Bureau of Local Government Finance Opinion

May 30, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Liwayway F. Sanchez Accountant World Best Manufacturing Corporation Maguyam Rd. Silang, Cavite M a d a m : This refers to your undated letter requesting official computation of the business license to be paid to the municipality of Capas, Tarlac. It is represented that World Best Manufacturing Corporation (WBMC) is a manufacturer of Christmas Light sets, wholly for exports. It is represented further that WBMC has been taxed as an exporter by the then municipality of Muntinlupa. However, when said company transferred its factory and office to the municipality of Capas, Tarlac, the same was taxed as a manufacturer. In this connection, please be informed that this Bureau has consistently expressed the view that exporters of non-essential commodities are liable to pay the business tax only at the rate of not exceeding one-half (1/2) of the rates prescribed under sub-sections (a), (b) and (d) of Article 232 of the Implementing Rules and Regulations (IRR) implementing sub-sections (a), (b) and (d) of Section 143 of the Local Government Code of 1991 (LGC). This is so for reason that the qualifying phrase "essential commodities" should be construed to apply only to business other than exporting considering that the term "exporter" is dissociated by the "comma" and the conjunction "and" following it. EAcCHI It may be noted that the rates prescribed under Sections 2B.02 [c] of the Revenue Code of Capas, Tarlac (1995) correspond to fifty percent (50%) of the rates authorized to be levied by municipalities under Section 143(c) of the LGC in relation with Section 143 (a) thereof. In view of the foregoing and for purposes of arriving at the correct business tax of WBMC, the computation shall be as follows: Gross sales = P13,300,060.00 Tax rate = With gross sale in the amount of P6,500,000 or more = 18 1/2% of 1% Tax due = P13,300,060.00 x 18 1/2% of 1% 13,300,060.00 x (0.185) x (0.01) = P24,605.11 Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director