 OF
Registration Fee THE YEAR
(P 500.00)

2. Income Tax
Return 1701 APRIL 15 NEXT YEAR
- Annual
SELF-EMPLOYED INDIVIDUALS /
PROFESSIONALS
TAX DUE FORM TO BE DEADLINE
USED
3. Percentage Tax 2551Q 1Q-April 25; 2Q-Jul 25;
(Quarterly) – (3M 3Q-Oct25; 4Q-Jan 25
and below)
or
Value-Added Tax
- monthly 2550M 20th day of the ff. month
- quarterly 2550Q 25th day after the close of
(above 3M) the quarter
SELF-EMPLOYED INDIVIDUALS /
PROFESSIONALS
TAX DUE FORM TO DEADLINE
BE USED
4. Expanded
Withholding Tax (EWT)
- monthly 0619E 10th day of the ff month
- quarterly 1601E-Q Last day of the next month
after the close of the
quarter

5. Withholding on
Compensation 1601C 10th day of the ff month
NON-INDIVIDUALS

TAX DUE FORM TO BE DEADLINE

USED
1. Annual 0605 ON OR BEFORE JAN 31 OF
Registration Fee THE YEAR
(P 500.00)

2. Income Tax
Return 1702
APRIL 15 NEXT YEAR
- Annual
-
NON-INDIVIDUALS

TAX DUE FORM TO BE DEADLINE

USED
3. Percentage Tax 2551Q 1Q-April 25; 2Q-Jul 25;
(Quarterly) – (3M and 3Q-Oct25; 4Q-Jan 25
below)
or
Value-Added Tax
- monthly 2550M 20th day of the ff. month
- quarterly 2550Q 25th day after the close of the
(above 3M) quarter
NON-INDIVIDUALS

TAX DUE FORM TO DEADLINE

BE USED
4. Expanded
Withholding Tax (EWT)
- monthly 0619E 10th day of the ff month
- quarterly 1601E-Q Last day of the next month
after the close of the
quarter

5. Withholding on
Compensation 1601C 10th day of the ff month
(INDIVIDUALS / NON-INDIVIDUALS)
BASIC FORMULA: SALES
less: DEDUCTIONS
= NET TAXABLE INCOME

*TAX DUE = EXEMPT

But Still required to file the Income tax return

A.OPTIONAL STANDARD DEDUCTION

- 40% of gross
sales/receipt/revenue/fees.

- NOT Applicable to BMBEs

BACK
B. ITEMIZED DEDUCTION
- includes all the ordinary and necessary
expenses paid or incurred during the taxable
year related to the operation of your business
or practice of your profession.
- Keep a file of your Official Receipt/
Cash/Sales Invoice, Payroll, Vouchers, Bank
Statements, Debit/Credit Memo.
EXAMPLES of ITEMIZED DEDUCTIONS:

RENTAL EXPENSES
SALARIES AND WAGES
REPAIRS AND MAINTENANCE
PROFESSIONAL FEE
DEPRECIATION EXPENSE
TAXES AND LICENSES
and ETC.
PERCENTAGE TAX 3% of GROSS Sales
(Quarterly)
(1% July 1, 2020 to June 2023)

Computation:

1st month Gross Sales 30,000.00

2nd month Gross Sales 50,000.00
3rd month Gross Sales 60,000.00
Total quarterly Gross Sales 140,000.00

Percentage Tax Due =

(P 140,000 x 1%) P 1,400.00
VALUE ADDED TAX
(Monthly and Quarterly)

2550M (Monthly)
2550Q* (Quarterly)

• Due on the 20th day of succeeding month (From

2550M)
• Due on the 25th day of the month following the end
of a particular quarter (Form 2550Q)
* Include the Summary List of Sales, Purchases and Importation
VALUE ADDED TAX 12% of NET SALES
(Monthly and Quarterly)

Computation:

Gross Sales of P300,000.00 Gross Purchases of P 180,000.00

Net Sales is P 267, 857.14 Net Sales is P 160,714.29
(P300,000 / 1.12) (P180,000 / 1.12)

OUTPUT TAX is INPUT TAX is

(P267,857.14 x 12%) = (P160,714.29 x 12%) =
P 32, 142.86 P 19,285.71

VAT DUE = OUTPUT – INPUT

= 32, 142.86 – 19, 285.71
= 12, 857.15
OPTIONS IN FILING INCOME TAX RETURNS
(PER TRAIN LAW)
 USING GRADUATED  USINGTHE 8% INCOME
RATES TAX FLAT RATE (IN
EXCESS OF P 250,000)
YOU WILL FILE:
 INCOME TAX RETURN NOT APPLICABLE
 PERCENTAGE TAX FOR BMBEs
SOME Expenses mandatorily required to be subjected to EWT:

1. ADVERTISING – 2%
2. RENTAL – 5%
3. SECURITY – 2%
4. MESSENGERIAL
ACTIVITIES/PROMOTIONS – 2%
5. PROFESSIONAL FEES – 10% OR 15%
6. CONTRACTORS – 2%
WITHHOLDING ON COMPENSATION
(1601-C):
Any employer who employs people
other than the Minimum Wage Earner
are required to withhold salaries from
its employees and remit the same to
the BIR.

