RPT and Local Business Tax

Chapter I
Real Property Taxes
A. Basic Real Property Tax
Basic real property tax (RPT) is ad valorem tax assessed, levied and collected in all
provinces, cities and municipalities within the Metropolitan Manila area on land, buildings,
machineries and other improvements affixed to the real property and not specifically exempted
by law.
1. Taxpayer
All persons, natural or juridical, owning or administering real property (land,
building, machineries and other improvements) are subject to the real property tax. The
tax is based on the assessed value of the property which is a certain percentage of its
market value.
Market value is defined as the estimated amount for which a property is

sold/trade. It serves as basis for a uniform appraisal of real property prepared prior t any
general revision of property assessment in the LGU.
2. Tax Base
Provinces, cities and municipalities within the Metro Manila Area (MMA)1
impose basic real property tax at the following rates: 2
Provinces - Not exceeding 1% of the assessed value of the real property;

and
Cities or Municipalities - Not exceeding 2% of the assessed value of the real property
Within the MMA
1
Pateros is the only municipality within the MMA as of this writing.
2
Section 233, LGC.
3. Appraisal and Assessment of Real Property
Appraisal is the act or process of determining the market value of a property as
of a specific date.
The appraisal of real property shall be based on the latest schedule of market
value (SMV) prepared by the provincial assessor, the city assessor or municipal assessor
of a municipality within the MMA as embodied in an ordinance passed by the respective
local Sanggunian or local council.
Assessment is the act or process of determining the proportion of the market value
subject to tax. The assessment level is the percentage applied to the market value of
property to determine its assessed or taxable value. Assessment levels are fixed by an
ordinance enacted by the local Sanggunian depending on the actual use of the property,
at rates not exceeding the following: 3
a. Lands
Class Assessment Levels (%)
 Residential 20
 Agricultural 40
 Commercial, Industrial 50
& Mineral
 Timberland 20
b. Buildings and Other Structures

The assessment level progresses directly with the fair market value FMV
as follows:
3
Section 218, LGC.
2
 Residential
Fair Market Value

Over Not Over
PhP 175,000 0
300,000 175,000 10
500,000 300,000 20
750,000 500,000 25
1,000,000 750,000 30
2,000,000 1,000,000 35
5,000,000 2,000,000 40
10,000,000 5,000,000 50
10,000,000 60
 Agricultural
Fair Market Value

Over Not Over
300,000 0
500,000 300,000 10
750,000 500,000 20
1,000,000 750,000 25
2,000,000 1,000,000 30
2,000,000 35
 Commercial/Industrial
Fair Market Value

Over Not Over
300,000 30
500,000 300,000 35
750,000 500,000 40
1,000,000 750,000 50
2,000,000 1,000,000 60
5,000,000 2,000,000 70
10,000,000 5,000,000 75
10,000,000 80
 Timberland
Fair Market Value

Over Not Over
300,000 45
500,000 300,000 50
750,000 500,000 55
1,000,000 750,000 60
2,000,000 1,000,000 65
2,000,000 70
3
c. Machineries
 Agricultural 40
 Residential 50
 Commercial 80
 Industrial 80
d. Special Classes
For all lands, buildings, machineries, and other improvements:
Actual Use Assessment levels (%)
 Cultural 15
 Scientific 15
 Hospital 15
 Local Water Districts 10
 Government-owned and/or controlled corporations 10
(GOCCs) engaged in the supply and distribution of
water and/or generation and transmission of electric
power
4. Manner of Computing the RPT

Consider a residential land in Naga City has a MV of PhP 1,000,000 with an
assessment level (AL) of 20% and 1% tax rate (TR). It should be mentioned that these
are maximum levels that LGUs may otherwise apply/implement lower assessment levels
to cushion the impact of a general revision. Derive the Assessed value (AL) by
multiplying the MV and the AL:
AV = MV X AL
= PhP 1,000,000.00 x 0.20
= PhP 200,000.00
4
To determine the RPT, multiply AV and the TR. Thus:
RPT = AV x TR
= PhP 200,000.00 x 0.01
RPT = PhP 2,000
Residents of the cities of Quezon, Valenzuela, Batangas and the municipality of

Pulilan, Bulacan can now pay their local taxes and fees using mobile phones through a
recently forged partnership between Globe Telecom and the said LGUs.
Under the partnership, GCash (the flagship mobile money service subsidiary of
Globe Telecom) and the LGUs will provide residents a platform to settle their payments
of real property taxes as well as business and construction fees and charges. Taxpayers
will no longer have to travel all the way to the city hall and queue in line for hours to pay
for their taxes. They get a better, faster and more convenient option to pay their financial
obligations by just using their mobile phones.
This system aims to facilitate government transactions, reduce operating costs

