RECEIVE
4 3 Ms Zo16

DATE:

Republic of the Philippi Time: Dann
HOUSE OF REPRESEN]
Quezon City, Metro Manila BY:
SEVENTEENTH CONGRESS RECISTRATON UNIT
First Regular Session BILLS AND INDEX SERVICE

034
House Bill No. 2391

Introduced by Representative GERALDINE B. ROMAN

EXPLANATORY NOTE

This bill seeks to change the allocation formula used in the computation of
the share of the local government units in the two percent (2%) tax on gross
income earned by all business enterprises within the Subic Special Economic
Zone (SSEZ), amending for the purpose Section 12 (c) of Republic Act (RA) No.
7227, otherwise known as the “Bases Conversion and Development Act of 1992,”
as amended.

Article 12, Section 1 of the 1987 Constitution provides that “the goals of
the national economy are a more equitable distribution of opportunities, income,
and wealth; a sustained increase in the amount of goods and services produced
by the nation for the benefit of the people; xxx.” Consonant to this constitutional
mandate, the SSEZ has been created with the passage of RA 7227. The SSEZ is a
self-sustaining, industrial, commercial, financial and investment center which
generates employment opportunities and attracts productive foreign investments.

RA 7227 provides that no national and local taxes shall be imposed within
the SSBZ. In lieu of said taxes, and as an incentive to a separate customs territory
like the SSEZ, a 5% tax on its gross income shall be paid by all business
enterprises within the zone, 3% of which shall be remitted to the national
government and 2% to the Subic Bay Metropolitan Authority (SBMA) for
distribution to the local government units which are affected by the creation of the
SSEZ.

HOUSE. OF REPRESENTATIVES:


With the passage of RA 9400 which amended RA 7227, the bases for the
allocation formula on how the local government units affected by the creation of
the SSEZ will share in the 2% tax on gross income from all business enterprises
within the SSEZ had been set on the basis of population (50%), land area (25%),
and equal sharing (25%).

While it is true that the Municipality of Morong has the biggest land
contribution among the local government units in the creation of SSEZ, which
amounts to a total of 8,172 hectares, we find it incongruous that the Municipality
of Morong receives one of the smallest share in the 2% tax on gross income from
all business enterprises within the SSEZ.

Thus, in the pursuit of giving the local government units which acceded to
SBMA a bigger portion of their land area, and in order to equitably diffuse
income opportunities for the common good, approval of this bill is earnestly
sought.

eo
TB hrmon,
GERALD . ROMAN



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 2394

Introduced by Representatives GERALDINE B. ROMAN

AN ACT

CHANGING THE ALLOCATION FORMULA USED IN THE
COMPUTATION OF THE SHARE OF THE LOCAL GOVERNMENT
UNITS IN THE TWO PERCENT (2%) TAX ON GROSS INCOME
EARNED BY ALL BUSINESS ENTERPRISES WITHIN THE SUBIC
SPECIAL ECONOMIC ZONE, AMENDING FOR THE PURPOS
REPUBLIC ACT NO. 7227, OTHERWISE KNOWN AS “BASES
CONVERSION AND DEVELOPMENT ACT OF 1992,” AS AMENDED

Be it enacted by the Senate and House of Representatives of the Philippines
in Congress assembled:

SECTION. 1. Section 12 (c) of Republic Act No. 7227, as amended, is
hereby further amended to read as follows:

“Sec. 12. Subic Special Economic Zone. — xxx

(a) Xxx

(b) xxx

(c) xxx In lieu of said taxes, a five percent (5%) tax on gross
income earned shall be paid by all business enterprises within the
Subic Special Economic Zone and shall be remitted as follows: three
percent (3%) to the National Government, and two percent (2%) to
the Subic Bay Metropolitan Authority (SBMA) for distribution to the
local government units affected by the declaration of and contiguous
to the zone, namely: the City of Olongapo and the municipalities of

Subic, San Antonio, San Marcelino, and Castillejos of the Province of


Zambales; and the municipalities of Morong, Hermosa and

Dinalupihan in the Province of Bataan, on the basis of [population]

LAND AREA (50%), [land area] POPULATION (25%), and equal

sharing (25%).

XXX.”

SEC.2. Within ninety (90) days from the effectivity of this Act, the
Department of Finance shall, in coordination with the Philippine Economic Zone
Authority, the Bureau of Internal Revenue and Bureau of Customs, and in
consultation with the Bases Conversion Development Authority and the SBMA,
promulgate the necessary rules and regulations for the effective implementation of
this Act.

SEC. 3. All laws, decrees, orders, proclamations, rules and regulations
or other issuances or parts thereof inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

SEC. 4. This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in a newspaper of general circulation.

Approved,