Guidelines and Mechanisms to Implement the Provisions of RA 9994 Re: Sale of Medicines and the Sharing of the 20% Senior Citizens' Discount

February 2, 1994 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 2ND INDORSEMENT Respectfully returned to the Municipal Treasurer, Paraaque, Metro Manila, the preceding indorsement dated November 11, 1993 of that Office, requesting opinion and/or advice relative to the letter dated October 19, 1993 of Atlas Cement Marketing Corporation (ACMC) regarding its interpretation of Section 145 of the Local Government Code (LGC) of 1991. casia In the aforecited letter Mr. Constancio T. Magno, Comptroller of ACMC informed that their company has already retired its business operation last February 1993 and has paid the corresponding tax for the 1st quarter of 1993 which he claimed is sufficient to cover payment for the 2nd, 3rd and 4th quarters of 1993 based on the gross sales or receipts for the current year of 1993 in view of said retirement. In this connection, it is informed that the tax on the gross sales for the preceding year 1992 of ACMC shall be computed and collected the following year 1993 pursuant to Sec. 143 of the LGC. Said tax computed for the whole year "shall be paid within the first twenty (20) days of January or of each subsequent quarter, as the case may be. The Sanggunian concerned may, for a justifiable reason or cause, extend the time for payment of such taxes without surcharges or penalties, but only for a period not exceeding six (6) months" (Sec. 167, LGC). The tax may therefor be paid in full or by installments in four equal sums per quarter of the year. Hence, what Atlas will pay for the 1st, 2nd, 3rd and 4th quarters of 1993 is the installment taxes on the gross sales realized in the preceding year 1992. However, if said corporation has already retired its business operation in February of 1993, the provision of Sec. 145 of the LGC of 1991 as implemented by Art. 241 of the implementing Rules and Regulations (IRR) of the Code shall be applied as regards the tax on the current gross sales of the corporation which states that: "Art. 241. Retirement of Business : Any person, natural or juridical, subject to the tax on businesses under Article 232 of this Rule shall, upon termination of the business, submit a sworn statement of the gross sales or receipts for the calendar year. acd "For purposes hereof, termination shall mean that business operation are stopped completely. Any change in ownership, management and/or name of the business shall not constitute termination as herein contemplated. Unless stated otherwise, assumption of the business by any new owner or manager or re-registration of the same business under a new name will only be considered by the LGU concerned for record purposes in the course of the renewal of the permit or license to operate the business. "The local treasurer concerned shall see to it that the payment of taxes of a business is not avoided by simulating the termination or retirement thereof. For this purpose, the following procedural guidelines shall be strictly followed: "(1) The local treasurer shall assign every application for the termination or retirement of business to an inspector in his office who shall go to address of the business on record to verify if it is really no longer operating. If the inspector finds that the business is simply placed under a new name, manager and/or new owner, the local treasurer shall recommend to the Mayor the disapproval of the application for the termination or retirement of said business; "(2) Accordingly, the business continues to become liable for the payment of all taxes, fees and charges imposed thereon under existing local tax ordinance; and "(3) In addition, in the case of a new owner to whom the business was transferred by sale or other form of conveyance, said new owner shall be liable to pay the tax or fee for the transfer of the business to him if there is an existing ordinance prescribing such transfer tax. "(b) In case it is found that the retirement or termination of the business is legitimate, and the tax due therefrom be less than the tax due for the current year based on the gross sales or receipt, the difference in the amount of the tax shall be paid before the business is considered officially retired or terminated." "(c) The permit issued to a business retiring or terminating its operations shall be surrendered to the local treasurer who shall forthwith cancel the same and record such cancellation in his books." (Underline supplied) On the basis of the foregoing, said corporation should pay the taxes due on: (a) The gross sales for the whole year 1992 on or before January 20, 1993, and (b) The gross sales from January 1, 1993 up to the date the business actually ceased operations, plus whatever penalties may be assessed thereon according to the existing tax ordinances of that municipality. Be guided accordingly. By Authority of the Secretary: LORINDA M. CARLOS Executive Director Bureau of Local Government Finance