and eliminate inefficient back-end operations. By adopting innovative means in
government transactions, the said project will promote good governance and implement
the Anti-Red tape Act of 20074 thus strengthening the fight against graft and corruption.
This will also provide cost-effective and innovative tax collection to generate additional
income for the cities to deliver basic social services and fund infrastructure projects.
The system was introduced through the Unite States Agency for International
Development or USAID’s Scaling Innovations in Mobile Money (SIMM), which support
the Philippine government’s promotion of financial inclusion by providing Filipinos
access to formal banking and financial services to improve transparency, accountability,
and security in government transactions by digitizing payment and collection systems.
The prompt payment of local taxes and fees using the alternative mode would
also entitle taxpayers the “early bird” incentives for those paying in cash.
__________
Source: Scaling innovations in Mobile Money (SIMM) Project:
(http://www.usaid.gov/philippines/partnership-growth-pfg/simm
Accessed 29 August 2014).
4
RA 9485, issued 22 October 2007.
5
5. Exemption from the Payment of RPT
Any person who claims a property tax exemption shall file with the provincial,
city or municipal assessor within 30 days from the date of declaration of real property
with sufficient documentary evidence to support such claim i.e., corporate charters,
title of ownership, articles of incorporation, bylaws, contracts, affidavits, certifica-
tions and mortgage deeds, and similar documents.5 The following are exempted from
payment of the RPT: 6
a. Real property owned by the Republic of the Philippines or any of its political
subdivisions, except when the beneficial use thereof has been granted, for
consideration or otherwise, to a taxable person;
b. Charitable institutions, churches, parsonages, or convents belonging thereto,

mosques, non-profit or religious cemeteries, and all lands, buildings, and
improvements actually, directly, and exclusively used for religious, charitable or
educational purposes;
c. All machineries and equipment that are actually, directly and exclusively used
by local water districts and government-owned and/or controlled corporations
(GOCCs) engaged in the supply and distribution of water and/or generation and
transmission of electric power;
d. All real property owned by duly registered cooperatives as provided for under
RA No. 6938; 7 and
e. Machinery and equipment used for pollution control and environmental

protection.
5
Section 206, Ibid.
6
Section 299, Ibid.
7
Entitled, “An Act to Ordain a Cooperative Code in the Philippines” (Approved 10 March 1990).
6
6. Collection of RPT
The RPT for any year shall accrue on the first day of January and paid where the
property is located. The basic RPT may be paid without interest in four (4) equal
installments; the first installment to be due and payable on or before March 31; the
second installment on or before June 30; the third installment, on or before September 30;
and the last installment on or before December 31. 8
The collection of RPT in four Pampanga towns increased, including Sta. Rita,
which recorded an almost 50% hike in 2013, as the provincial government launched the
Integrated Tax Management System (iTAX) in the municipalities of Mexico and San
Simon.
iTAX is a German-aided tax collection system designed to effectively collect

RPTs and other tax-generating schemes of LGUs. It is an integrated modular system for
taxation with an open source database which can handle all types of taxes. In addition,
iTAX is a single system that simplifies assessment and collection processes, avoids data
duplication, and makes the creation of user-friendly “one-stop-shops” possible. The
system also reduce waiting periods for the issuing of information on a particular
taxpayer account from up to four hours to only 3 minutes.
Pampanga is the fourth province in Luzon to implement the said system, joining
La Union, Pangasinan and Mindoro Oriental. Negros Oriental, Cebu, Southern Leyte
and Leyte in Visayas; Misamis Occidental, Lanao del Norte and Zamboanga del Sur in
Mindanao are also using the iTAX system designed to effectively collect RPTs and other
tax-generating schemes.
iTAX leads to better tax compliance, easier tax collection and more effective
enforcement. “Life and vibrancy of a province depends not solely on investors but also
through revenues particularly RPT.”
__________
Source: Benefits of a computerized integrated system for taxation: iTax case study –
A handbook for practitioners based on GIZ tax sector experience in Tanzania and
the Philippines (http://www2.gtz.de/dokumente/bib-2011/giz2011-0048en-itax-case-
study.pdf. Accessed 29 August 2014).
8
Sections 247, LGC.
7
7. Tax Discount for Advance Prompt Payment9
An added incentive to real property taxpayers under the LGC is the grant of a
discount not exceeding 20% of the annual tax due if the basic RPT and the additional tax
for SEF are paid in advance of the prescribed schedule or period of payment.
It should be noted, however, the provision in Sec. 251 of the LGC states that
discounts are granted to advanced prompt payment, while Article (ART.) 341 of the
Rules and Regulations Implementing (IRR) the LGC refer to the words advance and
prompt separately. Such that the Sanggunian concerned may grant a discount of 10%
for prompt payments, and a discount of 20% for advance payments. For purposes of this
Rule, a prompt payment which grants a 10% discount indicate real property taxes paid
quarterly even if said taxes are paid on the last day of each quarter.
Mentioned below are cities offering tax discounts to taxpayers:10
Table 1. Tax Discounts Granted by Selected LGUs

LGUs Tax Discounts Offered
Makati City - 10% discount on annual RPT paid on or before
January 20
- 5% discount for quarterly payments (payments

made on the 1st 20 days every 1st month of the
quarter)
Pasig City - 10% discount on annual RPT paid on or before

