Davao City Council approves tax exemption for Japanese projects

Davao City Council approves tax exemption for Japanese projects
Vice Mayor J. Melchor Quitain Jr./Facebook

THE 20th City Council approved, on May 14, 2024, an ordinance exempting Japanese Official Development Assistance (ODA)-Funded Projects in Davao City from local taxes. 

Councilor Myrna G. Dalodo-Ortiz, speaking during the council session on Tuesday morning, June 11, 2024, at the Sangguniang Panlungsod, explained that they acceded to a request from the Japan International Cooperation Agency (Jica), aligning with an agreement between the Japanese and Philippine governments.

“All fiscal and taxes imposed in the Republic of the Philippines on Jica and Japanese companies operating as suppliers, contractors, and consultants shall be assumed by the government of the Philippines,” she said.

Ortiz, chairing the committee of finance, ways, and means, emphasized that this ordinance relieves Jica and Japanese contractors from local business taxes, estimated at around P70 million. 

She highlighted the city's reluctance to accumulate further debt after clearing a P5 billion debt in 2019. Borrowing for infrastructure projects, such as the City Bypass Road at a cost of P13 billion, would incur significant interest expenses, potentially close to a billion pesos over three years.

“So P70 million against the P13 billion project cost of the City Bypass Road, and our interest rate if we borrow the P13 billion will end up to the tune of P937.9 million for three years, at a rate of 4.9 percent, so it's significant, almost a billion. Thus, we granted their request for P70 million, and it is better, if we consider our cost of money,” she continued.

The ordinance, titled “An ordinance imposing zero percent tax on the local business tax of the Japanese official development assistance-funded projects in Davao City subject to all laws and existing legal rules and regulations,” mandates that beneficiaries must provide project confirmation from the Japanese ambassador, an updated list of Japan-ODA funded projects, and proof of prior tax payments. RGP

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