SBMA adopts new taxation collection scheme

A new taxation collection scheme for both foreign and local investors, here has been introduced by Freeport authorities to cut-short the long and tedious process of revenue share distribution intended for neighboring communities.

The Subic Bay Metropolitan Authority (SBMA) said that it will soon be collecting the two percent from five percent gross revenue taxes being paid by business locators in this free port. The two percent share will then be distributed to contiguous local government units (LGUs) on regular basis.

The two percent share is mandated by the law under Republic Act (RA) 7227 or the Bases conversion law which created this premier Freeport zone.

Instead of paying the full five percent gross revenue taxes directly to the Bureau of Internal Revenue (BIR), investors were told to instead pay three percent to the BIR while the remaining two percent to the SBMA treasury department.

The new scheme was announced by Subic authorities during a forum held under the auspices of the Department of Finance (DOF) attended by 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 .

During 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.

Ironically, the BIR office in Subic headed by Revenue District Officer Rey Roberto Y. Manalili (OIC) refused to release the record of previous collection derived from the five percent gross revenue taxes of Freeport investors to the media.
The Business World learned that Subic BIR office has continuously failed to meet its target collection since Manalili took over as the OIC head of the local BIR office here last year.

Manalili is now the subject of complaint from local media citing violation on the right of the press to have access to public records. Rey Garcia