January 20
Quezon City - 20% discount on annual RPT paid from January to

March
__________
Sources: Quezon City Revenue Code, As Amended: 2012, Makati’s Citizen Guidebook, Pasig
City Assessor’s Office
9
Section 251, Ibid.
10
Per interview with the personnel of the City Treasurers’ Office of Makati, Pasig and Quezon (18 June
2014).
8
8. Interest on Unpaid RPT11
The taxpayer shall be subject to an interest of 2% per month on the unpaid
amount of tax or a fraction thereof, until the delinquent tax shall have been fully paid but
in no case shall the total interest on the unpaid tax or portion thereof exceed 36 months.
The local government of Quezon City has done a good job for its inexorable
efforts to collect and enforce real property tax in its jurisdiction. Section 270 of the LGC
is incorporated in their Revenue Code as part of their collection remedies. 12
Additionally, the concurrent implementation of civil and administrative remedies was
adopted by the City, with the following schedule:
a. First delinquent month – sending of notices of delinquency
b. After 10 working days of no response – sending of final notice of delinquency
c. After five working days of still no response – sending of warrant of levy

through registered mail or personal delivery with proof of service (copy furnished
City Assessor and register of Deeds
d. Within 30 days after service of warrant of levy, City treasurer shall advertise
for sale or auction. The advertisement shall be posted at the main entrance of the
City Hall building and in a publicly accessible and conspicuous place in the
barangay where the real property is located and by publication for two (2) weeks in a
newspaper of general circulation in Quezon City. The advertisement shall indicate
the amount of the delinquent tax plus interest, name of the owner of the real property,
description of the property, and the date and place of the auction.
__________
Source: Quezon City Revenue Code As Amended: 2012
11
Section 255, LGC.
12
Section 14 (c), Quezon City Revenue Code, As Amended, 2012.
9
9. Distribution of Proceeds13
Province
35% - Province
40% - Municipality where the property is located
25% - Barangay where the property is located
City
70% - City
15% - Barangay where property is located
15% - To accrue equally to all component barangays of the city
Municipalities within Metro Manila
35% - MMDA
35% - Municipality
15% - Barangay where property is located
15% - To accrue equally to all component barangays of the
Municipality
B. Other Impositions on Real Property
1. Special Education Fund (SEF) Tax14
a. Taxpayer
The SEF tax is imposed addition to the basic RPT. It is imposed on
owners or administrators of real property.
b. Tax Base and Rate

A province, city or municipality with the MMA may collect an annual tax
of one percent (1%) of the assessed value of the real property.
13
Section 271, Ibid.
14
Section 235, Ibid.
10
c. Application of the Proceeds of the SEF Tax
The proceeds of the tax shall accrue exclusively to the Special Education
Fund (SEF). The SEF shall be automatically released to the local school boards
(provincial, city and municipal).
The proceeds of the tax shall be allocated for the operation and
maintenance of public schools, construction and repair of school buildings,
facilities and equipment, education research, purchase of books, and sport
development as determined and approved by the local school board.
d. Distribution of Proceeds
Province
50% - Provincial School Board

50% - Municipal School Board
City
100% - City School Board
Municipality within Metro Manila
100% - Municipality School Board
2. Idle Land Tax15
a. Taxpayer
The idle land tax is imposed in addition to the basic RPT. It is imposed on
owners and administrators of idle lands and shall be based on the assessed value
of the property.
15
Section 236, Ibid.
11
b. Coverage of the Tax: 16
- Agricultural lands more than one (1) hectare, one-half (1/2) of which
remains uncultivated or unimproved. Not considered as idle lands are: 17
i. agricultural lands planted to permanent or perennial crops with

at least 50 trees to a hectare; and
ii. lands actually used for grazing purposes
- Lands located in a city or municipality more than 1,000 square meters in

area, ½ of which remain unutilized or unimproved. Regardless of land area,
the tax shall also apply to residential lots in subdivisions wherein the
ownership of which has been transferred to individual owners, who shall be
liable for the additional tax. Conversely, lots that have not been transferred
to the buyer will still be subject to the said tax payable by subdivision
owner or operator.18
c. Tax Base and Rate

A province, city or a municipality within MMA, may levy an annual tax
on idle lands at the rate not exceeding five percent (5%) of the assessed value of
the property.
d. Exemptions
Idle lands may be exempt from additional levy by reason of force
majeure, civil disturbance, natural calamity or any cause or circumstance which
physically or legally prevents the owner of the property or person having legal
interest therein from improving, utilizing or cultivating the same. 19
e. Distribution of Proceeds20
Collections accrue to the respective general fund of the province or city
where the land subject to tax is situated.
16
Section 237, Ibid.
17
Ibid.
18
Section 237 (b), Ibid.
19
Section 238, LGC.
20
Section 273, Ibid.
12
In case of municipality within Metro Manila, the same shall accrue equally
to the MMDA and the municipality where the land is situated.
3. Special Levy21
a. Taxpayer
The special levy is imposed on owners and administrators of lands
comprised within the territorial jurisdiction of a province, city or municipality
especially benefitted by public works projects or improvements funded by the
LGU concerned.

