Bureau of Local Government Finance Opinion

April 9, 2003 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Jose E. Reyes Treasurer Philko Peroxide Corporation Unit 1106, 88 Corporate Center Sedeo St. Cor. Valero St. Makati City Sir : This refers to your letter dated March 31, 2003 requesting confirmation of your position with respect to the allocation in the payment of business tax. CaHAcT Representations are made that Philko Peroxide Corporation (PPC) is engaged mainly in the manufacturing, processing and selling of high concentrated and diluted hydrogen peroxide, and that its manufacturing facilities are located in Malolos City, Bulacan while its administrative, accounting and sales office where sales are transacted and recorded is in Makati City, Metro Manila. On the basis of the above representations, it is the position of PPC that the payment of its annual business tax should be allocated between Malolos and Makati at the ratio of seventy percent (70%) and thirty percent (30%), respectively, pursuant to Section 150 of the Local Government Code (LGC) of 1991, quoted as follows: "Sec. 150. Situs of the Tax . (a) . . . "(b) The following sales allocation shall apply to manufacturers, assemblers, contractors, producers, and exporters with factories, project offices, plants, and plantations in the pursuit of their business: "(1) Thirty percent (30%) of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located; and "(2) Seventy percent (70%) of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office, plant, or plantation is located. "xxx xxx xxx." It appears that PPC has no branch/sales office, thus, its gross receipts should be recorded in Makati City where the principal office is located and thirty percent (30%) of said gross receipts shall be taxable by said city; while the remaining seventy percent (70%) shall be taxable by Malolos City where the plant is located. This is in accordance with the aforequoted Section of the LGC, and, apparently, the present practice adopted by PPC is in full accord with the law. We trust that this will help clarify matters. IHCacT Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA Executive Director