Essential Commodities Entitled to Discounted Business Tax Rate

December 27, 2016 BLGF OPINION NO. 002-2017 CO-LFPS-PPPSD Mr. Allan A. Teh President YEUNG Marine Products, Inc. 4450 D. Campos St., Brgy. Don Galo Paraaque City SUBJECT : Essential Commodities Entitled to Discounted Business Tax Rate Dear Mr. Teh : This has reference to your letter, dated 10 November 2016, pertaining to the issue on whether YEUNG Marine Products, Inc. (YMPI) would qualify for the 50% discounted rate on its business tax, pursuant to Section 143 (c) 1 of the Local Government Code (LGC) of 1991, which provides a rate of not exceeding one-half (1/2) of the rates prescribed under Section 143 (a), (b) and (d) for businesses engaged in exporting, manufacturing, wholesaling, distributing, among others, of essential commodities enumerated under the same subsection. Thus, in order to determine if YMPI is entitled to the rate prescribed under paragraph (c) of Section 143 of the LGC, the said corporation must meet the qualifications as prescribed therein. Upon perusal of the documents presented, it could be gleaned from the original Articles of Incorporation, dated 14 February 2007, as well as from the amended Articles of Incorporation of YMPI, dated 18 October 2013, of the purpose for which the corporation is incorporated, to wit: "To engage in, and carry on the business of buying, selling, distributing , fish/fishery products processing and preservation and marketing on wholesale basis, any and all kind and description of fish and other marine products culturing in cages; to enter into all kinds of contracts for the chartering, import, export, purchase, acquisition, and storage of marine products for its own account as principal or in representative capacity as broker, indentor or commission merchant, factors or agents. (as Amended on October 18, 2013)" (emphasis supplied) In view of the foregoing, this Bureau expresses the view that marine products are specifically provided for under Section 143 (c) of the LGC as essential commodities. As such, YMPI shall be subject to only one-half (1/2) of the rates of business taxes on wholesalers, distributors or dealers prescribed under Section 143 (b) of the same code, as implemented under a duly enacted tax ordinance of the local government unit concerned. Thus, this Opinion is rendered without prejudice to the outcome of the examination that may be conducted by the City Treasurer's Office of Paraaque City. If contrary facts and information are proven, then the appropriate tax treatment should be applied accordingly. We hope that we have provided clarity on the matter. Very truly yours, (SGD.) NIO RAYMOND B. ALVINA OIC Executive Director Footnotes 1. "Sec. 143. Tax on Business. The Municipality may impose taxes on the following businesses: xxx . . . (c) On exporters, and on manufacturers, millers, producers, wholesalers , distributors , dealers or retailers of essential commodities enumerated hereunder at a rate not exceeding one-half (1/2) of the rates prescribed under subsections (a), (b) and (d) of this Section: (1) Rice and corn; (2) Wheat or cassava flour, meat, dairy products, locally manufactured, processed or preserved food, sugar, salt and other agricultural, marine, and fresh water products , whether in their original state or not; (3) Cooking oil and cooking gas; (4) Laundry soap, detergents and medicine; (5) Agricultural implements, equipment and post-harvest facilities, fertilizers, pesticides, insecticides, herbicides and other farm inputs; (6) Poultry feeds and other animal feeds; (7) School supplies; and (8) Cement. xxx xxx xxx."