QuestionsQuestions (EXECUTIVE ORDER NO. 69)
RA 7109 applies to a water district created pursuant to Presidential Decree No. 198, as amended.
A covered water district is exempt from: (1) income taxes, except taxes on interest income from deposits and on investments not directly related to water service operations; (2) franchise taxes; and (3) duties and taxes on imported machinery, equipment and materials required for its operations, subject to the proviso on domestic availability.
When the income is (1) interest income from deposits, or (2) income from investments that have no direct relation with water service operations.
Import duty and tax exemption applies only if the machinery, equipment, and materials required are not domestically manufactured at comparable and competitive prices and quality.
All lands, buildings, and other real property (including equipment attached thereto) used for water supply generation and distribution are exempt from real property taxes.
The land or building must not be used for office or any other commercial purposes.
Only for a period of five (5) years from the effectivity of the Act.
They must adopt internal control reforms that bring about their economic and financial viability.
During the period of exemption, appropriations for personal services, as well as for travel, transportation or representation expenses, and purchase of motor vehicles, may not be increased by more than 25% a year.
Through the Local Water Utilities Administration, water districts must furnish the Bureau of Local Government Finance of the Department of Finance annual statistical data and financial statements (and other needed information) for monitoring compliance and reviewing rationalization of exemptions.
Unpaid taxes and duties due from a local water district for the period starting October 15, 1984 until the effectivity date of the Act.
No. It is subject to conditions: the Bureau must, after reviewing the district’s statistical data and financial statements, establish the district’s financial incapability to meet the obligations for the stated period after providing for maintenance and operating expenses, debt servicing, and reserve fund.
It must submit to the Bureau a program of internal reforms, duly certified by the Local Water Utilities Administration, aimed at making the district economically and financially viable.
The Secretary of Finance.
All laws, decrees, orders, rules and regulations, or parts thereof inconsistent with RA 7109 are repealed or modified accordingly.
Upon its approval.
The real property tax exemption under Section 2 is not available for lands or buildings used for office or any other commercial purposes.