Bureau of Local Government Finance Opinion

March 17, 1995 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Marcelino T. Alapag Certified Public Accountant Marlim Mansions, Suite # 2 Balibago, Angeles City S i r : At the onset, please accept our deep apologies for this very much delayed reply which, however, was not deliberate but only due to a very heavy workload. You have requested information regarding the following queries: 1. Does a local government unit have the power to tax export sales of a registered Countryside and Barangay Business Enterprise (CBBE)? 2. Would registered CBBEs be subject to the Mayors permit, sanitary permit, sanitation ordinance fees, employees health center fees, fire safety fees and corporate residence certificate? It is represented that G.A.R. Manufacturing & Export Company (GAR) was granted a permit and license under Countryside and Barangay Business Enterprise, RA No. 6810 (not 6820) known as Kalakalan 20 with Registration No. 082, dated December 26, 1991. In this connection, please be informed that Section 9 of RA 6810, implemented under Section 17 of Department Administrative Order No. 2, series of 1990 of the Department of Trade and Industry, provides as follows: "Sec. 9. The exemptions and other benefits provided in this Act shall apply for a period not exceeding five (5) years from the date of the registration of the CBBE, provided such CBBE is registered within five (5) years from the effectivity of this Act." Section 17 of DTI Department Administrative Order No. 2: "Sec. 17. Exemption from taxes and fees. Registered CBBEs shall be exempt from all taxes and fees, whether national or local for a period of five (5) years from the date of registration, including but not limited to: "xxx xxx xxx "(e) Other taxes or fees that are, or may be, imposed by the national or local government units. xxx xxx xxx Relative thereto, quoted hereunder are the pertinent provisions of Articles 221 and 283 of the Implementing Rules and Regulations (IRR) implementing Sections 133(n) and 193 of the Local Government Code (LGC) of 1991, which provides: "ART. 221. Common Limitations on the Taxing and Other Revenue-raising Powers of Local Government Units. Unless otherwise provided herein, the exercise of the taxing and other revenue raising powers of provinces, cities, municipalities and barangays shall not extend to the levy of the following: xxx xxx xxx "(n) Taxes, fees or charges, on countryside and barangay business enterprises and cooperatives duly registered under RA6810 and RA6938, otherwise known as the 'CooperativeCodeof the Philippines' respectively; and dctai "xxx xxx xxx" "ART. 283. Withdrawal of Tax Exemption Privileges or Incentives. Unless otherwise provided for in this Rule, beginning January 1, 1992, all local tax exemption privileges or incentives granted to or presently enjoyed by any person, whether natural or juridical, including government-owned or controlled corporations, are considered withdrawn, except the following: xxx xxx xxx "(e) Business entity, association, or cooperatives registered under RA6810, otherwise known as the MagnaCarta for Countryside and BarangayEnterprises or Kalakalan20; and xxx xxx xxx In view of the foregoing, it may be stated that provinces, cities and municipalities are prohibited from imposing taxes and fees on registered CBBEs for a period of five (5) years from the date of registration pursuant to RA 6810. Accordingly, GAR would be entitled to such tax exemption for the five-year period from December 26, 1991 up to December 25, 1996, inclusive. However, said company shall be liable to pay charges or fees for services rendered by the local government unit, such as garbage fees, sanitary inspection fees, electrical inspection fees, and similar others, as well as rentals or tolls for use of public utilities owned and operated by the local government. With regard to corporate residence certificates (now community tax), Section 133 of the Local Government Code of 1991 expressly prohibits local government units from imposing the community tax on CBBEs duly registered under RA No. 6810. However, upon request, said entity may be issued a community tax certificate upon payment of One Peso (P1.00) pursuant to Article 247 of the IRR, implementing Section 162 of the LGC, quoted hereunder: "Art. 247. Community Tax Certificate . A community tax certificate shall be issued to every person or corporation upon payment of the community tax. A community tax certificate may also be issued to any person or corporation not subject to the community tax upon payment of One Peso (P1.00). We hope that this will clarify matters. Very truly yours, By authority of the Secretary: LORINDA M. CARLOS Executive Director Bureau of Local Government Finance