Question & AnswerQ&A (Republic Act No. 11925)
The main purpose of Republic Act No. 7109 is to grant tax exemption privileges to local water districts created pursuant to Presidential Decree No. 198, as amended.
Local water districts are exempted from (1) income taxes, except taxes on interest income from deposits and investments not related to water service operations; (2) franchise taxes; and (3) duties and taxes on imported machinery, equipment, and materials required for their operations, provided these are not domestically manufactured at comparable prices and quality.
Yes, under Section 2, all lands, buildings, and other real property, including attached equipment used for water supply generation and distribution are exempt from real property taxes, provided such properties are not used for office or commercial purposes.
The tax exemption privileges are valid for a period of five (5) years from the effectivity of the Act.
The water district must adopt internal control reforms for economic and financial viability, and any appropriations for personal services, travel, transportation, representation expenses, and purchase of motor vehicles shall not increase by more than 25% annually during the exemption period.
Water districts must submit statistical data and financial statements annually to the Bureau of Local Government Finance through the Local Water Utilities Administration for monitoring compliance and reviewing the exemptions.
The condonation allows the Government to forgive unpaid taxes and duties from October 15, 1984 until the Act's effectivity date if the water district is financially incapable of paying them and submits an internal reform program.
The program must be duly certified by the Local Water Utilities Administration.
The Secretary of Finance is authorized to promulgate the necessary rules and regulations for effective implementation.
All laws, decrees, orders, rules, and regulations or parts thereof that are inconsistent are repealed or modified accordingly.