Whether an Enabling Ordinance is Needed for LGUs who may Provide Fee and Tax Exemption Privileges Under RA 9178

February 9, 2004 DILG LEGAL OPINION NO. 010-04 Atty. Roel A. Refran Chief of Staff Office of Senator Ralph G. Recto Rm. 519, GSIS Financial Center CCP Complex, Pasay Dear Atty. Refran : This refers to your letter wishing to be clarified, in connection with DILG Memorandum Circular No. 2003-172 dated 23 August 2003, on whether an enabling ordinance is needed for Local Government Units (LGUs) who may provide fee and tax exemption privileges to qualified micro enterprises in implementing RA 9178, otherwise known as the " Barangay Micro Business Enterprises (BMBE) Act of 2002 ". At the outset, may we clarify our position vis--vis DILG Memorandum Circular No. 2003-172 dated 23 August 2003. In said Circular, we declared that for purposes of registration of BMBEs and issuance of a Certificate of Authority to enable the BMBEs to avail of the benefits under the Act, an enabling ordinance of the city or municipal government concerned is no longer necessary as the law does not require it. In that regard, may we point out the participation of LGUs under the BMBE Act of 2002. Under Section 4 of the same Act, BMBEs are required to register and obtain a Certificate of Authority from the city or municipal treasurer in order for it to avail themselves of the benefits under the law. The statutory benefits given by the national government to BMBEs under said law pertain to exemption from payment of income tax arising from the operation of said enterprise and exemption from the coverage of the Minimum Wage Law. Under the same section, the mayors are likewise given the authority to appoint a BMBE officer who shall be under the Office of the Treasurer. The same section provided also that the LGU shall issue the Certificate of Authority promptly and free of charge. However, to defray administrative cost of registration and monitoring, the LGU may charge a fee not exceeding P1,000.00. To our mind, the imposition of a registration fee need not require an appropriate ordinance since the law already authorizes it to be so imposed. The Local Chief Executive may, therefore, exercise the delegated Authority to fix the amount of the registration fee not to exceed P1,000.00. The other participation of the LGUs under the law is found under Section 7, 2nd paragraph, which provides that: " The LGUs are encouraged either to reduce the amount of local taxes, fees and charges imposed or to exempt the BMBEs from local taxes, fees and charges ". With respect to the reduction of amount or exemption of BMBEs from local taxes, fees and, charges, we are of the view that an enabling ordinance is necessary and required in view of Section 192 of the Local Government Code, which states 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 ". We hope we have clarified the matter accordingly. TIHCcA Very truly yours, (SGD.) JOSE D. LINA, JR. Secretary Department of Interior and Local Government