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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
'14 
SEP 10 P 3 :06 
SENATE 
S.No. 2406 
Introduced by Senator Ralph'G, Recto 
AN ACT 
TO INCLUDE IN THE COMPUTATION OF THE INTERNAL REVENUE 
ALLOTMENT (IRA), ALL THE NATIONAL INTERNAL REVENUE TAXES 
COLLECTED BY THE BUREAU OF INTERNAL REVENUE AND THE 
BUREAU OF CUSTOMS, AMENDING FOR THIS PURPOSE SECTION 284 OF 
REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS THE LOCAL 
GOVERNMENT CODE OF 1991 
Explanatory Note 
section 6, Article X of the 1987 Constitution provides that the local government 
units (LGUs) shall have a just share, as determined by law, in the national taxes which 
shall be automatically released to them. 
In view of this constitutional mandate, Republic Act No. 7160, otherwise known 
as the Local Government Code of 1991 was enacted to achieve and promote the basic 
policy oflocal autonomy. 
However, the Local Government Code of 1991 particularly Section 284 provides 
that the LGUs shall have a share in the "national internal revenue taxes" which was 
interpreted by the National Government to include only the national internal revenue 
taxes collected by the Bureau of Internal Revenue. Therefore, the national internal 
revenue taxes such as the value-added tax and excise taxes on the importation of goods 
collected by the Bureau of Customs are not included in the computation of internal 
revenue allotment (IRA) share ofLGUs. 
The LGUs argue that the value-added tax and excise taxes collected by the 
Bureau of Customs should be included in the allocation of IRA share because the said 
taxes are also "national internal revenue taxes" imposed under the National hlternal 
Revenue Code of 1997, as amended. The Bureau of Customs is only deputized by the 
Bureau of mternal Revenue to collect such taxes on imported goods. 
The LGU s have been deprived of their just share in the national internal revenue 
taxes collected on the importation of goods. For the years 2008 to 2012, the Bureau of 
Customs collected an average of PI92 Billion annually in value-added tax and excise 
taxes. 
The purpose and intent of this bill is to give the LGUs their just share in the 
national internal revenue taxes by clarifying its definition as referring to "national 
internal revenue taxes" imposed under the National Internal Revenue Code of 1997 as 
amended, collected by the Bureau of Internal Revenue and the Bureau of Customs. 
' 
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In the light of the foregoing, immediate passage of this bill is earnestly sought. 
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SIXTEENTH CONGRESS OF THE REPUBLIC ) 
OF THE PHILIPPINES 
) 
Second Regular Session 
) 
'14 
SEP 10 P3 :06 
s.No.2406 
RECEIVE\) llY;_"~ 
SENATE 
Introduced by Senator Ralph G. Recto 
AN ACT 
TO INCLUDE IN THE COMPUTATION OF THE INTERNAL REVENUE 
ALLOTMENT (IRA), ALL THE NATIONAL INTERNAL REVENUE TAXES 
COLLECTED BY THE BUREAU OF INTERNAL REVENUE AND THE 
BUREAU OF CUSTOMS, AMENDING FOR THIS PURPOSE SECTION 284 OF 
REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS 
THE LOCAL 
GOVERNMENT CODE OF 1991 
Be it enacted by the Senate and the House of Representatives of the Philippines in 
Congress assembled: 
1 
SECTION 1. Section 284 of Republic Act No. 7160 is hereby amended to read 
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as follows: 
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"Section 284. Allotment of Internal Revenue Taxes. - Local government units 
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shall have a share in the national internal revenue taxes based on the collection of the 
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third fiscal year preceding the current fiscal year as follows: 
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(a) On the first year of the effectivity of this Code, thirty percent (30%); 
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(b) On the second year, thirty-five percent (35%); and 
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(c) On the third year and thereafter, forty percent (40%). 
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"xxx 
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AS USED IN THIS ACT, THE TERM "NATIONAL INTERNAL 
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REVENUE TAXES" SHALL INCLUDE INCOME TAX, ESTATE AND 
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DONOR'S TAXES, VALUE-ADDED TAX, OTHER PERCENTAGE TAXES, 
13. 
EXCISE TAXES, DOCUMENTARY STAMP TAXES, AND SUCH OTHER 
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TAXES COLLECTED BY THE BUREAU OF INTERNAL REVENUE; AND 
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VALUE-ADDED TAX AND EXCISE TAXES ON IMPORTED GOODS 
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COLLECTED BY THE BUREAU OF CUSTOMS." 
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SEC. 2. Implementing Rules and Regulations. - The Secretary of Finance and the 
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Secretary of Budget and Management shall promulgate the necessary rules and 
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regulations for the effective implementation of the provisions of this Act. 
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SEC. 3. Separability Clause. - If any provision of this Act is declared invalid or 
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unconstitutional, other provisions hereof which are not affected thereby shall remain in 
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full force and effect. 
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SEC. 4. Repealing Clause. - All laws, orders, decrees, rules and regulations, and 
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other parts thereof inconsistent with the provisions of this Act are hereby repealed, 
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amended or modified accordingly. 
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SEC. 5. Effectivity Clause. - This Act shall take effect fifteen (15) days after its 
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publication in Official Gazette or in at least two (2) national newspapers of general 
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circulation. 
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Approved. 
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