BIR Ruling No. 368-2021

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE Quezon City D

BIR Ruling No. 397-201!; BIR Ruling No. 398-2011 Repub|ic Act No. 9178 (BMBE's Act of 2002); UT-368-20z1 OCT L4 2021

No. 2-9th Street., East Tapinac, Olongapo City, 2200 LADDERIZED CPA REVIEW CENTER INC

Attention: Mr. Mark Lord M. Bumagat President & CEO

Gentlemen:

for the foilowing: (1) income tax exemption pursuant to the Barangay Micro Business of tax type "Income Tax" on the Certificate of Registration (BIR Form 2303) issued to Ladderized CPA Review Center, Inc. Enterprises (BMBE's) of 2002: (2) clarification on the jurisdiction of application for registration on availment of tax incentives under the BMBE's Act of 2002; and (3) removal This refers to your letter application and protest dated September 2, 2019 requesting

your request for the removal of the tax type - "Income Tax" on your Certificate of Registration (BIR Form 2303) was not granted by the Revenue District Office with a note merely on the basis of being a BMBE registered enterprise. Hence, this request. Revenue District Office No. 18, Olongapo City. However, your request was forwarded to Revenue Region No. 4, City of San Fernando, Pampanga for appropriate action. Moreover, Certificate of Tax Exemption in relation with the Certificate of Authority as Barangay Micro Business Enterprise (BMBE) issued by Department of Trade and industry (DTI) with As represented, on August 07, 2019, you have requested for the issuance of a

under R.A. 9178, otherwise known as the BMBEs Act of 2002" provides that: Registration of Barangay Micro Business Enterprise and the Availment of Tax Incentives Finance (DOF) Department Order No. 017-04 entitled "Guidelines to Implement the In reply thereto, please be informed that Rule 3 (Section 3) of the Department of

"RULE 3

Guidelines in the Availment of Income Tax Exemption

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the BMBE shall register as such BMBE with the BIR RDO where the principal office or place SECTION 3. Availment of Tax Incentives. -- For purposes of availing of the tax incentives,

T

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following documents: of business of the BMBE is located. Its application for registration shall be supported by the

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over the principal office or place of business of BMBE-registered taxpayer, and not the Revenue Region, shall process and approve an application of income tax exemption. Such being the case, it is clear that the Revenue District Office having jurisdiction

(Tax Code), as amended, states that: Moreover, Section 236(A)(C)(E) of the National Internal Revenue Code of 1997

"SECTION 236. Registration Requirements.

(A) Requirements. --- Every person subject to any internal revenue tax shall register once with the appropriate Revenue District Officer:

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Subsection (A) hereof, shall register each type of internal revenue tax for hereof. who is required to register with the Bureau of Internal Revenue under which he is obligated, shall file a return and shall pay such taxes, and shall update such registration of any changes in accordance with Subsection (E) C) Registration of Each Type of Internal Revenue Tax. Every person

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Section shall, whenever applicable, update his registration information with change in tax type and other taxpayer details. " the Revemue District Office where he is registered, specifying therein any (E) Other Updates. --- -- Any person registered in accordance with this

information with the Revenue District Office where it is registered. internal revenue tax for which he is obligated and fill any, update on the registration Based on the foregoing provisions, a taxpayer is required to register each type of

compliance with the provisions of Sections l, 2 and 3 of Rule 3 of the DOF Order No. l7-04. the payment of income tax for income arising from the operations of the enterprise.' It is understood, however, that the availment of the foregoing tax exemption is subject to the to wit: and was awarded a BMBE Certificate of Authority by the DTI, it is therefore exempt from In as much as LADDERIZED CPA REVIEW CENTER INC.is a registered BMBE

such BMBE: Provided, that this income tax exemption shall not apply to the following: be exempt from income tax on income arising purely from its operations as "Sec. I. Exemption from Income Tax. -- A duly registered BMBE shall

1 B3IR Ruling No. 207-2011 dated July 1. 2011

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e f g h. b. C. d. i a Interest, including those from any currency bank deposit and through the stock exchange: Capital gains from the sale or other disposition of real The share of an individual in the net income after tax of an association, a joint account, or a joint venture or consortium; The share of an individual in the distributable net income after tax of a taxable partnership of which he is a partner; Income from the practice of profession received directly from yield or any other monetary benefit from deposit substitutes and from trust funds and similar arrangements; Prizes and other winnings: Cash and/or property dividends; Capital gains from the sale of shares of stock not traded property: Royalties;

k. the clients or from the professional partnership of which the individual is a partner; All other forms of passive income and income from revenues BMBEs as such. not effectively connected with or arising from operations of the Compensation; and

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application for registration shall be supported by the following documents: Sec. 3. Availment of Tax Incentives. -- 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. Its

Sworn Statement of the values of assets owned and/or used/to be used The Sworn Statement shall be supported by pertinent information and documents such as: Copy of the BMBE's Certificate of Authority duly authenticated by the hy the BMBE and/or its affiliates reflecting the current values thereof. Office of the City or Municipal Treasurer:

i Acquisition cost, date of acquisition and depreciated value

tt for existing assets; Invoices and/or official receipts for newly-acquired assets

itt. iN Copy of Loan Contract/s, if any, and Duly-Notarized Certification of Amortization Pavments on the Loan. not yet depreciated; Duly-notarized copy of Contract of Lease for assets used in the conduct of business covered by lease agreement: and

d. Certified list of affiliates, indicating addresses, line of business and C. Certified list of branches, sales outlets, places of production. operated by the BMBE indicating their respective addresses, whether warehouse and storage places, or such other facility owned and/or located in the same municipality or city where the principal place of business is located, or elsewhere responsihle officers thereof:

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. Latest Audited Financial Statement, or Account Information Form or its equivalent containing data lifted from audited financial statements. '

type of internal revenue tax including withholding taxes for which it is liable. BIR in the pertinent registration file of the BMBE, and its registration certificate be accordingly amended to refiect its registration likewise as a BMBE. If the BMBE has not been registered under or pursuant to existing registration, the BMBE shall register for each registration rules and regulations, its registration as a BMBE shall be duly recorded by the Thus, if the BMBE is currently registered with the BIR under or pursuant to existing

to file income tax return pursuant to Section 52 of the Tax Code, as amended. For this Certificate of Registration (BIR Form 2303) indicates Income Tax as tax type, is now considered as taxable entity for purpose of income tax. purpose, the tax type "Income Tax" would always appear in the Certificate of Registration despite the income tax exemption. This does not mean, however, that BMBEs whose It shou!d be noted that while BMBEs are exempt from income tax, they are mandated

than the Act, it shall so state this fact in its registration form and indicate whether it shal double or multiple avaiiment of income tax exemption privileges. 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 Finally, if a BMBE is also entitled to exemption from income tax under any law other

However, if upon investigation, it will be ascertained that the facts are different, then this ruling shall be considered null and void. This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours.

K- Commissioner of Internal Revenue CAESAR R. DULAY 585