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Wednesday, December 11, 2002
Law gives incentives to micro businesses
By Cherry T. Lim
PRESIDENT Arroyo has signed into law a measure that provides incentives to barangay micro business enterprises, including exemption from taxes and from coverage of the minimum wage law.
Republic Act 9178, also known as the “Barangay Micro Business Enterprises (BMBE) Act of 2002,” gives BMBEs exemption from income taxes.
Local fees
Local government units are also encouraged to reduce the amount of local taxes, fees and charges imposed on BMBEs, or to exempt these enterprises from paying these.
Approved by Arroyo last Nov. 13, the law also exempts such companies from paying their workers the minimum wage, but specifies that their employees would still be entitled to the same benefits given to regular employees, like social security and health care benefits.
The law, a copy of which was furnished Sun.Star by the Department of Trade and Industry (DTI) 7, defines a BMBE as a business “engaged in the production, processing or manufacturing of products or commodities, including agro-processing, trading and services,” whose total assets do not exceed P3 million.
Total assets would exclude the land on which the business entity’s office, plant and equipment are situated.
The services provided by those who passed government licensure examinations in connection with the exercise of their professions are not covered by RA 9178.
Financing
To help fund the operations of these micro businesses, various financial institutions would set up a special credit window. These institutions are the Land Bank of the Philippines, Development Bank of the Philippines, Small Business Guarantee and Finance Corp. (SBGFC) and the People’s Credit and Finance Corp.
The law also directs the Government Service Insurance System and the Social Security System to set up a special credit window for their own members who want to put up BMBEs.
The financial institutions would be able to use the loans granted to BMBEs as alternative compliance to Presidential Decree 717, the Agri Agra Law, and RA 6977, the Magna Carta for Small and Medium Enterprises.
Guarantees
To reduce the risks in lending to the micro enterprises, the SBGFC and the Quedan and Rural Credit Guarantee Corp. (Quedancor), in case of agribusiness activities, would guarantee the loans.
To avail themselves of the incentives provided under the new law, BMBEs would first have to register at the Office of the Treasurer of their respective cities or municipalities.
With a conservative estimate of two new small businesses in each of the 42,000 barangays nationwide, some 84,000 BMBEs could be covered by the proposed law, according to a report.
Joyce Yang, a member of the National Small and Medium Development Council representing the Visayas, said the DTI was tasked with coming up with the implementing rules and regulations within 90 days of the law’s approval.
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