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On the basis of the aforequoted provisions of law, this Bureau expresses the
following views:
Query No. 1
The answer is in the negative. Considering the representation made that UDDC
does not maintain any branch of ce either in Quezon City or Bocaue, Bulacan, the
company is therefore not oblige to secure business permit provided under Section 147,
supra.
The real property of UDDC in Quezon City as well as the soon-to-be-acquired
property in Bocaue, Bulacan can never be considered as "branches or sales of ces" to
satisfy Section 150 (b) (2) (1) of the LGC. The short of it is that the property in Quezon
City, if leased to another party, will be the very subject of the business of UDDC as a
Real Estate Lessor. To make a point, the situation by analogy, can be compared to the
business of retailing and/or wholesaling where the subject of its business are the
merchandise they offer for sale to customers. In the herein case of UDDC, the real
property is the subject of its business as a Real Estate Lessor which it may offers to
interested party. Presented in another wise, say, in the case of a " retailer" or a
"wholesaler", the real property owned by UDDC in Quezon City can be likened to a
"merchandise" of a "retailer" or a "wholesaler" that UDDC offers or advertises for lease.
Therefore, the subject property(ies) will not qualify as "branches" or "sales of ces " as
the terms were de ned [Article 243 (1) (b)] above for property(ies) will be the subject
of the business once UDDC is engaged in leasing venture.
Query No. 2
It may be stated that the basic rule in determining the situs of the local business
tax is where the transactions are made and recorded.
In order for the sale to be recorded and be subject to local business tax in the
city or municipality other than where the principal of ce is located, the taxpayer must
have a branch or sales outlet in such city or municipality where a sale or transaction is
made, other than where its principal of ce is located. Consequently, all sales made and
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recorded in such branch or sales of ce shall be 100% taxable by the city or municipality
there where such branch or sales office is located.
However, in cases where there is no such branch or sales of ce in the city or
municipality where the sale or transaction is made, the sale shall be duly recorded in the
principal of ce and the taxes due shall accrue and shall be paid to such city or
municipality.
Accordingly, it may be stated that business entity, like UDDC, which does not
maintain any branch or sales office where the real property subject of lease are situated
shall record the rental fees in the main or head of ce and that the taxes due thereon
shall accrue and shall be paid 100% to Naga City where the main or head of ce is
located, to the exclusion of Quezon City and Bocaue, Bulacan, where UDDC's real
properties are situated.
All previous rulings or opinions issued by the Bureau on cases similarly situated
that are inconsistent herein are hereby modified accordingly.
We hope that we have clarified your concerns.
Very truly yours,
(SGD.) SALVADOR M. DEL CASTILLO
OIC-Executive Director
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