Bureau of Local Government Finance Opinion

August 10, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned thru the Municipal Treasurer, Villanueva, Misamis Oriental, to the Sangguniang Bayan, that municipality. This refers to the letter dated September 4, 1997 of Mr. Romeo N. Bantug, Municipal Vice-Mayor, that municipality, requesting opinion or suggestions for the eventual implementation of the proposed ordinance imposing business taxes and inspection fees enacted by that Body which was forwarded to this Bureau for comment and appropriate action. As such, the LGU would like to be clarified about the following: 1. On the light of PD 538, most particularly Section 9 thereof, can the LGU impose local taxes on those firms or enterprises hired by industries who are the purportedly tax free beneficiary; it being an industry operating within PHIVIDEC INDUSTRIAL ESTATE-MISAMIS ORIENTAL, (PIE-MO), and likewise registered with the BOARD OF INVESTMENTS? Example: Philippine Sinter Corporation, (PSC), a PHIVIDEC and BOI registered Sintering Plant producing sintered ore at Phividec Industrial Estate, hired Philippine Sandblasting Corporation to perform factory building and equipment maintenance. For purposes of the proposed Ordinance, can Philippine Sandblasting Corporation be imposed local taxes, pursuant to Section 143(e) and 150 of R.A. 7160? 2. Given the same Industry, (PSC) in the above example and same PD 538, can the LGU, just the same, impose fees and other charges, on those buyers of scrap or surplus materials and obsolete machines sold to them by Philippine Sinter Corporation? On query No. 1. Pursuant to Section 9 of PD 538, aside from the tax privileges accorded those of the enterprises operating in the Areas who are likewise registered with the Board of Investments, all industries or firms operating in the Areas shall be exempt from the payment of local taxes. However, this Bureau has already ruled under a letter dated September 19, 1994, addressed to Ms. Helena P. Autentico, Municipal Secretary, copy attached, that starting January 1, 1992, that municipality may impose, under a duly enacted ordinance, business taxes and other measures on the Philippine Sinter Corporation and other corporations or entities operating within the industrial area. This view is expressed pursuant to the provisions of Article 283 of the Implementing Rules and Regulations (IRR), implementing Section 193 of the Local Government Code (LGC) of 1991. Hence, that Office may also impose the business tax on contractor on Philippine Sandblasting Corporation being hired by PSC to perform factory building and equipment maintenance. On query No. 2. Pursuant to Section 147 of the LGC persons engaged in any business, in this case the buying of scrap or surplus materials and obsolete machines, are obliged to secure a Mayor's permit and pay the corresponding fee for the operation of such business. Said individuals are likewise liable to pay regulatory fees and service charges imposed under a duly-enacted ordinance of that municipality. Be guided accordingly. (SGD.) ANGELINA M. MAGSINO (Deputy Executive Director) Officer-in-Charge