(10%)
The Local Government Code took effect on January 1, 1992.
PLDT’s legislative franchise was granted sometime before 1992. Its franchise provides that PLDT will only pay 3% franchise tax in lieu of all taxes.
The legislative franchises of Smart and Globe Telecoms were granted in 1998. Their legislative franchises state that they will pay only 5% franchise tax in lieu of all taxes.
The Province of Zamboanga del Norte passed an ordinance in 1997 that imposes a local franchise tax on all telecommunication companies operating within the province.
The tax is 50% of 1% of the gross annual receipts of the preceding calendar year based on the incoming receipts, or receipts realized, within its territorial jurisdiction.
Is the ordinance valid? Are PLDT, Smart and Globe liable to pay franchise taxes? Reason briefly.
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1 comment:
II.
The ordinance is valid. Provinces are authorized under the law to impose franchise taxes.
PLDT, Smart, and Globe are liable to pay franchise taxes as provided in their legislative franchises. Smart and Globe, however, cannot be made liable to pay local franchise taxes since local franchise taxes may only be imposed on companies with legislative franchises that do not contain the exempting “in-lieu-of-all-taxes” proviso.
As to PLDT, although its legislative franchise contains the “in-lieu-of-all-taxes” proviso, its exemption from payment of local taxes was withdrawn by the enactment of the Local Government Code.
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