The City Council will discuss a Memorandum of Agreement (MOA) on the tax sharing on the operations of Therma South, Inc.’s (TSI) Coal Plant, whose power plant is operational in the boundary of the city and Sta. Cruz, Davao del Sur.
In last Tuesday’s regular session, councilors forwarded the item to the Committee on Finance, Ways and Means, and Appropriations chaired by Councilor Danilo Dayanghirang to further study the measure.
TSI’s principal office is located in the city of Davao, while its coal plant is located in the boundary of the two areas.
“The local government units of Davao City and Sta. Cruz have agreed on a 60%-40% sharing of the 70% of Therma South, Inc’s (TSI) local business tax, respectively,” the TSI said in a statement sent to Times.
The higher percentage goes to the city.
“The remaining 30% will automatically go to Davao City being the principal place of business of TSI,” it added.
The Municipality of Sta. Cruz already enacted an ordinance specifying that it will enter into a MOA with the City of Davao and TSI to clarify the extent of TSI’s obligations to the LGUs.
Based on Section 143 of the local government code, 30% of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located; and 70% of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office, plant, or plantation is located.
“The MOA shall contain, among others, the sales allocation and collection sharing and the condition that every three years from the effectivity of the MOA, any of the City of Davao and the Municipality of Sta. Cruz may request for the renegotiation of the terms thereof, provided that until and unless a new MOA is entered into by the parties, the executed MOA and the collection sharing therein agreed shall continue to be in effect,” the Sta. Cruz Municipal Ordinance said.
The item was passed on first reading.
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