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Subic Bay Metropolitan Authority (MPD-SBMA)

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29 June 2010

SBMA adopts new scheme for release of LGU share from corporate taxes

The Subic Bay Metropolitan Authority (SBMA) will soon be collecting the two percent share of contiguous local government units (LGUs) from corporate taxes paid by business locators in this free port, instead of the Bureau of Internal Revenue (BIR).

This was announced by Subic authorities during a forum held under the auspices of the Department of Finance (DOF) for some 300 representatives of companies in the Subic Bay Freeport Zone.

“We are doing this to make sure that the LGU shares are distributed quickly,” SBMA administrator and CEO Armand Arreza explained.

He said that previously, Subic locators forward their corporate tax, or five percent of their gross income earned, straight to the BIR, which automatically remits payments to the national treasury.

Thereafter, the Department of Budget Management (DBM) releases the two percent share to the LGUs concerned.

Arreza also said that since the creation of the SBMA, the 2 percent share was only distributed for a few years, resulting to a lot of complaints from LGUs.

“The funds could have been used to finance LGU development projects and provide for basic support services in health, education, and peace and order,” Arreza noted.

“So it is but right and lawful that the LGUs receive their share on a regular basis,” he stressed.

According to Republic Act No. 9400, which amended RA 7227 or the Bases Conversion and Development Act of 1992, no national and local taxes shall be imposed within the Subic Special Economic Zone except for a five percent tax on gross income earned by business enterprises within the zone.

Accordingly, the corporate tax shall be remitted as follows: three percent to the National Government, and two percent to the SBMA for distribution to LGUs affected by the declaration of, and contiguous to the zone.

The two percent share is divided according to population (50%), land area (25%), and equal sharing (25%).

The contiguous communities include the City of Olongapo and the municipalities of Subic, San Antonio, San Marcelino and Castillejos in Zambales, and Morong, Hermosa and Dinalupihan in Bataan.

In the forum, Arreza said that there will be no other changes in the computation of the corporate taxes, except for splitting the check into two: 60 percent to be forwarded to the BIR and 40 percent to the SBMA Treasury Department.

Aside from Arreza, BIR assistant revenue district officer Maglangit Dicampong was present to address concerns raised by business locators. The forum speakers also included SBMA senior deputy administrator for internal services Ramon Agregado, SBMA deputy administrator for finance Cristina Millan, and SBMA treasury department manager Paulita Yee.

For her part, Millan assured the locators that the SBMA will issue guidelines to address matters regarding the new collection scheme for corporate taxes.

The new scheme will be implemented starting with the locators’ second quarter tax payments. (SBMA Corporate Communications)

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