Bureau of Local Government Finance Opinion

September 1, 1994 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred thru the Provincial Treasurer, Sta. Cruz, Laguna, to the Municipal Treasurer of Santa Rosa, same province, for appropriated action the herein letter dated September 28, 1992 of Mr. Ben N. de Leon, Manager, Fujitsu Ten Corp. of the Phil. (FTCP), Laguna Technopark, Don Jose, Sta. Rosa, Laguna, requesting clarification on whether FTCP is subject to the payment of the municipal tax under Section 143 (c) of the Local Government Code (LGC) of 1991. It is represented that FTCP is engaged in the manufacture and total exportation of its products which are printed circuit board (PCB) assemblies for car audio products, and that it has been registered with the Board of Investments since August 24, 1990 as new export producer of car-audio products including desk mechanism and components on a preferred, non-pioneer status. The municipality of Santa Rosa, Laguna thru that Office allegedly assessed FTCP for business tax in the total amount of P126,250.00 pursuant to the provisions of Section 143(c) of the LGC. In this connection, it is the view of this Department that FTCP falls under the classification of exporters, and should be taxed at the provided under Sec. 143(c) of the LGC. However, the tax may only be imposed after the lapse of its tax exemption period pursuant to Sec. 3 (b), quoted hereunder , of Local Finance Circular No. 5-93 dated October 22, 1993 of this Department, supplementing and further clarifying the implementation of Sec. 133 (g), of the LGC: "SEC. 3. Exemption of pioneer and non-pioneer enterprises. ..; "(b) Starting January 1, 1992, pioneer and non-pioneer enterprises registered with the BOI prior to the effectivity of the LGC shall be exempt from local business taxes until the end of the remaining period of their six (6) and four (4) years exemption from the dated of registration; ...." On the basis of the foregoing provisions, if FTCP is indeed registered as a non-pioneer enterprise, it shall be exempt from local taxes for a period of four (4) years from the date of its registration by the BOI. However, it shall be subject to the Mayors Permit and other regulatory fees imposed on similar businesses under existing tax ordinances of the municipality. Accordingly, the Municipal Treasurer should require FTCP to produce a certified or authenticated copy of its BOI Registration to establish its tax-exempt status and the duration thereof. Report of the action taken hereon within five (5) days from receipt hereof is requested. By authority of the Secretary: LORINDA M. CARLOS Executive Director Bureau of Local Government Finance