Bureau of Local Government Finance Opinion

April 15, 2002 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Treasurer of Manila for appropriate action the herein letter dated April 3, 2001 of Alba Romeo and Co. requesting on behalf of their client, Asiagel Corporation (Asiagel for brevity) confirmation that the business of exporting algae from seaweed is covered by the provision providing for a special rate for exporters which is one half (1/2) of the rate for other businesses in accordance with the Revenue Code of the City of Manila in relation with the Local Government Code (LGC) of 1991. Representations are made that Asiagel is a corporation engaged in the business of exporting, buying and selling at wholesale and retail algae from seaweed. All export sales are conducted at its sales office in Escolta, Manila. On January 20, 2001, Asiagel applied for a renewal of its Mayor's permit with the City of Manila and was assessed a business tax at seventy five percent (75%) of one percent (1%) as provided under the Revenue Code of the City of Manila, as amended, quoted as follows: "Section 15. Tax on Wholesalers, Distributors, or Dealers . There is hereby imposed a graduated tax on wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature in accordance with the following schedule: cDHAES "Gross Sales "xxx xxx xxx "2,000,000.00 or more at a rate not exceeding seventy five percent (75%) of one percent (1%)" Said Code also provides as follows: "Section 16. Tax on Essential Commodities . A percentage tax at the rate of one half (1/2) of the rates prescribed under Sections 14, 15, and 17 is hereby imposed on exporters, and on manufacturers, millers, producers, wholesalers, distributors, dealers or retailers of essential commodities enumerated hereunder: "xxx xxx xxx." In this connection, it may be stated that Section 143 (c) of the LGC, plainly provides that exporters, insofar as their export sales are concerned and without any distinction as to the nature of products exported, shall be subject to local business tax at a rate not exceeding 1/2 of the rates prescribed for other businesses enumerated in paragraphs (a), (b), and (d) thereof. This is so for reason that the qualifying phrase "essential commodities" should be construed to apply only to the class of business immediately preceding it. It could not be extended to the business of "exporting" for such is disassociated by the "comma" and the conjunction "and" following it. ETHSAI Accordingly, that Office is hereby instructed to recompute the business taxes of Asiagel in order to ensure compliance with Section 143 (c) of the LGC. Be guided accordingly. (SGD.) JUANITA D. AMATONG Undersecretary and Officer-in-Charge, BLGF <www.blgf.gov.ph/downloads/opinion/localtax/2002/a2001-0403.pdf> last visited January 14, 2014.