Bureau of Local Government Finance Opinion

October 2, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Provincial Assessor of Cavite, Trece Martirez City, the herein preceding indorsement relative to the letter dated June 2, 2000 of Gun Sub Rim, Corporate Treasurer, Dae Ryung Ind., Inc. Phils. (DRIIP), requesting a certificate of exemption from paying transfer tax and other fees as provided for under Section 24 of RA 7916 otherwise known as the Special Economic Zone Act of 1995. Said request is being made in view of the sale of DRIIP to Dae Duck Phils, Inc. consisting of Industrial Buildings (B, D, & E) with a total consideration of NINETY SEVEN MILLION TWO HUNDRED SEVENTY SEVEN THOUSAND (P97,277,000.00) with corresponding transfer tax of FOUR HUNDRED EIGHTY SIX THOUSAND THREE HUNDRED EIGHTY FIVE (P486,385.00) pursuant to Section 135 of RA 7160 as implemented under Article D, Section 2D.01 of Provincial Ordinance No. 98-001 of the said Province. Section 24 of RA 7916, as amended by RA 8748, provides as follows: "Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE, in lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: DAEaTS "(a) Three percent (3%) to the National Government; "(b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located." In the aforequoted Section, there is an unequivocal provision that the exemption of business establishments operating within the ECOZONE extends to all the taxes, except real property taxes on land own by the developers, that the local government units may levy and collect. Accordingly, DRIIP shall be considered exempt from paying transfer tax under Article D, Section 2D.01 of Provincial Ordinance No. 98-001 of that province. It bears emphasis, however, that the tax exemption applies only to taxes, but not to regulatory or proprietary fees or service charges that may have been provided for under the said Provincial Ordinance. Be guided accordingly. (SGD.) BENJAMIN A. GERONIMO Executive Director <http://www.blgf.gov.ph/downloads/opinion/localtax/2000/a2000-0703.pdf> last visited on October 2, 2013.