An Ordinance Amending Section 1 of Ordinance No. 2016 by Limiting the Exemption from Real Property Tax Only to Those PEZA-Registered Enterprises Operating in the Ecozones and IT Parks within the Territorial Jurisdiction of the City of Cebu Which are Enjoying the Five Percent (5%) Gross Income Tax Regime

April 24, 2013 Excerpt from the Minutes of the Regular Session Held by the Sangguniang Panlungsod of the City of Cebu in its Session Hall on April 24, 2013. RESOLUTION NO. 12-5488-2013 The Sangguniang Panlungsod of the City of Cebu, as moved by Members Daluz III and M. Osmea, and seconded by Member Cuenco; RESOLVED, to approve the following Ordinance: CEBU CITY ORDINANCE NO. 2361-13 AN ORDINANCE AMENDING SECTION 1 OF ORDINANCE NO. 2016 BY LIMITING THE EXEMPTION FROM REAL PROPERTY TAX ONLY TO THOSE PEZA-REGISTERED ENTERPRISES OPERATING IN THE ECOZONES AND IT PARKS WITHIN THE TERRITORIAL JURISDICTION OF THE CITY OF CEBU WHICH ARE ENJOYING THE FIVE PERCENT (5%) GROSS INCOME TAX REGIME WHEREAS, under Section 2 (a) of Republic Act No. 7916, as amended, otherwise known as "The Special Economic Zone Act of 1996." It is the policy of the State to encourage private enterprise and provide incentives to needed investments; WHEREAS, Section 24 of RA 7916, as amended, provides that except for real property taxes in land owned by developers, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE, in lieu thereof, five percent (5%) of the gross income earned by all business enterprises within the ECOZONE shall be paid and remitted as follows: a) Three percent (3%) to the National Government; and b) Two percent (2%) which shall be directly remitted by the business establishments to the treasurer's office of the municipality or city where the enterprise is located. WHEREAS, within the territorial jurisdiction of the City of Cebu, there are several areas registered with the Philippine Economic Zone Authority ("PEZA") as Information Technology Parks ("IT Parks"), within which are buildings the whole or part of which has been developed to provide infrastructures and facilities required by IT Enterprise ("IT Facilities") and several buildings located outside these IT Parks registered with the PEZA as Information Technology Buildings ("IT Centers"); WHEREAS, the aforesaid IT Parks and IT Centers within the territorial jurisdiction of the City of Cebu serve as the business address to several PEZA-registered Information Technology Enterprise ("IT Enterprise") and have contributed to the economic growth of the City of Cebu by providing investments and employment opportunities for the people of Cebu City; WHEREAS, the City of Cebu shall encourage and support investments of IT Enterprises as well as the establishment and operation of IT Parks and/or IT Centers to serve as readily available suitable location for information technology operations, in order to accelerate the growth and development of the City of Cebu's information technology sector; WHEREAS, Section 1 of City Ordinance No. 2016 provides that all PEZA-registered enterprises operating in the ECOZONES within the territorial jurisdiction of the City of Cebu shall be exempt from all local taxes, except real property taxes; WHEREAS, the said Section 1 of City Ordinance No. 2016 imposes real property taxes on PEZA-registered enterprises without the similar distinction as provided under Section 24 of RA 7916; CAIHTE WHEREAS, a local ordinance must conform to existing national laws and other legislations; WHEREAS, it is necessary to further define the scope and coverage of Section 1 of City Ordinance No. 2016 for the purpose of harmonizing this Ordinance with the provisions of RA 7916, as amended, in order to provide the PEZA-registered business establishments operating within the territorial jurisdiction of the City of Cebu the full extent of the fiscal incentives provided to them under said RA 7916; WHEREAS, Section 912 of the Local Government Code of 1991 provides that "local government units may, through ordinances duly approved, grant tax exemptions, incentives, or reliefs under such terms and conditions as they may deem necessary;" NOW THEREFORE, in view of the foregoing premises, the Sangguniang Panlungsod of the City of Cebu, in a regular a session assembled hereby ordains that: SECTION 1. Section 1 of City Ordinance No. 2016 is hereby amended, in order to read as follows: "SECTION 1. EXEMPTION. ALL PEZA-registered enterprises, enjoying tax incentives under the five percent (5%) gross income tax regime, operating in the ECOZONES and IT Parks within the territorial jurisdiction of the City of Cebu shall be exempt from all local taxes, except real property taxes on land owned by developers. However, owners of IT Facilities shall be liable for real property tax to the extent of the total floor area leased to and occupied by non-PEZA-registered enterprises; PROVIDED, that owners of IT Centers shall be liable for the full amount of real property tax; PROVIDED, that the exemptions shall apply upon the effectivity of the enterprise's PEZA Registration; PROVIDED FURTHER, that the PEZA-registered enterprises enjoying tax incentives under the five percent (5%) gross income tax regime shall directly remit to the City of Cebu the two percent (2%) of the five percent (5%) of the gross income earned by these enterprises, as final tax in lieu of all national and local taxes, as provided in Republic Act No. 7916; DETACa PROVIDED FURTHERMORE, that the payment of the two (2%) percent final tax to the City Treasurer's Office shall be made within three (3) working days from the deadline set by the Bureau of Internal Revenue (BIR) for payment of corporate income taxes. Otherwise, an interest of two percent (2%) will accrue monthly or a fraction thereof upon default; PROVIDED FINALLY, that the PEZA-registered enterprise should secure clearance from the City prior to its application for a yearly Certificate of Accreditation from the Philippine Economic Zone Authority (PEZA)." SECTION 2. Separability Clause . If any portion of this Ordinance is declared unconstitutional or invalid by any court of competent jurisdiction, the same shall not affect the validity and effectivity of the other provisions not affected thereby. SECTION 3. Repealing Clause . Any ordinance or provisions thereof which are inconsistent with this Ordinance shall be deemed repealed or modified accordingly. SECTION 4. Effectivity Clause . The Ordinance shall take effect after fifteen (15) days following its publication. HEITAD CARRIED UNANIMOUSLY. (Member Labella was cut.) I hereby certify to the correctness of the aforequoted resolution/ordinance. (SGD.) CYNTHIA M. KAHULUGAN Acting Secretary to the Sangguniang Panlungsod ATTESTED: (SGD.) JOY AUGUSTUS G. YOUNG Presiding Officer APPROVED: (SGD.) MICHAEL L. RAMA City Mayor May 10, 2013