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RMC No. 28-2010: Circularizes the full text of Republic Act No. 10026 entitled “An Act Granting Income Tax Exemption to Local Water Districts by Amending Section 27(C) of the National Internal Revenue Code (NIRC) of 1997, as Amended, and Adding Section 289-A to the Code, for the Purpose”

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Summary

RMC No. 28-2010 circularizes the full text of Republic Act No. 10026, which grants income tax exemption to local water districts by amending Section 27(C) of the NIRC of 1997, as amended, and adding Section 289-A.

Key points

  1. Section 27(C) amended. Government-owned or controlled corporations, agencies or instrumentalities pay the same income tax rate as corporations in a similar business, except GSIS, SSS, PHIC, the local water districts (LWD) and PCSO.
  2. Use of tax savings. Under new Section 289-A, the amount a local water district saves through the exemption must go to capital equipment expenditure. The purpose is to expand water services coverage and improve water quality.
  3. Conditions on water districts. The water district adopts internal control reforms for economic and financial viability. It may not increase by more than twenty percent (20%) a year its appropriation for personal services, travel, transportation or representation expenses, and purchase of motor vehicles.
  4. Condonation of unpaid taxes. Unpaid taxes of a local water district from August 13, 1996 until the Act’s effectivity are condoned, on two conditions. The BIR must establish the district’s financial incapacity after reviewing its financial statements, and the district must submit to Congress a program of internal reforms certified by the local water utilities administration.
  5. Annual reporting. Through the Local Water Utilities Administration, water districts give the Senate and House Committees on Ways and Means yearly statistical data and financial statements.

Who is affected

  • Local water districts
  • Local Water Utilities Administration

Deadlines and effectivity

  • Condonation covers unpaid taxes from August 13, 1996 until the effectivity of the Act

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.

Copies of BIR issuances are hosted here for reference. For the official version, check bir.gov.ph. Summaries by Tax Resources PH are not a substitute for the full text or professional advice.