Bureau of Local Government Finance Opinion

July 16, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned to the Provincial Treasurer, Sta. Cruz, Laguna, the attached letter dated March 3, 1998 of that Office seeking clarification as to whether Amtrust Leisure Corporation (ALC), operator of Enchanted Kingdom is exempt from the payment of amusement taxes. It appears that ALC is registered with the Board of Investments (BOI) on December 27, 1996 as a new Operator of Tourist Accommodations Facility (Resort) with Special Interest Activity (Theme Park) on a preferred non-pioneer status. Thus, said Company requested that Office for the issuance of Certificate of Tax Exemption as embodied under Section 4(iii) of Local Finance Circular No. 5-93 dated October 22, 1993 of the Department of Finance. However, that Office contends that Section 4(a) of the said Circular pertains only to business taxes which is different from the amusement taxes imposed by the province. Section 133(g) of the Local Government Code of 1991 (LGC) provides as follows: "Section 133. Common Limitations of 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) . . . ; "(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 this connection, this Bureau has expressed a uniform view on previous similar queries concerning tax exemption of BOI-registered enterprise. For so long as a business enterprise is certified by the BOI as pioneer or non-pioneer, it shall remain exempt from local taxation for a period of six (6) and four (4) years, respectively, from the date of registration. As regards the contention of that office that such exemption pertains only to business taxes and not to amusement taxes, it may be emphasized that the basis for the exemption of BOI registered enterprises for local taxes is the aforequoted Section 133(g) of the Code, the provisions of which are clear and explicit, i.e., that LGUs are prohibited from imposing taxes on registered pioneer or non-pioneer enterprises. Accordingly, and considering that ALC is a BOI registered non-pioneer enterprise, said corporation shall be exempt from the payment of local business tax levied by the municipality concerned as well as the amusement tax imposable by that province for a period of four (4) years starting from December 27, 1996 to December 26, 2000. HaAIES In view thereof, that Office may issue the Certificate of Tax Exemption to ALC pursuant to Section 4(iii) of the Local Finance Circular only upon presentation of its BOI-certification. Be guided accordingly. (SGD.) ANGELINA M. MAGSINO (Deputy Executive Director) Officer-In-Charge