Republic Act No. 9054/Article IX

by Congress of the Philippines

Layout 2

Article IX

Fiscal Autonomy

Section 1. Revenue Source.—The Regional Government shall have the power to create its own sources of revenues and to levy taxes, fees, and charges, subject to the provisions of the Constitution and this Organic Act.

Sec. 2. Fiscal Autonomy.—The Regional Government shall enjoy fiscal autonomy in generating and budgeting its own sources of revenue, its share of the internal revenue taxes and block grants and subsidies remitted to it by the central government or national government or any donor.

The utilization of its share of the internal revenue taxes and block grants or subsidies from the central government or national government shall be subject to a semi-annual and annual audits by the Commission on Audit and to the rules and regulations of the Department of Budget and Management. All accountable officials of the Regional Government shall, upon demand, furnish the Commission on Audit all documents, papers, and effects necessary for the completion of the audit. Failure to do so shall empower the President or the Secretary of Finance to reduce, suspend, or cancel the release of funds intended for the autonomous region to the extent of the amounts that cannot be audited for reasons attributable to the officials of the autonomous region or are unaccounted for after audit.

If more than half of the funds released to the autonomous region by the central government or national government remain unaccounted for six (6) months after the audit mentioned above, the Secretary of Finance may also suspend or cancel the release of any or all funds allocated by the central government or national government for the autonomous region. Officials of the Regional Government who fail to submit the documents, papers and effects demanded by the Commission on Audit within the period specified herein may be suspended or removed from office by the President upon recommendation of the Secretary of Finance.

The utilization of the revenue generated by the Regional Government and block grants or subsidies remitted to it by foreign or domestic donors shall be subject to the rules and regulations of the Regional Government Department of the Budget and Management, if any, and to audit by regional government auditors. In the absence of such rules and regulations, the audit of the said funds, block grants or subsidies shall be done by the Commission on Audit and the use thereof shall be in accordance with the rules and regulations of the Department of the Budget and Management of the central government or national government.

The results of the audit mentioned in this Section shall be published in national newspapers of general circulation and in newspapers of regional circulation. The results shall also be announced over government-owned radio and television stations.

Sec. 3. Regional Tax Code.—The Regional Assembly may enact a regional government tax code. Until the regional government tax code is enacted, the pertinent provisions of Republic Act No. 7160, the Local Government Code of 1991, shall apply to tax ordinances of the provinces, cities, municipalities, and barangay within the autonomous region.

Sec. 4. Regional Economic and Financial Programs.—The Regional Government may formulate its own economic and financial programs, subject to the provisions of the Constitution.

Sec. 5. Uniform, Equitable Taxation; Prohibition Against Confiscatory Taxes, Fees.—In enacting revenue-raising measures, the Regional Assembly shall observe the principles of uniformity and equity in taxation and shall not impose confiscatory taxes or fees of any kind. Until a regional tax code shall have been enacted by it, the Regional Assembly may not revoke or amend, directly or indirectly any city or municipal ordinances imposing taxes or fees on purely local business. Prior to the revocation or amendment of such city or municipal ordinances, the Regional Assembly shall consult with the city or municipal government concerned.

Sec. 6. Payment of Taxes.—Corporations, partnerships, or firms directly engaged in business in the autonomous region shall pay their corresponding taxes, fees, and charges in the province or city, where the corporation, partnership, or firm is doing business.

Corporations, partnerships, or firms whose central, main, or head offices are located outside the autonomous region but which are doing business within its territorial jurisdiction, by farming, developing, or utilizing the land, aquatic, or natural resources therein, shall pay the income taxes corresponding to the income realized from their business operations in the autonomous region to the city, or municipality where their branch offices or business operations or activities are located.

Sec. 7. Extent of Tax Powers; Exceptions.—Unless otherwise provided herein, the taxing power of the regional government and of the provinces, cities, municipalities, and barangay located therein shall not extend to the following:

(a) Income tax, except when levied on banks and other financial institutions;

(b) Documentary stamps tax;

(c) Taxes on estate, inheritance, gifts, legacies, and other acquisitions mortis causa, except as otherwise provided by law;

(d) Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges, and dues except vessels which are registered by their owners with the Regional Government and wharfage on wharves constructed and maintained by the Regional Government or the local government unit concerned;

(c) Taxes, fees, or charges and other impositions upon goods carried into or out of, or passing through the territorial jurisdiction of the provinces, cities, municipalities, or barangay of the autonomous region in the guise of charges for wharfage, tolls for bridges, or otherwise, or other taxes, fees or charges in any form whatsoever upon such goods or merchandise except tolls on bridges or roads constructed and maintained by the provinces, cities, municipalities, or barangay concerned or by the Regional Government.

(f) Taxes, fees, or charges on agricultural and aquatic products when sold by marginal farmers or fisherfolk;

(g) Taxes on business enterprises certified by the Board of Investments or by the Regional Assembly as pioneer or non-pioneer for a period of six (6) and four (4) years, respectively from the date of registration;

(h) Excise taxes on articles enumerated under the national internal revenue code, and taxes, fees, or charges on petroleum products;

(i) Percentage or value-added tax (VAT) on sales, barters, or exchanges or similar transactions on goods or services except as otherwise provided by law;

(j) Taxes on the gross receipts of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land, or water except as provided in this Organic Act;

(k) Taxes on premiums paid by way of reinsurance or retrocession;

(l) Taxes, fees, or other charges on Philippine products actually exported, except as otherwise provided by law enacted by the Congress;

(m) Taxes, fees, or charges on countryside, barangay business enterprises and cooperatives duly registered under Republic Act No. 6810, the "Magna Carta for Countryside and Barangay Business Enterprises" and Republic Act No. 6938, the "Cooperatives Code of the Philippines", respectively, and

(n) Taxes, fees, or charges of any kind on the central government or national government, its agencies and instrumentalities and local government units except on government-owned or -controlled corporations or entities that are primarily organized to do business.