REFUND any excess taxes you withheld

on the compensation of your
employees.
FILE the ANNUAL INFORMATION RETURNS:

• BIR FORM 1701 / 1702EX w/ Account Information

Form or its equivalent, containing data lifted from
audited financial statements and a sworn statement
of assets owned and/or used in business. ON OR
BEFORE APRIL 15

• BIR FORM 1604-C (COMPENSATION) w/ Alphalist of

Employees. ON OR BEFORE JANUARY 31

• BIR FORM 1604-E (EXPANDED) w/ Alphalist of

Payees. ON OR BEFORE MARCH 1
 WHAT TO DO DURING ACTUAL BUSINESS
TRANSACTIONS? DO’S AND DON’T’S

 Regularly issue valid receipts/invoices

 Register CRM/POS machines before using
 Record everyday transactions in the
books of accounts
 Keep books of accounts in the place of
business
WHAT TO DO DURING ACTUAL BUSINESS
TRANSACTIONS? DO’S AND DON’T’S

 Do not use unregistered books of

accounts
 Display your COR, Ask for BIR Receipt
Poster and Annual Registration Fee (BIR
form 0605)
 File and pay BIR returns regularly
WHAT TO DO DURING ACTUAL BUSINESS
TRANSACTIONS? DO’S AND DON’T’S

 File returns even when there is no

payment to be made to avoid OPEN
CASES (Use eBIRForms Offline program and
submit online)
 Update your BIR registration using BIR
Form 1905 when there is a change in
information ( e.g. address, trade
name, etc)
WHAT TO DO DURING ACTUAL BUSINESS
TRANSACTIONS? DO’S AND DON’T’S

 Secure Tax Clearance in the event of

BUSINESS CLOSURE OR CESSATION.
PENALTIES:

1. FOR LATE FILING

A. SURCHARGE (25%)
B. INTEREST (12% PER ANNUM)
C. COMPROMISE PENALTY (MINIMUM OF 1,000 PHP)

FOR NO PAYMENT RETURNS, COMPROMISE PENALTY

WILL BE BASED ON THE GROSS SALES DECLARED.
OTHER PENALTIES:
1. FAILURE TO REGISTER 2. FAILURE TO DISPLAY YOUR
YOUR BUSINESS BEFORE ANNUAL REGISTRATION RETURN
THE START OF OPERATION. (BIR FORM 0605).

P 20,000.00 P 1,000.00 or
imprisonment of not
more than 6 months
OTHER PENALTIES:
3. FAILURE TO DISPLAY THE 4. FAILURE TO ATTACH
COR (BIR FORM 2303). AUTHORIZED STICKER AUTHORIZING
THE USE OF POS/CRM/CAS.

P 1,000.00 or P 1,000.00 per unit

imprisonment of of machine
not more than 6
months
OTHER PENALTIES:

5. USE OF UNREGISTERED 6. FAILURE TO ISSUE

MACHINE (POS/CRM/CAS) RECEIPTS/ INVOICES
P 25,000.00 per P 10,000.00 1st
unit of machine offense
P 20,000 2nd offense
OTHER PENALTIES:

7. REFUSAL TO ISSUE 8. USING INVOICES WHERE THE

RECEIPTS/INVOICES ORIGINAL IS DETACHED AND THE
DUPLICATE IS BLANK.

 P 20,000 1 st  P 10,000 1ST offense

offense  P 20,000 2nd offense
 25,000 2nd
offense
OTHER PENALTIES:
9. FAILURE TO SUPPLY
CORRECT INFORMATION IN
THE RECEIPTS/INVOICES.

P 1,000.00 per
incorrect/lacking
information
OTHER PENALTIES:
BOOKEEPING
REQUIREMENTS:

FAILURE TO:
 Register books of P 1,000 to P
accounts 50,000 depending
 Maintain books of on the annual gross
accounts in the business sales
premises
 Update entries in the
books
Question and Answer
?