Realty Tax Exemption of Properties located within the ECOZONE

August 25, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION MEMORANDUM FOR : Undersecretary Lily K. Gruba SUBJECT : Realty Tax Exemption of Properties located within the ECOZONE Attached are the proposed actions on the letters/queries posed by the Provincial Governor of Bataan, the Municipal Mayor of Dasmarias, Cavite and the Provincial Treasurer of Laguna, all pertaining to the real property tax exemption of enterprises operating within the ECOZONE. It may be observed that under the said proposed actions, emphasis have been made that R.A. No. 7916, "The Special Economic Zone Act of 1995," has been amended by R.A. No. 8748 and under the said amendment, clarifications have been made, particularly under Section 24 thereof, that: (1) lands owned by developers within the ECOZONE are subject to real property taxes; and (2) the 2% of the 5% of gross income earned by business enterprises within the ECOZONES shall be remitted, and exclusively accrue, to the municipal or city funds, as the case may be. With regard to your attached September 1, 1998 Memorandum embodying your position concerning the previous ruling of the DOF on the same subject matter, this Bureau shares the same conclusion "that the business establishments within the ECOZONE are liable to pay real property taxes." This Bureau's original position was discussed lengthily under the attached proposed action on the request of the Provincial Governor of Leyte, which was submitted to DOF prior to the said ruling it has issued. cDTaSH May we, however, suggest that clarification on whether the real property tax is a national tax or a local tax, on the basis of the Supreme Court Ruling in the case of Benguet Corporation vs. Central Board of Assessment Appeals (210 SCRA 579), be dropped from the discussion when DOF finally reconsiders its position. This recommendation is being made for reason that the citation (Supreme Court Ruling) may no longer be appropriate considering that the law (PD 464) then applicable has been entirely repealed by the Local Government Code of 1991, R.A. No. 7160. For your consideration. (SGD.) ANGELINA M. MAGSINO