Bureau of Local Government Finance Opinion

May 16, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Misa & Gonzales Law Offices Suite 22A, 22nd Floor, Tower A Kingswood Condominium Pasong Tamo cor. Vito Cruz Streets Makati City Attention: Atty. George E. Misa Atty. Alden Francis C. Gonzales Gentlemen : This refers to your letter dated May 8, 2000 requesting clarification that the term "Local Business Tax" encompasses all business taxes that local governments are empowered to impose including, but not limited to, fees on gravel and sand and other quarry products such as limestone. The request is being made in view of Local Finance Circular No. 5-93 (LFC) providing among other matters, exemption from local business taxes of business entities certified by the Board of Investments as pioneer or non-pioneer enterprises pursuant to Section 133 (g) of the Local Government Code of 1991 (LGC). It is submitted that the term "local business taxes" clearly include all kinds of LBT since the LFC and the LGC do not make any qualification as to what kind of taxes are included in the said term. Section 133 (g) of the LGC provides as follows: "Sec. 133. Common Limitations on the Taxing Powers of Local Government Units. Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: "(a) . . .; IcAaSD "(g) Taxes on business enterprise certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively, from the date of registration; "xxx xxx xxx." In the aforequoted Section, there is an unequivocal provision that the exemption of BOI-registered business enterprises extends to all the taxes that the local government units may levy and collect. It bears emphasis however, that the term tax as used therein strictly pertains to taxes for revenue purposes and does not include mayor's permit and other regulatory fees and user charges which are impositions of a different nature. Said fees are by nature service charges as compensation for services actually rendered by the local government unit. We hope that this will help clarify matters. Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge <http://www.blgf.gov.ph/downloads/opinion/localtax/2000/a2000-0502.pdf> last visited on October 2, 2013.