Share of Municipality in the 2% Miller's Tax Imposed under Sec. 203 of the Tax Code

May 8, 1984 BIR RULING NO. 089-84 203-000-00-089-84 S i r : This refers to your letter dated February 21, 1984 requesting information as to whether that Municipality could get a share in the percentage tax (2% miller's tax) imposed under Section 203 of the Tax Code which is paid by the Sugar Planters Sugar Milling Company, Inc. and remitted entirely to the Philippine Sugar Commission (PHILSUCOM) [NASUTRA is its trading arm] pursuant to R.A. No. 3051, as amended by P.D. No. 388. You also requested for information as to how that Municipality could increase its B.I.R. allotment. In reply, please be informed that since the aforestated proceeds from the collection of the 2% miller's tax are remitted entirely to PHILSUCOM, it is not possible for that Municipality to receive a share of said proceeds. Moreover, the system of allocating internal revenue allotments, i.e., excess income, regular and special allotments, whereby the shares of the respective municipalities are computed on the basis of certain collections credited to their account has been superseded by P.D. No. 144 which took effect on July 1, 1973. Under Section 344 of the Tax Code a amended, all internal revenue collections not accruing to special funds or accounts are aggregated and 20% thereof are earmarked as follows: Provinces 30%; Municipalities 45%; and Cities 25%. The share of every municipality is then computed on the basis of the following factors: population 70%; land area 20%; and equal sharing 10%. If, by applying said formula, the computation will result in an increase, or decrease, of the share of the municipality, the allotment shall not increase by more than 25% of, nor shall be less than, its actual allotment for the preceding year (as amended by P.D. Nos. 937 and 1741). Under Local Budget Circular No. 9 dated January 2, 1981 implementing P.D. No, 1741, third, fourth, fifth and sixth class municipalities are allowed additional 5%, 10%, 15% and 20% increase, respectively, of their allotment received in the preceding year if recommended by the Ministry of Local Government and Community Development and approved by the President. Very truly yours, (SGD.) RUBEN B. ANCHETA Acting Commissioner