Bureau of Local Government Finance Opinion

February 28, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Arthur G. Coronel President AGC Realty Corporation 825 EDSA, Quezon City Sir : This refers to your letter dated February 16, 2011 requesting clarification in securing a Business Permit in Quezon City. Representations are made that AGC Realty Corporation (AGC for brevity) is a PEZA Registered Ecozone Facilities Enterprise with Registration Certificate No. 95-A08 dated February 16, 1995 that was contracted to construct factory buildings for lease to the PEZA-Economic Zone Export Enterprise at the Cavite Economic Zone and Calamba Premiere Industrial Park, Calamba City, Laguna. It is claimed that being a PEZA registered entity, AGC is exempt from National and Local Taxes and a Zero VAT Rating. However, AGC is duly paying its ITR and other dues to the Municipality of Cavite and Calamba City. Section 24 of R.A. 7916 provides as follows: "Sec. 24. Exemption from National and Local Taxes. Except for real property taxes on land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: EaIcAS "xxx xxx xxx." As can be gleaned from the abovequoted provisions, the exemptions would only apply to those activities undertaken within the ECOZONE. In this connection and considering that your office in Quezon City is not within the ECOZONE, the city may impose a business tax on the business activities transacted by AGC thereat. Likewise, AGC shall be subject to the payment of Mayor's permit and other regulatory fees and charges imposed under a duly-enacted ordinance of said city. We hope that this will help clarify matters. STaCcA Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director