Bureau of Local Government Finance Opinion

April 24, 1995 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Onofre H. Francisco, Sr. Office of the City Legal Officer City Hall, Davao City S i r : This has reference to your letter dated August 15, 1994 seeking clarification as to whether the 60-day period within which BOI-registered enterprises may avail of the exemption from local business taxes is prescriptive. Article 221 (g) of the Implementing Rules and Regulations (IRR)implementing Section 133 (g) of the Local Government Code (LGC) of 1991 provides: "Art. 221. Common Limitations on the Taxing and Other Revenue-Raising Powers of Local Government Units . Unless otherwise provided herein, the exercise of the taxing and revenue-raising powers of provinces, cities, municipalities and barangays shall not extend to the levy of the following: "xxx xxx xxx" "(g) Taxes on business enterprises 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 For purposes of implementing the afore-quoted provisions of the Code, the Department of Finance issued Local Finance Circular (LFC) No. 5-93, dated October 22, 1993, pursuant Article 287 of the IRR, prescribing the limitations, manner and procedures for the imposition of local business taxes on BOI-registered enterprises, the pertinent portion of which is quoted hereunder: "Sec. 4. Availment of the Exemption .(a) Within sixty (60) days "(i) from receipt of the Certificate of Registration from the BOI, or" "(ii) from the effectivity of the tax ordinance or revenue measure imposing a tax on business, or "(iii) from the effectivity of these guidelines, whichever comes later, the President or any duly authorized representative of the registered enterprise, shall submit a certified true copy of said Certificate of Registration to the local treasurer concerned together with a request for a Certificate of Exemption for the appropriate period, as indicated in Sec. 3 above. "xxx xxx xxx" In this connection, it may be stated that guidelines issued by this Department relative to the levy and administration of local taxes, fees and charges pursuant to Article 287 of the IRR are only intended to, among others: (a) guide' local elective officials in the enactment of local tax ordinances or revenue codes; (b) local treasury offices in collecting taxes and other local impositions, as well as in determining or computing tax discounts or penalties and surcharges; and (c) the taxpaying public as to the proper interpretation and application of the law and rules governing local taxation. Such guidelines, however, cannot, as they are not meant to, amend provisions of law, particularly the LGC of 1991. Accordingly, in reply to your query, it is the considered view of this Department that the 60-day period prescribed under LFC No. 5-93 abovementioned is only directory and not mandatory and, therefore, the failure of any business to observe the same will not render taxable what the law has expressly exempted from local taxation. Stated otherwise, said 60-day period is deemed to be not prescriptive. prcd However, be reminded that the tax exemption granted to BOI-registered enterprises applies only to taxes, specifically the tax on business, but not to regulatory or proprietary fees and service charges, including such penalties or surcharges imposed thereon for failure to pay on time, that may have been provided for under a duly-enacted tax ordinance of the local government concerned. Very truly yours, JUANITA D. AMATONG Acting Secretary