The tax shall not exceed 60% of the accrual cost of the
project/improvement, including the cost of acquiring lands. The special levy shall
be apportioned, computed, and assessed according to the assessed value of the
lands affected as shown by the books of the assessor concerned. The assessor
shall determine the annual amount of special levy assessed against each parcel of
land comprised within the area especially benefited by public works or projects.
The number of annual installments for the payments of the special levy shall not
be less than five nor more than 10 years.
c. Exemptions
The special levy shall not apply to lands exempt from basic RPT and the
remainder of the land portions of which have been donated to the LGU concerned
for the construction of such projects/improvements.
d. Distribution of Proceeds
Proceeds accrue to the general fund of the LGU which financed such
public works, projects or other improvements. 22
21
Section 240, Ibid.
22
Section 274, Ibid.
13
4. Socialized Housing Tax (SHT) 23
The collection of the SHT shall form part of the funds for the urban development
and housing program of the LGU with the objective of providing housing benefits to their
constituents.
a. Taxpayer
The SHT is imposed on the owners or administrators of lands in urban
areas of an LGU with assessed value in excess of PhP 50,000. The tax shall be in
addition to the basic RPT and SEF tax. The cities of Tacloban, Cebu, Talisay and
Quezon are examples of LGUs that impose the SHT.
b. Tax Base and Rate24

A province, city or municipality may levy and collect an annual tax of ½
of 1% of the assessed value of the land.
c. Distribution of Proceeds25
Proceeds accrue directly to the general fund under a special account to be
established for the purpose by the city or municipality within Metro Manila where
the land subject to tax is situated.
However, proceeds of the SHT collected by municipal treasurers, outside

Metropolitan Manila Area shall be apportioned between the province and
municipality concerned as determined and approved by the Local Sanggunian.
23
Section 43, RA No. 7279, otherwise known as the “Urban Development and Housing Act of
1992,”(Effectivity date 22 July 1991) as implemented by Local Circular No. 1-97, dated 10 April 1997.
24
Section 6 (6.1)(c)(1), DOF- LFC No. 1-97.
25
Section 6 (6.1)(c)(2), DOF- LFC No. 1-97.
14
5. Tax on Transfer of Real Property Ownership26
a. Taxpayer
The tax on transfer of real property ownership is paid by the seller, donor,
transferor, executor or administrator of real property on the sale, donation, barter,
or any mode of transferring ownership or title of real property.

The province may impose a tax not exceeding fifty percent (50%) of one
percent (1%) of the total consideration involved in the acquisition of the
property or of the fair market value in case monetary consideration involved in
the transfer is not substantial, whichever is higher. The city may impose a rate of
seventy five percent (75%) of one percent (1%). The tax shall be paid within
60 days from the date of the execution of the deed or from the date of the
decedent’s death.
c. Exemption
The sale, transfer, or other disposition of real property pursuant to RA
6657, otherwise known as the “Comprehensive Agrarian Reform Law of 1988,
27
” is exempt from the tax.
Listed below are rates of various taxes on real property imposed by selected LGUs.
Assessment levels and tax rates can vary among different LGUs but not to excel the ceilings that
are prescribed under the law:
26
Section 135, LGC.
27
Approved 10 June 1988.
15
Table 2. Various RPT rates and SEF Imposed by Selected LGUs
Basic RPT Makati City (%) Naga City, Malaybalay City,
Rates Camarines Sur (%) Bukidnon (%)
Residential 1.5 1.0 1.0
Commercial 2.0 1.25 2.0
Agricultural - 1.25 2.0
Industrial 2.0 1.25 2.0
SEF 1.0 1.0 1.0
Idle Land Tax 1.0 ½ of 1% of the assessed ½ of 1% of the assessed

value of real property value of real property
Special Levy 1.0 60% of the actual costs of 60% of the actual costs of
the project and the project and
improvements improvements
Transfer Tax 60% of 1% of the market 75% of 1% of the total 50% of 1% of the market
value or the selling price consideration involved in value or the selling price
whichever is the higher the acquisition of the whichever is the higher
property
References: Assessor’s Office, Makati City Hall (April 2013).
Assessor’s Office Malaybalay City Hall (April 2013).
http://naga.gov.ph/invest/doing-business-2/cost-of-doing-business-3/local-business-fees-and-taxes-
2/ (24 March 2014).
C. Prescriptive Period28
The basic RPT and other tax or property levied under the LGC shall be collected within
five (5) years from the date they become due. No action for the collection of the tax, whether
administrative or judicial shall be instituted after such period has expired.
In case of fraud or intent to evade payment of the tax, such action may be instituted for
the collection of the tax within ten (10) years from the discovery of such fraud or intent to evade
payment. The period of prescription within which to collect shall be suspended for time during
which:
28
Section 270, Ibid.
16
1. The local treasurer is legally prevented from collecting the tax;
2. The property owner or the person having legal interest therein may request for a
reinvestigation and execute a waiver in writing before the period within which to collect
expires; and
3. The property owner or the person having legal interest therein is out of the country or
otherwise cannot be located.
17
Chapter II
Business Taxes
Kinds of Business Taxes that Municipalities and Cities May Impose
Municipalities and cities may impose and collect any of the following business taxes. The
rate of taxes that may be imposed and collected by a city may exceed the maximum rates
allowed for the municipality by not more than 50%.
A. On Manufacturers29, Assemblers, Repackers, Processors, Brewers, Distillers, Rectifiers

and Compounders of Liquors, Distilled Spirits, Wines of Whatever Kind or Nature: 30
Gross Sales/Receipts31 Municipality City

