Bureau of Local Government Finance Opinion

March 15, 2011 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION The City Treasurer Batangas City Madam : This has reference to the letter dated March 2, 2011 of Mr. Redentor R. Gabinete, Director for Corporate Affairs and Sustainability, Pepsi-Cola Products Philippines, Incorporated (PCPPI), copy attached, requesting reiteration of the opinion of this Bureau on the classification of PCPPI for purposes of paying the local business tax. Representations are made that PCPPI is a manufacturer of non-alcoholic beverage products such as Pepsi Cola, Pepsi Max, Pepsi Diet, Mountain Dew, 7 Up, 7 Up Light, MUG Root Beer, Tropicana, Lipton Iced Tea, Sting, Mirinda, Gatorade, Propel and Premier Drinking Water. It has eleven (11) manufacturing plants and more than eighty (80) sales offices which also serve as warehouses for the products prior to their delivery to customers, located in different cities and municipalities in the country. However, it is claimed that for local business tax purpose, that Office classified PCPPI as a wholesaler instead of a manufacturer. In this connection, please be informed that this Bureau, consistent with its previous stand on the same issue, maintains the position that PCPPI is classified as manufacturer for payment of local business taxes. aDcHIS Moreover, this Bureau had, on several occasions, recognized that maintaining sales offices for the purpose of selling one's own manufactured products is an activity incidental to manufacturing. This means, that a business that is engaged in the manufacturing activity is considered not engaged in another commercial activity as a wholesaler, retailer, distributor or contractor. For your guidance and ready reference, attached is a copy of the letter dated August 5, 2002 of this Bureau addressed to Mr. Rodante F. Ramos, AVP and Assistant Controller, PCPPI. That Office is requested to submit a report of the action taken on the matter within five (5) days from receipt hereof. aDSIHc Very truly yours, (SGD.) MA. PRESENTACION R. MONTESA, CESO III Executive Director