Bureau of Local Government Finance Opinion

August 27, 1996 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 4th Indorsement Respectfully returned, thru the Regional Director for Local Government Finance, Region X. Lago Bldg.,Vamenta Blvd. Carmen, Cagayan de Oro City to the In-Charge of Office, Office of the Provincial Treasurer of Agusan del Norte, City of Butuan. llcd This refers to Municipal Ordinance No. 004-96, entitled "AN ORDINANCE ESTABLISHING A LOCAL INVESTMENT INCENTIVE PROGRAM IN THE MUNICIPALITY OF MAGALLANES, AGUSAN DEL NORTE",dated February 5, 1996 enacted by the Sangguniang Bayan of Magallanes, which was forwarded by the ICO-Provincial Treasurer of Agusan Del Norte for comment and legal opinion. Article 232 (b) (2) of the Implementing Rules and Regulation (IRR) implementing Section 192 of the Local Government Code of 1991, (LGC) provides the guideline in the grant of tax incentives. "Art. 232. ... "(2) On the grant of tax incentives: "(i) The tax incentive shall be granted only to new investments in the locality and the ordinance shall prescribe the terms and conditions that must be complied with for such grant or tax incentive; (ii) The grant of the tax incentive shall be for a definite period not exceeding one (1) calendar year; (iii) The grant of tax incentive shall be by ordinance passed prior to the first (1st) day of January of any year; and (iv) Any tax incentive granted to a type or kind of business shall apply to all businesses similarly situated." Upon perusal of the subject ordinance and on the basis of the aforequoted provisions, this Bureau concurs in the observation of the Regional Office that the grant of tax incentives under Section 8 thereof for a period of three (3) years to five (5) years should be reduced to a period not exceeding one (1) year to conform with the provisions of sub-paragraph (2-ii) of Art. 282 quoted above. On the basis of the foregoing, the ICO-Provincial Treasurer of Agusan del Norte should make representations with the Sangguniang Panlalawigan that in the review of the subject ordinance of Magallanes. Section VIII thereof should be disapproved by being violative of Section 192 of the Code. Likewise, she may instruct the Municipal Treasurer of Magallanes to inform the Sangguniang Bayan that said provisions of the ordinance should be amended accordingly. prcd (SGD.) LORINDA M. CARLOS Executive Director