Bureau of Local Government Finance Opinion

July 8, 2014 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Atty. Fernando C. Campos President Arcontica Investment Corporation Bohol Mansions, No. 43 Bohol Ave. South Triangle, Quezon City Sir : This refers to your letter dated June 24, 2014 requesting consideration of the following relative to the collection of the amusement tax from cockfighting activity by the City of Dasmarias, Cavite: 1. Section 125(a) of the National Internal Revenue Code (NIRC) as amended provides that there shall be collected from the proprietor, lessee or operator of cockpits a tax equivalent to 18% of gross receipts. The term "gross receipts" embraces all the receipts of the proprietor, lessee or operator of the amusement place. Such gross receipts also include income from television, radio and motion picture rights. A person, entity or association conducting any activity subject to the tax herein imposed shall be similarly liable for said tax with respect to such portion of the receipts derived by him or it. The operator, proprietor or lessee is required to make a true and complete return and pay the taxes within 20 days after the end of each quarter. 2. Section 140 of R.A. No. 7160 (Local Government Code), AMUSEMENT TAX. (a) The Province may levy an amusement tax to be collected from the proprietors, lessees, or operators of the theaters, cinema, concert halls, circuses, boxing stadia, and other places of entertainment at the rate of not more than 30% of the gross receipts from admission fees. The amusement tax is shared equally between the province and the municipality where such amusement places are located. "LOSS OF NOT LESS THAN PH3,600,000 IN AMUSEMENT TAXES FROM NON COMPLIANCE WITH NIRC AND LOCAL GOVT. CODE, PRIMARY RESPONSIBILITY OF DOF." In view of the foregoing, that Office submits that regardless of whether the amusement tax is imposed by the Component City or the Province itself, considering the national policy to tax gambling activities, the collection of 30% of the admission fees as amusement tax should be upheld and strict enforcement thereof should be vigorously followed by both the Department of Finance and the Department of Local Government (sic) . While the Department of Finance, through this Bureau continues to implement programs and activities and provide technical assistance to LGUs to enhance their capacity to generate revenues, effectively allocate resources, and efficiently utilize and account for these resources, the Bureau is guided with the provisions of the LGC, its IRR and other related laws in the implementation thereof. In this connection and in the case of amusement taxes, it is worth mentioning that Section 140(a) of the LGC was amended by R.A. No. 9640, Section 1 of which is quoted as follows: Section 1. Section 140 of Republic Act No. 7160, otherwise known as "The Local Government Code of 1991", is hereby amended to read as follows: "SEC. 140. Amusement Tax . (a) The province may levy an amusement tax to be collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement at a rate of not more than ten percent (10%) of the gross receipts from the admissions fees. "xxx xxx xxx." With respect to the publication in the Philippine Star wherein taxpayers are encouraged to send anonymous tips regarding irregular practices of LGUs, this Bureau may only address issues which pertains to the treasury and assessment operations of the LGU's. With respect to local officials, it is the Department of the Interior and Local Government (DILG) that has jurisdiction on their conduct. So that to the alleged rampant abuses of Mayor in holding continuous big time gambling in cockpits, said issue is not within the jurisdiction of this Bureau to resolve. Accordingly, this Bureau would like to reiterate its previous stand that the DILG and other investigative agencies of the government concerned should be consulted. We hope that this will help clarify matters. Very truly yours, (SGD.) SALVADOR M. DEL CASTILLO OIC-Executive Director