Small agri firms no longer subject to income tax – BIR

Farmers and fishermen registered as barangay micro business enterprises (BMBEs) will no longer pay income and donor’s taxes, the Bureau of Internal Revenue (BIR) said.

Under Revenue Regulations (RR) 19-2021, the BIR extended fiscal incentives to farmers and fisherfolk enterprises in line with the provisions of Republic Act (RA) 11321, or the Sagip Saka Act, signed into law in 2019.

The RR grants agricultural firms accredited as BMBEs exemption from paying taxes for income from operations.

According to the BIR, the tax break applies only to farmers and fishermen entities issued with a certificate of authority to perform as a BMBE by the Department of Trade and Industry. Likewise, they should be listed as a beneficiary under RA 11321’s implementing rules and regulations.

Beneficiaries involve mostly producer groups whose products are listed as priority commodities with the prospect of gaining marketable surplus.

Aside from operating as BMBEs, farmers and fisherfolk enterprises may only avail the tax perk if their assets, inclusive of loans, amount to less than P3 million.

Further, the RR provides donors with an exemption from paying donor’s tax on donations of real and personal properties that they pass on to agricultural firms.

However, the RR requires the recipient to be certified by the Department of Agriculture and to be included as a proponent of the Farmers and Fisherfolk Enterprise Development Program under the Sagip Saka Act.

The donation should also be made to advance the targets of the program, particularly in building the capacity of agricultural firms. It should contribute in improving the output and productivity of the beneficiaries, among others, as part of efforts to achieve food security.

The application for exemption should also comply with the guidelines for processing of requests as mandated under Revenue Memorandum Order 9-2014. As such, donors may only deduct the donation from their gross income upon compliance with the rules of deductability.

The Sagip Saka Act supports the purchase of farm and fish products from local growers through various mechanisms, including the exemption of local government procurement from the bidding process and the provision of incentives to private firms participating in the program.