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CioF REPRESENTATIVES

‘SEVENTEENTH CONGRESS OF THE ) CCEIVED
REPUBLIC OF THE PHILIPPINES —_) 18
First Regular Session ) oare_08 a 20
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HOUSE OF REPRESENTATIVE
H.No.__ 9p Me oer

FRATONUAIT

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Introduced by Representative Vilma Santi
6th District of Batangas

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 of local
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 (BIR). 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 (BOC) are not
included in the computation of internal revenue allotment (IRA) share of LGUs.

The LGUs argue that the value-added tax and excise taxes collected by the BOC should be
included in the allocation of IRA share because the said taxes are also “national internal revenue
taxes” imposed under the National Internal Revenue Code (NIRC) of 1997, as amended. The BOC
is only deputized by the BIR to collect such taxes on imported goods.

The LGUs have been deprived of their just share in the national internal revenue taxes
collected on the importation of goods. For the years 2010 to 2014, the BOC collected an average of
244.3 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 NIRC of 1997, as amended, collected by the BIR and the BOC.

In the light of the foregoing, immediate passage of thi


SEVENTEENTH CONGRESS OF THE )
REPUBLIC OF THE PHILIPPINES —_)
First Regular Session )

HOUSE OF REPRESENTATIVES,
2b14
H. No.

Introduced by Representative Vilma Santos-Recto
6th District of Batangas

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 House of Representatives of the Philippines in Congress
assembled:

SECTION Section 284 of Republic Act No. 7160 is hereby amended to read as.
follows:

“Section 284, Allotment of Internal Revenue Taxes. - Local government units
shall have a share in the national internal revenue taxesbased on the collection of the third
fiscal year preceding the current fiscal year as follows:

(a) On the first year of the effectivity of this Code, thirty percent (30%);

(b) On the second year, thirty-five percent (35%); and

(c) On the third year and thereafter, forty percent (40%).

“XXX

AS USED IN THIS ACT, THE TERM “NATIONAL INTERNAL
REVENUE TAXES” SHALL INCLUDE INCOME TAX, ESTATE AND
DONOR’S TAXES, VALUE-ADDED TAX, OTHER PERCENTAGE TAXES,
EXCISE TAXES, DOCUMENTARY STAMP TAXES, AND SUCH OTHER
TAXES COLLECTED BY THE BUREAU OF INTERNAL REVENUE; AND
VALUE-ADDED TAX AND EXCISE TAXESON IMPORTED GOODS

COLLECTED BY THE BUREAU OF CUSTOMS.”


SEC. 2. Implementing Rules and Regulations. ~ Within sixty (60) days from the
effectivity of this Act, the Secretary of Finance and the Secretary of Budget and
Management shall promulgate the necessary rules and regulations for the effective
implementation of the provisions of this Act.

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

SEC. 4.£ffectivity Clause— This Act shall take effect fifteen (15) days after its
publication in Official Gazette or in at least two (2) national newspapers of general
circulation

Approved,