Bureau of Local Government Finance Opinion

August 5, 2016 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Treasurer of Taguig City, for comment the within letter dated 26 July 2016 of Ms. TERESITA C. BIOL, President, HANJINPHIL CORPORATION ("Hanjin" for brevity) requesting for an opinion regarding the tax basis in imposing local business tax. Ms. Biol submitted that Hanjin filed the application for the renewal of its business permit and declared a gross sales for 2015 in the amount of P10,622,400.00. However, a certain Mr. James Malapad of the "local business tax assessment division" assessed Hanjin for local business tax (approximately in the amount of P823,061.00) based on the 2014 gross sales of the company in the amount of P127,546,461.16. According to him, the basis for taxpayer's business tax is either its gross sales for two (2) preceding years or the preceding year, whichever produces a higher yield in accordance, as alleged, with Memorandum Circular No. 01-10 dated January 4, 2010 of the Office of the City Mayor. A careful reading of the copy of Ordinance No. 85, s. 2005 of Taguig City reveals a negative result. Nowhere in the Ordinance does it state that the basis in computing the business tax of a taxpayer is either the gross sales for the two (2) preceding years or the preceding year, whichever produces a higher result. Basically, Ordinance No. 85 speaks of the so called "Presumptive Income Level" (PIL) assessment approach which provides for a "Schedule of Minimum Gross Sales or Receipts." On the other hand, excerpt of said Ordinance particularly Section 75 thereof provides that the imposition of tax is based on "Gross Sales/Receipt for the Preceding Calendar Year." In this connection and to resolve the issue, your full comment on the matter is hereby requested within ten (10) days upon receipt hereof so that appropriate action could be taken on the matter. For compliance. (SGD.) NIO RAYMOND B. ALVINA OIC Executive Director