Bureau of Local Government Finance Opinion

December 2, 2014 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Treasurer of Manila, for comment and/or appropriate action, the herein letter dated November 24, 2013 of Mr. Son Young Jong, Philippines Station Manager, Jejuair Co. Ltd., requesting for clarification as to whether or not Jejuair Co. Ltd., which is engaged in the business of common carrier by air is subject to local business tax base on gross receipts. Jejuair Co. Ltd. is a foreign corporation with a registered branch office in the Philippines located at G/F Alcantara Bldg., 704 Pablo Ocampo St., Malate, Manila. Its primary purpose is to engage in the business of air transportation services for passengers, cargo and/or mail. On January 21, 2013 Jejuair Co. Ltd. paid its business tax base on Section 18 Tax on Contractors, Article IV Taxes on Business of Ordinance No. 7794 of that City. Thus, Jejuair Co. Ltd. believes that it is exempted in local business tax. It is worth noting that per Statement of Business Taxes and Fees issued by that Office dated January 11, 2013, Jejuair Co. Ltd. is classified as "Transport Contractor/Services" and therefore exempt from business tax pursuant to Section 133 (j) of the Local Government Code of 1991, which provides: "Section 133. Common Limitations on the Taxing Powers of Local Government Units . Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: "(a) . . . "(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water, except as provided in this Code; "xxx xxx xxx." In this connection, advice of action taken hereon within five (5) days from receipt hereof together with the excerpt of the said Ordinance is requested. (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director