For the Preceding Calendar Year (PhP) Maximum Amount of Tax/Annum (PhP)
Less than 10,000 165.00 247.50
10,000 or more but less than 15,000 220.00 330.00
40,000 or more but less than 50,000 825.00 1,237.50
50,000 or more but less than 75,000 1,320.00 1,980.00
29
Includes every person who, by physical or chemical process, alters the exterior texture or form or inner
substance of any raw material or manufactured or partially manufactured product in such manner as to prepare it for
special use or uses to which it could not have been put in its original condition, or who by any such process alters
the quality of any such raw material or manufactured or partially manufactured products so as to reduce it to
marketable shape or prepare it for any of the use of industry, or who by any such process combines any such raw
material or manufactured or partially manufactured products with other materials or products in their original
condition could not have been put, and who in addition alters such raw material or manufactured or partially
manufactured products, or combines the same to produce such finished products for the purpose of their sale or
distribution to others and not for his own use or consumption.
30
Section 143(a), LGC.
31
Include the total amount of money or its equivalent representing the contract price, compensation or
service fee, including the amount charged or materials supplied with the services and deposits or advance payments
actually or constructively received during the taxable quarter for the services performed or to be performed for
another person excluding discounts if determinable at the time of sales, sales return, excise tax, and valued-added
tax (VAT).
18
Gross Sales/Receipts31 Municipality City
750,000 or more but less than 1,000,000 10,000.00 15,000.00
1,000,000 or more but less than 2,000,000 13,750.00 20,625.00
6,500,000 or more At a rate not exceeding At a rate not exceeding

37 ½% of 1% 56¼% of 1%
19
B. On Wholesalers32, Distributors, or Dealers33 in Any Article of Commerce of Whatever
Kind or Nature: 34
Gross Sales/Receipts For Municipality City

the Preceding Calendar Year (PhP) Maximum Amount of Tax/Annum (PhP)
Less than 1,000.00 18.00 27.00
32
A person who buys or imports the commodities for resale to persons other than the end user regardless
of the quantity of the transaction.
33
A person whose business is to buy and sell merchandise, goods, chattels as a merchant; stands
immediately between the producer or manufacturer and the consumer and depends for his profit upon the labor he
bestows upon his commodities but upon the skill and foresight with which he watches the market.
34
Section 143(b), LGC.
20
Gross Sales/Receipts For Municipality City
the Preceding Calendar Year (PhP) Maximum Amount of Tax/Annum (PhP)
2,000,000 or more At a rate not At a rate not

exceeding 50% of 1% exceeding 75% of 1%
C. On Exporters and Manufacturers, Millers, Producers, Wholesalers, Distributors,

Dealers or Retailers of Essential Commodities: 35
Particular Municipality City

Maximum Amount of Tax/Annum (PhP)
Rice and corn Not more than ½ of Not more than ¾ of
- Wheat or cassava flour, meat, dairy products, the rates prescribed the rates prescribed
locally manufactured, processed or preserved for manufacturers, for manufacturers,
food, sugar, salt and other agricultural marine, wholesalers and wholesalers and
and fresh water products, whether in their retailers of other retailers of other
original state or not products. products.
- Cooking oil and cooking gas
- Laundry soap, detergents and medicine
- Agricultural implements, equipment and post-
harvest facilities, fertilizers, pesticides,
insecticides, herbicides and other farm inputs
- Poultry feeds and other animal feed
- School supplies
- Cement
35
Section 143(d), Ibid.
21
D. On Contractors36 and Other Independent Contractors37:
Gross Sales/Receipts Municipality City
Less than 5,000 27.50 41.25
200,000 or more but less than 250,000 3,630.00 5.445.00
2,000,000 or more At a rate not At a rate not exceeding

exceeding 50% of 1% 75% of 1%
36
Includes persons, natural or juridical, not subject to professional tax under Section139 of the LGC,
whose activity consists essentially of the sale of all kinds of services for the exercise or use of the physical or mental
faculties of such contractor or his employees.
37
Section 143(e), LGC.
22
E. On Retailers: 38
Retailer Municipality City
Gross receipts of PhP 400,000 or less 2% 3%
Gross receipts over PhP 400,000 1% 1.5%
F. On Banks and Other Financial Institutions:39

Municipality City
- gross receipts of the preceding calendar Not exceeding 50% Not exceeding 75%
year derived from interest, commissions of 1% of gross of 1% of gross
and discounts from lending activities, receipts receipts
income from financial leasing, dividends,
rentals on property and profit from
exchange or sale of property, insurance
premium
G. On Other Businesses:40
Municipality City
If business is subject to excise tax, VAT or Rate shall not Rate shall not
percentage tax under the NIRC exceed 2% of the exceed 3% of the
gross sales or gross sales or
receipts of the receipts of the
preceding calendar preceding calendar
year year
H. On Peddlers:41
Gross Sales/Receipts Municipality City
For the Preceding Calendar Year Maximum Amount of Tax/Annum (PhP)
Peddlers engaged in the sale of any At a rate not At a rate not
merchandise or article of commerce42 exceeding PhP 50/ exceeding PhP 75/
peddler annually peddler annually
38
A purchaser that buys the commodity for his own consumption, irrespective of the quantity of the
commodity sold; Section 143(d), LGC.
39
Section 143(f), LGC.
40
Section 143(h), Ibid.
41
Any person who, either for himself or on commission, travels from place to place and sells his goods or
offers to sell and deliver the same. Whether a peddler is a wholesale peddler or retail peddler of a particular
commodity shall be determined from the definition of wholesale dealer or retail dealer as provided in the LGC.
42
Section 143(g), LGC
23
I. Situs of the Local Business Tax43
For the purpose of collection of the business taxes, situs of the local business tax
is the place where transactions and sales take place and are recorded. For this purpose,
the gross receipts/sales are allocated among the business units that contribute to the total
sales. These include the principal office (PO); branch or sales office/s (B/SO);
warehouse/s (WH); plantation (PL); factory/ies (F); experimental farm/s (EF); project
office/s (PrOs); port of loading (POL); and route sales (RS). Under the LGC, allocation
of sales shall be as follows:
BUSINESS BUSINESS LGC SALES

