Exemption of Businesses Engaged in the Production, Manufacturer, Distribution or Sale of Liquefied Petroleum Gas

April 14, 2004 BLGF MEMORANDUM CIRCULAR NO. 004-04 TO : All Regional Directors, Bureau of Local Government Finance, (BLGF); District Treasurers of Metropolitan Manila Area; City and Municipal Treasurers; and Others Concerned SUBJECT : Exemption of Businesses Engaged in the Production, Manufacturer, Distribution or Sale of Liquefied Petroleum Gas (LPG) Pursuant to the provision of Sec. 143(h) of Republic Act No. 7160, otherwise known as the Local Government Code (LGC) of 1991, as implemented by Art. 232(h) of the Implementing Rules and Regulations (IRR), any business engaged in the production, manufacture, refining, distribution or sale of oil, gasoline and other petroleum products shall not be subject to any local tax imposed under said provision. However, several queries and requests for clarification have been received by this Bureau regarding the taxability of Liquefied Petroleum Gas (LPG). Therefore and in accordance with Art. 287 of the IRR, BLGF issued a clarification embodied in the letter dated April 1, 2003 to supplement Art. 232(h) of the same IRR, the pertinent portion of which is quoted as follows: ". . . considering the fact that imposing taxes on LPG would mean additional burden, which shall ultimately be shouldered by the consuming public, this Bureau so holds that LPG is not subject to local business tax. However, said LPG business shall still be liable to pay the Mayor's permit and other regulatory fees or service charges that the local government unit may impose under a duly enacted local tax ordinance." It should be stressed, however, that the exemption refers only to the payment of local business tax. Said businesses are not exempt from payment of real property tax. Accordingly and to ensure uniformity in complying with Article 232(h) of the IRR, all Regional Directors of the Bureau of Local Government Finance and District Treasurers of Metropolitan Manila Area, are hereby directed to transmit the contents of this Circular to all City and Municipal treasurers within their respective jurisdictions for their information and guidance. HDIATS MA. PRESENTACION R. MONTESA Executive Director