Guidelines on the Release of the Share of ARMM and Concerned LGUs in the National Internal Revenue Collections

February 26, 2004 ARMM-DOF-DBM JOINT CIRCULAR NO. 01-04 TO : All Concerned Officials of the Department of Budget and Management (DBM), Department of Finance (DOF) Thru the Bureau of Internal Revenue (BIR), the Autonomous Region in Muslim Mindanao (ARMM) and All Others Concerned SUBJECT : Guidelines on the Release of the Share of ARMM and Concerned LGUs in the National Internal Revenue Collections Pursuant to Special Provision No. 1 of the ARMM Appropriation Under the FY 2003 General Appropriations Act, R.A. No. 9206 1.0 Purposes 1.1 To prescribe the guidelines relative to the implementation of Special Provision No. 1, page 673 of the appropriations of ARMM under R.A. No. 9206, the General Appropriations Act (GAA) of FY 2003, quoted as follows: "Appropriation of the Autonomous Region in Muslim Mindanao. The amount of three Hundred Million Pesos (P300,000,000) herein appropriated for maintenance and other operating expenses shall be charged against the share of the ARMM and the concerned local government units from national internal revenue taxes, fees and charges and taxes imposed on natural resources collected within the area of autonomy pursuant to Section 9, Article IX of R.A. No. 9054 and the share of the national government from its collection of internal revenue taxes within the area of autonomy pursuant to Section 15, Article IX of R.A. No. 9054: PROVIDED, That the Internal Revenue Allotment and other budgetary allotments shall be released to the local government unit comprising the Autonomous Region subject to the guidelines to be issued by the Department of Finance, the ARMM and the Department of Budget and Management and subject, further, to the submission of a Special Budget in accordance with Section 35, Chapter 5, Book VI of E.O. No. 292." 1.2 Delineate the responsibilities of the DBM, DOF, thru the BIR and the ARMM in the remittance/release of funds to the ARMM and concerned LGUs pursuant to said Special Provision. 1.3 To amend the provisions of Revenue Regulations (RR) No. 4-98 dated February 5, 1998 and RR 5-2003 dated January 22, 2003. 2.0 Definition of Terms 2.1 For the purpose of this Joint Circular, the following terms shall be construed to mean as follows: 1. Fund refers to the share of ARMM in the national internal revenue collections. 2. National Internal Revenue Collection refers to the Internal revenue taxes, fees and charges and taxes imposed on natural resources, collected by the BIR in the expanded ARMM. 3. Tax Remittance Advice (TRA) refers to the serially numbered document to be distributed by BIR to National Government Agencies (NGAs) and attached to every Withholding Tax Return (WTR) filed for payment of taxes withheld to the BIR and shall be certified by the Chief Accountant and approved by the head of the NGA or his duly authorized representative. This shall be the basis for the BIR and the Bureau of the Treasury (BTr) to record the collection and deposit in their respective books of accounts. 4. Special Allotment Release Order (SARO) a specific authorization issued by DBM to ARMM to incur obligations within a specific amount during a specified period for the purpose indicated. 5. Notice of Cash Allocation (NCA) a document issued by DBM authorizing ARMM-Office of the Regional Governor (ORG) to withdraw a specific amount from an Authorized Government Depository Bank (AGDB) through the use of Modified Disbursement Scheme (MDS) checks for deposit to the account of the Office of the Regional Treasurer. 3.0 Coverage 3.1 Pursuant to R.A. No. 9054, dated March 31, 2001, ARMM shall have a share in the national internal revenue collections as follows: Section 9, Article IX Withholding tax collected by NGAs and national internal revenue collections within the area of autonomy, of which 70% shall be shared by the Regional Government (RG) and Local Government Units (LGUs) within the expanded ARMM; Section 15, Article IX 30% share of the National Government (NG) from current year collections of internal revenue taxes within ARMM to be allotted to RG for a period of five (5) years as may be provided in the annual general appropriations act (FY 2003FY 2007) and Section 15, Article IX 80% allotment to the RG and 20% to the concerned LGUs out of the 50% share of the NG from the yearly Incremental revenue from VAT collections within the ARMM under Section 106 (value-added tax on sales of goods and properties), 108 (value-added tax on sale of services and use or lease of properties) and 116 (tax on persons exempt from value-added tax) of the National Internal Revenue Code (NIRC) in relation to Section 9, Article IX of R.A. No. 9054 and Section 283 of the NIRC of 1997, if any. DSATCI The foregoing provisions are illustrated as follows: SHARE PARTICULARS RG Concerned TOTAL NG LGUs ARMM a. Section 9, Article IX 35% 35% 70% 30% b. Section 15, Article IX 30% 30% (30%) c. Section 15, Article IX, of which 80% to the RG and 20% to concerned LGUs 40% 10% 50% 50% 3.2 This shall apply to all national internal revenue collections from the provinces/cities comprising the expanded ARMM, namely: Sulu, Tawi-tawi, Lanao del Sur, Maguindanao (except Cotabato City), Marawi City and Basilan Province (except Isabela City) per Commission on Elections Resolution No. 4561 promulgated August 28, 2001. 4.0 General Guidelines 4.1 All national revenue collections (cash and TRAs) within the expanded ARMM shall be reported to the nearest BIR Revenue Collecting Officers (RCOs) pursuant to existing BIR rules and regulations. 4.2 RCOs concerned shall deposit all cash collections within the expanded ARMM to the Bureau of Treasury through the nearest AGDBs in the area. The practice of deducting from this collection the share of the ARMM pursuant to RR 4-98 and 5-2003 shall be discontinued. 4.3 The 30% share of the National Government in all current year collections of internal revenue taxes within the expanded ARMM shall be made available to ARMM for a period of five (5) years only (FY 2003FY 2007) consistent with Section 15, Article IX of R.A. No. 9054. 