A law that microbusiness owners should know about
- Manuel Guilius Pamorca
- Oct 8
- 3 min read
MICRO, small, and medium enterprises (MSMEs) make up more than 98 percent of all businesses in the Philippines. These ventures may be small, but they form the backbone of the economy, sustaining livelihoods and keeping commerce alive in every corner of the country.
All businesses, from conglomerates to MSMEs, pay taxes. Taxes are the lifeblood of government and a cornerstone of civilized society. However, for a sari-sari store owner, or a fledgling food cart operator, or other microbusinesses just finding their footing, taxes often feel less like a civic duty and more like a mountain standing in their way.
It’s why you hear questions like, “How can I lower my taxes?” or “Is there a way where I don’t have to pay income tax at all?”
But the answer has been there for more than 20 years. It’s called the Barangay Micro Business Enterprises (BMBE) Act of 2002, or Republic Act 9178.
The BMBE Act was crafted with one clear purpose: to ease the weight on small businesses and help them scale up. It exempts qualifying businesses from income tax on operations, frees them from the minimum wage law (while keeping social benefits intact), and opens access to special credit windows, technology training, and, in some places, even reduced local taxes.
To qualify, a business must have total assets of not more than P3 million, excluding land, and must be engaged in producing goods or rendering services. In other words, most of the microbusinesses we see every day could actually benefit from these incentives — if their owners only knew about them.
Low awareness
Yet, ask around, and you’ll find that very few entrepreneurs even know the law exists. I’ve spoken to business owners in my work, in classrooms, and even in casual settings online — and most admit they’ve never heard of it. Local studies echo the same reality: awareness of the BMBE Act remains stubbornly low, despite its potential impact.
So, why so few takers? One reason is that the program has not been promoted as strongly as it should be. From the government’s perspective, granting exemptions might appear to mean lost revenue.
But the larger picture shows otherwise. When small businesses survive, stabilize, and eventually grow, they generate more employment, circulate more money in the economy, and ultimately contribute more taxes in the long run. The short-term “loss” in tax revenue is outweighed by the long-term benefits of stronger, sustainable enterprises.
Negative perception
Another factor is a negative perception that precludes entrepreneurs from even entertaining the idea. Many entrepreneurs may assume that registering would involve long lines, endless requirements, and confusing bureaucracy.
The truth is, the process is straightforward. Requirements are relatively light, and the staff at registration desks are generally willing to help and guide applicants through the steps.
This is why both government and professionals need to step in. Local governments could start by integrating BMBE registration assistance into the annual business permit renewal process. Set up a booth. Answer questions. Make it easy for entrepreneurs to apply on the spot. A small investment in awareness could translate into stronger, more resilient local economies.
For our part as accountants and practitioners, we have the responsibility to educate. In an era where information spreads instantaneously through social media, we can use our platforms to inform and guide entrepreneurs about the law, its benefits, and the simple steps to avail themselves of it.
The BMBE Act was never meant to be just another piece of legislation gathering dust in our legal books. It was enacted with the vision of giving struggling entrepreneurs a fair chance at survival and growth. By easing tax burdens and providing access for support, the law gives MSMEs a foothold in a competitive economy.
When these enterprises become stable and grow stronger, they evolve into more effective contributors to society, employment and the economy as a whole.
The challenge is not in the law itself, but in making sure that more people know about it and believe that it is within their reach. For microbusinesses across the country, the BMBE Act is not just an option — it is a vital lifeline.
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Manuel Guilius Pamorca is a member of the Association of Certified Public Accountants in Public Practice (Acpapp) Media Affairs.
