Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

15™ CONGRESS
t Regular Session

HOUSE BILLNo._ 297 1

Introduced by REP. SALVADOR H. ESCUDERO III

EXPLANATORY NOTE

This bill seeks to achieve fairness in local taxation, especially in treating the situs of
the tax.

Albeit, the current law on local taxation as provided for in the Local Government
Code already recognizes and imposes the situs rule on taxation, it is submitted that further
modification be had. And this is in the area of tax sharing between and among local
government units where the principal place of business, branch or sales outlet, factory,
project office, plant or plantation is located,

‘A hundred percent share of all sales or transactions to Local Government Units
(LGUs) is proposed so long as such sales or transactions occur in the LGU concerned, This
practically expunges the present thirty percent share of the LGU where the principal place of
business is located.

This proposal is anchored on a more equalized distribution of revenues, especially
since most principal places of business are located in highly urbanized cities in the country
like those in Metro Manila.

Moreover, this bill is in consonance with the constitutional mandate of making LGUs
autonomous and self-sustaining government bodies.

‘Thus, the early passage of this measure is sought.

Ma Riot
SALVABOR H. ESCUDERO TIL

Representative
1* District, Sorsogon


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

15™ CONGRESS
First Regular Session

HOUSE BILL NO. 2a74

Introduced by REP. SALVADOR H..ESCUDERO II

AN ACT
RATIONALIZNG LOCAL TAXATION AMENDING FOR THAT PURPOSE
SECTION 150, CHAPTER 1, TITLE ONE, BOOK Il OF REPUBLIC ACT NO. 7160,
AS AMENDED, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT CODE.

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

Section 1. Section 150, Chapter 1, Title One, Book Il of Republic Act No. 7160, as
amended, is hereby further amended to read as follows:

. “SECTION 150. Situs of the Tax. - (a) For purposes of
collection of the taxes under Section 143 of this Code,
manufacturers, assemblers, repackers, brewers, distillers, rectifiers
and compounders of liquor, distilled spirits and wines, millers,
producers, exporters, wholesalers, distributors, dealers, contractors,
banks and other financial institutions, and other businesses,
maintaining or operating branch or sales outlet, FACTORY,
PROJECT OFFICE, PLANT OR PLANTATION elsewhere
shall record the sale in the branch or sales outlet, FACTORY,
PROJECT OFFICE, PLANT OR PLANTATION making the
sale or transaction, and the tax thereon shall accrue and shall be
paid to the municipality where such branch or sales outlet,
FACTORY, PROJECT OFFICE, PLANT OR PLANTATION
is located. In cases where there is no such branch or sales outlet,
FACTORY, PROJECT OFFICE, PLANT OR PLANTATION
in the city or municipality where the sale or transaction is made,
the sale shall be duly recorded in the principal office and the taxes
due shall accrue and shall be paid {0 such city or municipality.

[(b) The following sales allocation shall apply to
manufacturers, assemblers, contractors, producers, and exporters
with factories, project offices, plants, and plantations in the pursuit
of their business:


(4) Thirty percent (30%) of all sales recorded in the
principal office shall be taxable by the city or municipality where
the principal office is located; and

(5) Seventy percent (70%) of all sales recorded in the
principal office shall be taxable by the city or municipality where
the factory, project office, plant, or plantation is located.]

[©] (B) In case of @ plantation located at a place other than
the place where the factory is located, [said seventy percent (70%)
THE SALE OR TRANSACTION mentioned [in subparagraph
(b) of subsection (2)] above shall be divided as follows:

(J) Sixty percent (60%) to the city or municipality where
the factory is located; and

(2) Forty percent (40%) to the city or municipality where
the plantation is located.

[@] (© In case where a manufacturer, assembler,
producer, exporter or contractor has two (2) or more factories,
project offices, plants, or plantations located in different localities,
the [seventy percent (70%)] SALE OR TRANSACTION
mentioned [in subparagraph (b) of subsection (2)] above shall be
prorated among the localities where the factories, project offices,
plants, and plantations are located in proportion to their respective
volume or production during the period for which the tax is due.

[(€)] (D) The foregoing [sales allocation] shall be applied
irrespective of whether or not sales are made in the locality where
the factory, project office, plant or plantation is located.”

Sec. 2. The Secretaries of the Department of Finance, the Department of Budget and
Management and the Department of the Interior and Local Government, and the Presidents of
the different Ligas shall promulgate the required rules and regulations for the speedy and

effective implementation of this Act.

See. 3. If any provision or part hereof is held invalid or’ unconstitutional, the
remainder of the law or the provision not otherwise affected shall remain valid and

subsisting.

Sec. 4. All laws, presidential decrees, executive orders, proclamations and/or
administrative regulations which are inconsistent with the provisions of this Act are hereby

amended, modified, superseded or repealed accordingly.

Sec. 5. This Act shall take effect fifteen (15) days from its publication in the Official

Gazette or at least two newspapers of national circulation.

Approved,