CLUSTER/S UNIT/S PROVISION ALLOCATION
1. Manufacturers, Business Section 150(a) All sales will be recorded in the
assemblers, repackers, maintains a B/SO making the sale or transaction.
brewers, distillers, B/SO. The tax will accrue and be 100%
rectifiers and payable to the city or municipality
compounders of liquor, where the B/SO is located.
distilled spirits and
wines, Business does -do- In case there is no B/SO in the city or
millers, producers, not have a municipality where the sale or
exporters, wholesalers, B/SO but transaction is made, all sales/receipts
distributors, maintains a will be recorded in the PO and the
dealers contractors, PO. taxes due thereon will accrue and be
banks & other financial paid to the city or municipality where
institutions, etc. the PO is located.
2. Manufacturers, Business Section 150(b) 30% of all sales recorded in the PO

assemblers, contractors, maintains a will be taxable by the city or
producers, or exporters PO as well as municipality where the PO is
F, PrO or PL. located, and the remaining 70% will
be taxable by the city/ies or
municipality/ies where the F, PrO,
or PL is/are located.
LGUs where only EFs are located

will not be entitled to the sales
allocation provided in the subsection.
The PL is Section 150(d) In case the PL is located in another

located place other than the locality where
elsewhere. the F is located, the 70% mentioned
above will be divided as follows:
a. 60% to the city or
municipality where the F is
located; and
43
Section 150, Ibid.
24
BUSINESS BUSINESS LGC SALES
CLUSTER/S UNIT/S PROVISION ALLOCATION
b. 40% to the city or
municipality where the PL is
located.
There are two Section 150(d) The 70% sales allocation mentioned
or more Fs, above will be prorated among the
PrOs, or Pls. city/ies or municipality/ies where
said Fs, PrOs, or PLs are located in
proportion to their respective
volumes of production during the
taxing period.
In addition to the above, the LGC Implementing Rules and Regulations (IRR) provide the
following regulations on POL, EFs and sales made by route trucks, vans, and other vehicles
(RS), viz.:
BUSINESS BUSINESS IRR SALES

CLUSTERS UNIT/S PROVISION ALLOCATION
1. Exporters Business maintains Article 243(c) City or municipality where a POL is

either a PO, B/SO, located shall not be authorized to
WH, F or PL in a levy or collect business tax unless the
locality where there exporter maintains a PO, B/SO, or
is POL. WH, F, PL in said city or
municipality
2. Manufacturers, RS Article RS made in the locality where a

producers, wholesalers, 243(d)(1) manufacturer, producer, wholesaler,
retailers or dealers Business maintains retailer, or dealer has a B/SO or WH
a B/SO or WH. will be recorded therein. The tax
will be payable to the city or
municipality where the B/SO or WH
is located.
RS Article RS will be recorded in the B/SO or

24(d)(2) WH where the route trucks withdraw
Business does not their products for sale. The tax will
maintain a B/SO or accrue to the city or municipality
WH where the B/SO or WH is located.
25
To further increase revenues and generate more employment for residents, the
Quezon City government has offered incentives to big business establishments which
include three- to four-year tax holidays and other special perks.
The Quezon City Economic Development Incentives Code of 2013 was approved
on July 18, 2014 which aims to boost and attract foreign and domestic medium and large
enterprises (MLEs) to do business in the city.
To qualify, compliance with the local business requirements is needed. Likewise,

15% of the rank-and-file workers medium enterprises (businesses with total assets of PhP
15 million to PhP 100 million) should be residents of Quezon City, while for large
enterprises (businesses with total assets of over PhP 100 million), city residents should
cover 30% of their workforce.
In conjunction with the fiscal incentives being offered to MLEs are tax holidays
on real property; special deductions on gross income in computing the base of business
tax; and exemptions from amusement taxes and fees for the transfer of real property
ownership. The incentives will be good for three to four years provided all the land,
buildings and equipment taxed are “actually, directly and exclusively” used by the
MLEs.
Additionally, the exemption of medium enterprises from the tax holiday on real
property and business will be extended by another year if at least 30% of their ran-and-
file employees are city residents. If the number of employees rises to 60%and workers
are all residents of Quezon City, an extension of two years will be furnished.
For large enterprises, tax holiday of the same mentioned taxes will be extended
by one year if they employ at least 40% of the city’s residents. To lengthen the tax
holiday to two years, employees should included 70% of Quezon City residents. An
additional three years will be offered if the figure go up to 100%.
The ordinance also provide tax credits for the purchase of raw materials
“actually, directl6y and exclusively used in production and operation” where the total
amount paid will be deducted from the MLE’s business tax.
_____
Source: Quezon City Economic Development Incentives Code of 2013
(quezoncity.gov.ph. Accessed 1 September 2014)
26
Chapter III
Other Taxes Imposed by Provinces and Cities
A. Tax on Business of Printing and Publication44
1. Taxpayer
The tax is imposed on persons engaged in the printing and/or publication of
books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets and other
similar in nature.
2. Tax Base and Rate