Sec. 8. Sources of Regional Government Revenue.—The sources of revenues of the Regional Government shall include, but are not limited to, the following:

(a) Taxes, except income taxes, imposed by the Regional Government;

(b) Fees and charges imposed by the Regional Government;

(c) Taxes, fees, or charges for the registration of motor vehicles and for the issuances of all kinds of licenses or permits for the driving thereof, except tricycles which shall be registered with the city or municipality within whose territorial boundaries they are operated;

(d) Shares and revenue generated from the operations of public utilities within the autonomous region;

(e) Appropriations, shares in the internal revenue taxes, block grants, and other budgetary allocations coming from the central government or national government; and

(f) Block grants derived from economic agreements or conventions entered into or authorized by the Regional Assembly, donations, endowments, foreign assistance, and other forms of aid, subject to the pertinent provisions of the Constitution.

Sec. 9. Sharing of Internal Revenue, Natural Resources Taxes, Fees and Charges.—The collections of a province or city from national internal revenue taxes, fees and charges, and taxes imposed on natural resources, shall be distributed as follows:

(a) Thirty-five percent (35%) to the province or city;

(b) Thirty-five percent (35%) to the regional government; and

(c) Thirty percent (30%) to the central government or national government.

The share of the province shall be apportioned as follows: forty-five (45%) percent to the province, thirty-five (35%) percent to the municipality and twenty percent (20%) to the barangay.

The share of the city shall be distributed as follows: fifty percent (50%) to the city and fifty (50%) percent to the barangay concerned.

The province or city concerned shall automatically retain its share and remit the shares of the Regional Government and the central government or national government to their respective treasurers who shall, after deducting the share of the Regional Government as mentioned in paragraphs (b) and (c) of this Section, remit the balance to the national government within the first five (5) days of every month after the collections were made.

The remittance of the shares of the provinces, cities, municipalities, and barangay in the internal revenue taxes, fees, and charges and the taxes, fees, and charges on the use, development, and operation of natural resources within the autonomous region shall be governed by law enacted by the Regional Assembly.

The remittances of the share of the central government or national government of the internal revenue taxes, fees and charges and on the taxes, fees, and charges on the use, development, and operation of the natural resources within the autonomous region shall be governed by the rules and regulations promulgated by the Department of Finance of the central government or national government.

Officials who fail to remit the shares of the central government or national government, the Regional Government and the local government units concerned in the taxes, fees, and charges mentioned above may be suspended or removed from office by order of the Secretary of Finance in cases involving the share of the central government or national government or by the Regional Governor in cases involving the share of the Regional Government and by the proper local government executive in cases involving the share of local government.

Sec. 10. Treasury Bills, Notes and Other Debt Papers.—The Regional Government may issue treasury bills, bonds, promissory notes, and other debt papers or documents pursuant to law enacted by the Regional Assembly.

Sec. 11. Economic Agreements.—Subject to the provisions of the Constitution, the Regional Government shall evolve a system of economic agreements and trade compacts to generate block grants for regional investments and improvements of regional economic structures which shall be authorized by law enacted by the Regional Assembly. Pursuant to specific recommendations of the Regional Economic and Development Planning Board, the Regional Government may assist local government units in their requirements for counterpart funds for foreign-assisted projects.

Sec. 12. Donations or Grants; Tax Deductible.—The Regional Government may accepts donations or grants for the development and welfare of the people in the autonomous region. Such donations or grants that are use exclusively to finance projects for education, health, youth and culture, and economic development, may be deducted in full from the taxable income of the donor or grantor.

Sec. 13. Regional Tax Exemptions.—The Regional Assembly, by a vote of absolute majority of all its members, may grant exemptions from regional taxes.

Sec. 14. Foreign or Domestic Loans.—The Regional Governor may be authorized by the Regional Assembly to contract foreign or domestic loans in accordance with the provisions of the Constitution. The loans so contracted may take effect upon approval by a majority of all the members of the Regional Assembly.

Sec. 15. Collection and Sharing of Internal Revenue Taxes.—The share of the central government or national government of all current year collections of internal revenue taxes, within the area of autonomy shall, for a period of five (5) years be allotted for the Regional Government in the Annual Appropriations Act.

The Bureau Of Internal Revenue (BIR) or the duly authorized treasurer of the city or municipality concerned, as the case may be, shall continue to collect such taxes and remit the share to the Regional Autonomous Government and the central government or national government through duly accredited depository bank within thirty (30) days from the end of each quarter of the current year;

Fifty percent (50%) of the share of the central government or national government of the yearly incremental revenue from tax collections under Sections 106 (value-added tax on sales of goods or properties), 108 (value-added tax on sale of services and use or lease of properties) and 116 (tax on persons exempt from value-added tax) of the National Internal Revenue Code (NIRC) shall be shared by the Regional Government and the local government units within the area of autonomy as follows:

(a) twenty percent (20%) shall accrue to the city or municipality where such taxes are collected; and

(b) eighty percent (80%) shall accrue to the Regional Government.

In all cases, the Regional Government shall remit to the local government units their respective shares within sixty (60) days from the end of each quarter of the current taxable year. The provinces, cities, municipalities, and barangays within the area of autonomy shall continue to receive their respective shares in the Internal Revenue Allotment (IRA), as provided for in Section 284 of Republic Act No. 7160, the Local Government Code of 1991. The five-year (5) period herein abovementioned may be extended upon mutual agreement of the central government or national government and the Regional Government.