Bureau of Local Government Finance Opinion

August 13, 2015 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. King Israel S. Corpuz Manager Retail Outlet Operations Group Innovatronix, Inc. Km. 26, The Richdale Sumulong Highway Sta. Cruz, Antipolo City Sir : This refers to your request to apply the Tax Exemption privileges and incentives granted to INNOVATRONIX, INC. (Innovatronix for brevity) and all Tronix outlets under Republic Act No. 7459, otherwise known as the INVENTORS AND INVENTION INCENTIVES ACT OF THE PHILS. To support the above request, the following documents are submitted: Memorandum Circular No. 94-169 dated September 26, 1994 by the Department of the Interior and Local Government, which states: "Section 5. Tax Incentives . Inventors, as certified by the Filipino Inventors society and duly confirmed by the Screening Committee, shall be exempt from payment of license fees, permit fees and other business taxes in the development of their particular inventions. This is an exception to the taxing power of local government . . . . ". . . The technologies, their manufacture or sale , shall also be exempt from payment of license fees, permit fees, custom duties and charges on imports." Endorsement Letter dated August 20, 2010 from the Department of Science and Technology whereby the Screening Committee of the Technology Application and Promotion Institute (TAPI) has certified that our products are indeed new inventions, manufactured on commercial scale, and thus, fall under R.A. 7459; and Certification of Tax Exemption dated March 28, 2012 from Bureau of Internal Revenue stating that Mr. Ramon I. Castillo representing Innovatronix, Inc. is a certified member of Filipino Inventors Society and the stated inventions will be exempted during the first ten (10) years from the date of first sale on a commercial scale. It was emphasized that the Digital Picture Processing System, listed as one of the four (4) inventions registered under the Bureau of Patent, is critical to its operations. With this system, Innovatronix will able to produce high quality photo prints without the need for a photo laboratory. Thus, it can offer digital printing at lower prices, thereby giving its customers more purchasing power for their money. Please be informed that a draft proposed action of this Bureau was forwarded to the office of the Revenue Operations and Legal Affairs Group (ROLAG), Department of Finance, for consideration and/or approval. Under a Memorandum dated July 22, 2015 from the Office of Undersecretary Carlo A. Carag, ROLAG, it was stated that "the BLGF and this Department does not have authority to rule on requests for exemption from local business taxes, charges and fees, as such function falls within the scope of authority of local treasurers pursuant to Republic Act (RA) No. 7160 or the 'Local Government Code.'" It was stated further that "the duty of the local treasurer to determine, assess and collect taxes, fees carries with it the authority to determine liability for local business taxes, fees and charges and rule on requests for exemption from such business taxes, fees and charges." ETHIDa In this connection, that Office may submit a request for Certificate of Exemption to the local treasurers of the LGUs concerned for the availment of the Tax Exemption privileges and incentives under Republic Act No. 7459. We hope that this will help clarify matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director