In the case of a province, the tax should not exceed fifty percent (50%) of one
percent (1%) of the gross annual receipts for the preceding calendar year. For newly
started business, the tax should not exceed one-twentieth (1/20) of one percent (1%) of
the capital investment.
In the case of a city or a municipality within MMA, the tax should not exceed
seventy-five percent (75%) of one percent (1%) of the gross annual receipts for the
preceding calendar year. For newly started businesses, the tax shall not exceed three-
fortieth (3/40) of one percent (1%) of the capital investment.
3. Exemption
The receipts from the printing and/or publishing of books or other reading
materials prescribed by the Department of Education (DepEd) as school texts or
references shall be exempt from the tax.
4. Time and Place of Payment

The tax shall be paid within the first twenty (20) days of January or of each
subsequent quarter, as the case may be, to the province or city where the business of
printing and publication is located.
44
Section 136, Ibid.
27
B. Franchise Tax
1. Taxpayer
The tax is imposed on persons engaged in businesses enjoying a franchise. 45

In the case of a province, the tax should not exceed fifty percent (50%) of one
percent (1%) of the gross annual receipts for the preceding year. For newly started
business, the tax should not exceed one-twentieth (1/20) of the capital investment.
In the case of a city or municipality within MMA, the tax should not exceed
seventy-five percent (75%) of one percent (1%) of the gross annual receipts for the
preceding calendar year. For newly started business, the tax should not exceed three-
fortieth (3/40) of one percent (1%) of the capital investment.

subsequent quarter, as the case may be, the province or city where the business enjoying
a franchise is located.
4. Exclusions
(i) Franchise tax is not applicable to businesses enjoying franchise operating

within the territorial jurisdiction of any city located within the province.
(ii) The term business enjoying franchise shall not include holders of certificates
of public convenience for the operation of public utility vehicles for reason that
such certificates are not considered as franchise.
45
A franchise is a right or privilege, affected with public interest which is conferred upon private persons
or corporations, under such terms and conditions as the government and its political subdivisions may impose in the
interest of public welfare, security and safety; Section 137, LGC.
28
C. Tax on Sand, Gravel and Other Quarry Resources46
1. Taxpayer
The tax is imposed on persons engaged in quarrying of sand, gravel and other
quarry resources. It is based on the fair market value of quarry material.

The tax should not exceed ten percent (10%) of the fair market value per cubic
meter of ordinary stones, sand, gravel, earth and other quarry resources, as defined
under the National Internal Revenue Code (NIRC), as amended,47 extracted from public
lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters
within its territorial jurisdiction.
3. Permit to Extract Quarry Resources

The permit to extract sand, gravel and other quarry resources shall be issued
exclusively by the Provincial Governor.
4. Distribution of Proceeds
30% - Province
30% - Component City/Municipality where the sand, gravel and other quarry
resources are extracted
40% - Barangays where the sand gravel and other quarry resources are extracted

The tax levied shall be due and payable upon removable of the sand, gravel and
other quarry resources from the locality where mined.
46
Section 138, LGC.
47
Section 151 (B) (4) of the NIRC, as amended, defines “quarry resources” as any common stone or other
common mineral substances as the Director of Bureau of Mines and Geo-Sciences may declare to be quarry
resources such as, but not restricted to, marl, marble, granite, volcanic cinders, basal, tuff and rock phosphate;
Provided, That they contain no metal or metals or other valuable minerals in economically workable quantities.
29
D. Professional Tax48
1. Taxpayer
The tax is issued on persons engaged in the exercise or practice of professions
requiring government examination such as lawyers, engineers, accountants, etc. or
professionals who passed the bar examinations, or any board, or other examinations
conducted by the Professional Regulatory Commission (PRC).
2. Tax Rate
The annual professional tax shall not exceed three hundred pesos (PhP 300).
3. Exemption
Professionals exclusively employed by the government.

The tax shall be paid annually on or before the thirty-first (31) of January to the
province or city where the profession is being practiced or where the principal office is
located in case the profession is practiced in several places.
5. Administrative Provisions
(i) Every person who has paid the corresponding professional tax shall be entitled
to practice his profession in any part of the Philippines without being subjected to
any other national or local tax, license, or fee for the practice of such profession.
(ii) Any individual or corporation employing a person subject to professional tax

shall require payment by that person of the tax of his profession before
employment and annually thereafter.
(iii) Any person subject to the professional tax shall write in deeds,
receipts, prescriptions, reports, books of account, plans and design,
48
Section 139, Ibid.
30
surveys and maps, as the case may be, the number of the official receipts issued
to him.
(iv) For the purpose of collecting the tax, the Provincial Treasurer or his duly
authorized representative shall require from such professionals their current
annual registration cards issued by competent authority before accepting payment
of their professional tax for the current year. The PRC shall likewise require
professionals presentation of proof of payment before registration of professionals
or renewal of their licenses.
E. Amusement Tax49
1. Taxpayer
The amusement tax is levied on proprietors, lessees, or operators of theaters,
cinemas, concert halls, circuses, boxing stadia, and other places of amusement.

