BIR Ruling

February 19, 1973 Mayor Pedro S. Tolentino Batangas City S i r : In reply to your letter dated January 30, 1973, I have the honor to inform you that the disposition of the residence taxes imposed under Commonwealth Act No. 465 is still provided under Section 8 of Commonwealth Act No. 586 otherwise known as the Educational Act of 1940 the pertinent portions of which are quoted hereunder as follows: cdt "Sec. 8. To enable the National Government to properly finance the public elementary schools and meet the burden of their operation as provided in this Act, from and after July first, nineteen hundred and forty, the disposition of the proceeds of the taxes under Commonwealth Act Numbered Four hundred and sixty-five, known as the Residence Tax Law, shall be as follows: Of all the taxes collected and remitted to the Commissioner of Internal Revenue as provided in section eight of Commonwealth Act Numbered Four hundred and sixty-five, fifty per centum shall be allotted in the following proportions by the said Commissioner among the provinces, chartered cities, municipalities, and municipal districts on the basis of population as shown by the latest official census: One-half of the general funds of the provinces. A subprovince shall receive its proportionate share of the proceeds allotted to the province; and The other half to the general funds of the chartered cities, municipalities, and municipal districts. Out of the remaining fifty per centum of the proceeds of said taxes, chartered cities shall continue to receive the corresponding share in the school fund of cities, municipalities, and municipal districts to which they were entitled under the provisions of law in force prior to July first, nineteen hundred and forty. The balance shall accrue to the National Government." It cannot be said, therefore, that residence taxes are now considered as local taxes and should be disposed of exclusively for local purposes. However, the issuance of residence tax certificate are now entrusted to the local government beginning January 1, 1973. aisa dc Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue