Bureau of Local Government Finance Opinion

March 4, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2nd Indorsement Respectfully returned to the Regional Director for Local Government Finance, Department of Finance, Region III, San Fernando City, Pampanga, his within Indorsement dated February 4, 2011 seeking clarification of the provisions of BLGF MEMORANDUM CIRCULAR NO. 31-2009 (MC 31-2009) dated October 7, 2009, particularly dealing on exemption of cooperatives from the payment of local taxes, fees and other charges. The above request is in relation to the letter dated 27 January 2011 of Mr. Joselito Sanchez, Chairman, City Cooperative Development Council, that city, requesting for the proper interpretation and implementation of the provision of MC 31-2009 which provides as follows: ". . ., cooperatives transacting business with both members and non-members are required to obtain or secure a Mayor's permit, which is implemented under the police powers of a local government unit to protect public interest and in furtherance of the general welfare clause enshrined both in the Constitution and the Local Government Code (Section 16 General Welfare Clause), and pay the commensurate cost of regulation, inspection and surveillance of the operation of its business but not exceeding One Thousand Pesos (P1,000.00). Likewise, said cooperatives shall secure a Community Tax Certificate (CTC) and pay the basic tax of Five Hundred Pesos (P500.00) as a juridical entity." In simple terms, the above provision shall mean that "Cooperatives transacting business with both members and non-members are required to obtain or secure a Mayor's permit and pay the corresponding fee of not exceeding One Thousand Pesos (P1,000.00), commensurate to the cost of regulation, inspection and surveillance of the operation of its business. " SCHATc Stated otherwise, the P1,000.00 fee covers both the Mayor's Permit fee as well as other regulatory fees imposable by a local government unit (LGU) concerned under its duly-enacted tax ordinance. However, the P1,000.00 fee shall not include the payment for utility charges like electricity, water, telephone, etc. Suffice it to say that the P1,000.00 amount is a token gesture and support to LGUs for maintaining the records and for hosting cooperative/s operating within its jurisdiction. Be guided accordingly. (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director