I am stoked! Today, I received my new Certificate of Registration (COR) from the Bureau of Internal Revenue (BIR), and in that new certificate, the registered activity Income Tax (IT) has been canceled.
In other words, I am now exempted from paying income tax on my business! Why? Because I have been certified by my municipality as a Barangay Micro-Business Enterprise (BMBE)!
To learn more about the BMBE law, click here.
Here's my new COR (I added the red oval for highlight):
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But here's what I'm so pleased about: I received this revised certificate on the very same day that I submitted the documentary requirements to the BIR -- the very same day! In fact, I am not just pleased; I am shocked. I was expecting my BMBE application at the BIR to be difficult, especially after all the trouble I had trying to get my BMBE certificate at the municipal hall.
At the municipal hall
I had a hard time applying for BMBE at the municipal hall because nobody there seemed to remember what the BMBE law was and the process for applying for the certification. (Read the full story here.)
When the municipal hall staff finally remembered the procedure for BMBE application, they gave me this application form, that I needed to fill out in triplicate:
|Right-click and click on Save Link As to get a printable copy of this form.|
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- an authorization letter,
- my BMBE certificate from the municipal hall,
- my municipal permit for 2013,
- my old COR for replacement/revision,
- and some money, in case she needs to pay for anything.
My mom then handed me my revised COR with a receipt for P100 stapled to it. I don't know exactly what the P100 was for. Right now, I don't care. I am exempted from income tax for two years! (Then, I will have to go through the process again to renew my application.) I still have to pay my monthly percentage tax, though. Do I need to file anything quarterly? I still don't know. I'll update this post when I find out.
UPDATE: I only needed to file quarterly income tax for the first quarter of 2013, for the period before my COR was revised. First quarter income after the approval of my new COR was not included in the computation. I didn't need to file anything anymore for the second quarter and all quarters after that, as per the BIR contact center, because as the 1701 and 1701-Q form says, we shouldn't file income tax if we have zero income tax payments due.
Now I am sending a copy of my revised COR to all my clients so that they can stop withholding taxes from the payments they send me. (Since withholding taxes are merely an advance on income taxes, if you are exempted from income tax, then you are also exempted from withholding tax. Reference: TaxAcctgCenter.org.)
Come April 2014, I won't have to file a form 1701 (Annual Income Tax Return for Self-Employed, Professionals, Estates, and Trusts ) anymore. Instead, I'll be filing an Account Information Form (1701-AIF) only. Whoopee!