4.4 Effective June 2003, the share of the ARMM from the national internal revenue collections within the area shall be covered by a SARO and NCA to be released upon submission of a special budget for the purpose. The said SARO releases including all NCA issuances from January 1 to May 31, 2003 pertaining to 2003 collections (treated as trust receipts), shall be within the amount appropriated under R.A. No. 9206, the FY 2003 GAA. 4.5 The BIR shall submit to DBM, copy furnished the ARMM Regional Treasurer a monthly certification of the total share (cash collection and TRA as reconciled with BTr) of ARMM from the National Internal Revenue Collections, duly signed by the Finance Division Chief and the Assistant Commissioner for Collection Services, every 15th day following the month of collection. The said monthly certification is to be supported by the list of TRAs and deposited collections, summarized/tabulated by province, municipality and barangays in each Revenue Regions/District Offices and by Departments/Agencies under the expanded ARMM. 4.6 Starting FY 2004, ARMM shall submit to DBM an annual special budget request consistent with the total amount appropriated in the GAA. 4.7 The total shares that will accrue to the ARMM pursuant to R.A. No. 9054 shall be deducted in the computation of the Internal Revenue Allotment for the particular year. 4.8 ARMM shall provide the BIR with information on VAT-registered establishments relative to the location of factories, project offices, plantations and plants, pursuant to DBM-DOF-DILG Joint Circular No. 1-02 dated February 6, 2002. 5.0 Procedural Guidelines 5.1 Upon the effectivity of this circular, BIR-Central Office (CO) shall submit to DBM a certification of the total shares of ARMM from the national internal revenue collection as enumerated under Sec. 3.1 of this circular for the period January to May, 2003. This certification will be the basis in determining if the NCA issued (released as trust receipts) for the said period is equivalent to the rightful share of ARMM from said BIR collection. If the NCA issued is less than the computed share, ARMM shall submit a special budget request for the purpose and DBM shall release SARO and NCA for the difference. If the NCA issued is more than the computed share, the difference is to be treated as an advance release to be covered by SARO only. 5.2 All SARO and NCA releases made for this purpose starting with June collections until the effectivity of this circular, including NCAs released as trust receipts, shall be considered as advances from the P300 Million available appropriation for FY 2003. Thereafter, subsequent releases pertaining to collections up to the month of November shall be based on a single special budget request, representing the unreleased balance of the share of ARMM and the concerned LGUs in the national internal revenue collections and the submitted BIR certifications on collections consistent with Section 4.5 of this Joint Circular. The issuance of SARO and NCA for December collections shall be made in January of the following year. 5.3 Starting FY 2004, ARMM shall submit to DBM an annual special budget request consistent with the amount provided in the National Expenditure Program (NEP), subject to adjustment upon approval of the General Appropriations Act. 5.4 Thereafter, DBM shall issue the SARO and NCA based on the monthly BIR certification pursuant to Section 4.5 of this Joint Circular to be credited to the regular MDS Account of the Office of the Regional Governor. 5.5 DBM shall transmit to ARMM-ORG the approved SARO and Advice of NCA issued (ANCAI). 5.6 Upon receipt of the approved SARO and ANCAI, ARMM-ORG shall record the entries in the appropriate Registry of Allotments and Obligations (RAO). The corresponding MDS check shall then be issued to ARMM-Office of the Regional Treasurer (ORT) which shall deposit the same to its AGDB Current Account for the purpose, to be apportioned as follows: 35% to the province/city within ARMM; 65% to the Regional Government, representing the 30% share of the National Government (for a period of 5 years, starting FY 2003) and the 35% share of the Regional government. The share of the province shall be apportioned as follows: 45% to the province; 35% to the municipality and 20% to the barangay. The share of the city shall be distributed as follows: 50% to the city and 50% to the barangay. The determination of the share of the abovementioned LGUs (Province/City/Municipality/Barangay) shall be based on the Certification issued by the BIR under Section 4.5 of this Circular. 5.7 The corresponding share of the LGUs shall be remitted by the ORT through the issuance of a credit advice to concerned AGDB of LGUs and a Notice of Fund Transfer to the LGUs copy furnished their AGDB. 5.8 The share of the Regional Government shall be released to various regional line agencies, offices and bureaus through the issuance of a credit advice to agencies AGDB and a Notice of Fund Transfer copy furnished their AGDB, to fund their regular programs and projects in accordance with the Regional Appropriations Act. 5.9 The ORT shall submit to the Commission on Audit a Report of Monthly Collection every 10th day of the month following the month of collection. 6.0 Applicability Clause The provisions of this Joint Circular shall be applicable until such time that Special Provision No. 1 of the appropriation of ARMM as stated in Item 1.1 above is superseded/deleted. 7.0 Repealing Clause The provisions of revenue issuances inconsistent herewith are hereby revoked or modified accordingly. CITcSH 8.0 Effectivity Clause The provisions of this joint circular shall take effect immediately. (SGD.) PAROUK S. HUSSIN Governor Autonomous Region in Muslim Mindanao (SGD.) JUANITA D. AMATONG Acting Secretary Department of Finance (SGD.) EMILIA T. BONCODIN Secretary Department of Budget and Management