Bureau of Local Government Finance Opinion

November 12, 1998 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully returned thru the City Treasurer, to Ms. Catherine Jane DL. Arce, Chief, Business Permit and License Office, Office of the City Mayor, Mandaluyong City. This refers to her letter dated October 1, 1998 requesting clarificatory statement or an authoritative opinion regarding the tax exemption privileges enjoyed by BOI-registered business establishments, particularly the United Paragon Mining Corporation (UPMC). It is represented that UPMC is an exporter of mining products and is a duly BOI-registered company. UPMC claims that it is exempted from the local business tax in view of the said BOI-registration thus, the request for tax refund on payments made for CYs 1996 and 1997. However, that Office alleged that based on the specific terms and conditions stipulated in the firm's BOI registration it was clearly indicated that UPMC is entitled only to tax and duty-free incentive on importation of capital equipment and spare parts. It is alleged further, that the company willingly paid the 1996 and 1997 assessment charged against them by that Office. In this connection, attention is invited to Sec. 133(g) of the Local Government Code of 1991 (LGC) which provides as follows: "Sec. 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) . . .," "(g) Taxes on business enterprises certified to by the Board of Investments as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively, from the date of registration. "xxx xxx xxx." In this connection, this Bureau has expressed a uniform view on previous similar queries concerning tax exemption of BOI-registered business establishments. For so long as a business enterprise is certified by the BOI as pioneer or non-pioneer, it shall remain exempt from local taxation for a period of six (6) and four (4) years, respectively, from the date of registration pursuant to Section 133(g) quoted above. Accordingly, and considering that UPMC is a BOI-registered pioneer enterprise, said corporation shall be exempt from the payment of local business taxes starting from the date of approval of its registration up to the time that the period of exemption lapsed. DACTSa It bears emphasis, however, that the exemption granted to pioneer and non-pioneer enterprise shall apply only upon presentation of the corresponding BOI-certification. Moreover, said enterprise shall still be liable to pay the Mayor's permit and other regulatory fees or service charges that the local government unit may have imposed under a duly-enacted local tax ordinance, the exemption being applicable to local taxes only. (SGD.) ANGELINA M. MAGSINO (Deputy Executive Director) Officer-In-Charge