Any business must pay taxes–city legal officer
THE stage is finally set for a series of suits and counter-suits on the business tax issue after acting city legal officer Roy Laforteza affirmed the city’s refusal to meet a demand by a university for refund of taxes it paid in the past.
In his August 19 letter reply to the letter of Atty. Gonzalo Duque, president of Lyceum Northwestern University, demanding a refund of all taxes paid since 2001, Laforteza pointed out that the existing revenue code of the city imposes taxes upon all businesses in the city.
“The clear and self-explanatory legal basis for this is Section 143, paragraph (h), of Republic Act 7160 (Local Government Code of 1991), which is instructive on this point,” Laforteza wrote.
Section 143 paragraph (h) of R.A. 7160 states that: “On any business, not otherwise specified in the preceding paragraph, which the sanggunian concerned may deem proper to tax: Provided, that on any business subject to the excise, value-added or percentage tax under the National Internal Revenue Code, as amended, the rate of tax shall not exceed two percent (2%) of gross sales or receipts of the preceding calendar year.”
Laforteza also pointed out that there are other businesses that have not been mentioned with particularity or specificity in the revenue code.
“However, it does not mean to say that just because a particular line of business has not been mentioned with specificity as among those liable to pay business tax, that they are already exempt from paying business tax. Suffice it to say that all persons or entities engaged in business must pay the corresponding business tax,” Laforteza stressed.
LNU’s demand for a refund is based on the supposed lack of ordinance which imposes business tax on private schools.
The University of Luzon has filed a case in court against the city government on the matter and other private schools, including LNU, are preparing to follow suit. (See related story on page 1)
“Certainly, the city does not impose business tax upon charitable institutions, or upon those that do not operate as a business or for a profit. Does LNU operate free of any charge and that there is nothing at all, derived from its operation, which the stockholders share as dividends or profit? If the answer is in the affirmative, perhaps apologies are in order,” Laforteza added.
The city’s chief legal counsel also explained that even assuming, without conceding, that LNU has erroneously paid taxes to the city, the claim for refund for taxes paid in 2002-2009 will not prosper as “No case or proceeding shall be maintained in any court for the recovery of any tax, fee, or charge erroneously or illegally collected until a written claim for refund or credit has been filed with the local treasurer. No case or proceeding shall be entertained in any court after the expiration of two (2) years from the date of the payment of such tax, fee, or charge, or from the date the taxpayer is entitled to a refund or credit.” (With report from CIO)
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