The tax shall not be more than 10% of the gross receipts from admission fees.
3. Manner of Computing the Tax

The tax shall first be deducted and withheld by their proprietors, lessees, or
operators and paid to the Provincial Treasurer or City Treasurer, as the case may be,
before the gross receipts are divided between the proprietors, lessees, or operators and the
distributors.
4. Exemptions
The amusement tax shall not apply to the holding of operas, concerts, dramas,
recitals, painting and art exhibitions, flower shows, musical programs, literary and
oratorical presentations, except pop, rock or similar concerts, subject to the guidelines to
be issued by the DOF.
49
Section 140, Ibid, as amended by RA 9640 (Approved 21 May 2009).
31
5. Sharing of Proceeds of the Tax
The proceeds from the amusement tax shall be shared equally by the province and
municipality where the amusement places are located.
In the case of a city, the entire proceeds (100%) accrue to the city.

subsequent quarter, as the case may be, to the province or city where the place of
amusement is located.
On October 23, 2006, the city government of Quezon City passed an ordinance
that exempt from amusement tax all locally produced films shown at city-based theaters
for three (3) years.50 With this pioneering piece of legislation, it is hoped that similar
ordinances, or those that tend to support and give incentives to the local film industry
will be enacted in other local government units as well, given that such decree will help
promote Filipino culture and values. This was further amended in 2009 thus extending
the tax holiday for five (5) more years and providing additional assistance and incentives
to the local film producers due to the sharp decline of films produced in the country and
to.51
__________
50
Ordinance No. 1718, Series 2006, entitled, “ An Ordinance Amending Section 39 of Ordinance No. SP-
91, Series 1993, of the Quezon City Revenue Code.” (Issued on 23 October 2006)
51
Ordinance No. SP1962, Series 2009, entitled,” An ordinance Amending Ordinance No. 1718, S-2006,
As to extend the Tax Holiday for the Showing of Local Films Imposed Under Section 39 (A) (1) of the Quezon City
Revenue Code, Amended, For Purposes thereof.” (Issued on 5 September 2009)
32
F. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or Producers,
Wholesalers of, Dealers, or Retailers in, Certain Products52
1. Taxpayer and Tax Base

The tax is imposed on manufacturers, producers, wholesalers, dealers or retailers
in the delivery, distribution of distilled spirits, fermented liquors, soft drinks, cigars, and
cigarettes and other products as may be determined by the Sangguniang
Panlalawigan/Panglunsod for every truck, van or any vehicle used by the former.
2. Rate of Levy
The tax shall not exceed five hundred pesos (PhP 500.00) for the province and not
to exceed seven hundred fifty pesos (PhP750.00) per truck or van for the city.

subsequent quarter, as the case may be, to the province or city where goods are
transported by delivery trucks or vans. Owner of the truck is liable to pay said tax to
each province or city if the said truck or van is used to transport goods to several
provinces or cities.
52
Section 141, LGC.
33
The Quezon City government created a task force for the purpose of
implementing Articles 17 and 19 of the City’s Revenue Code. The move has help
contribute raise revenue collections with the business taxes particularly on the intensified
tax collection from delivery, service and public utility vehicles.
Based on Article 17 of the revenue code, an annual fix tax rate of PhP 500 shall
be imposed on every truck or van used in the delivery or distribution of any product or
for servicing business customers within the territorial jurisdiction of the city. Tricycles
shall pay PhP 250, while motorcycles shall pay PhP100 every year. Delivery and service
motor vehicles with business establishments shall be subjected only 50% of the tax.
On the other hand, Article 19 of the code states the operators of motor vehicles
for hire with terminals in the city shall pay fixed annual terminal rates of PhP 400 per
unit for buses, cargo trucks and vans; PhP 200 per unit for taxis; and PhP 100 per unit
of jeepneys and other vehicles for hire.
Furthermore, no motor vehicle used for delivery shall be allowed in the city
without a valid sticker issued by the mayor’s office.
__________
34
Table 3. SUMMARY OF LOCAL BUSINESS TAXES IMPOSED BY SELECTED CITIES AS OF MARCH 24, 2014
Amount of Tax Per Annum (In PhP)
Type of Business Naga City,

Makati City Malaybalay City,
Camarines Sur Bukidnon
a. Manufacturers, assemblers, repackers, processors,

brewers, distillers, rectifiers and compounders of
liquors, distilled spirits, and wines or manufacturers of
any article of commerce of whatever kind of nature
with gross receipts of:
- less than PhP10,000.00 to PhP 6.49M 1,850.00 – 34,125.00 214.00 - 31,687.50 165.00 – 24,375.00
- PhP6.5 M or more 34,125.00 plus 52.5% of 1% At rate of 37.5% of 1% At rate of 37.5% of 1%
b. On wholesalers, distributors or dealers in any article

of commerce of whatever kind of nature at rates
ranging with gross receipts of:
- less than PhP 1,000.00 to PhP 1.9M 1,190.00 – 12,000.00 23.40 – 13,000.00 18.00 – 10,000.00
- PhP 2M or more 12,000 plus 60% of 1% At rate of 50% of 1% At rate of 50% of 1%
c. On retailers with gross receipts for the preceding

calendar year
- PhP400,000.00 or less 75% of 1% on gross sales or 2% 2%

receipts for the preceding
- In excess of first PhP400,000.00 calendar year. 1% 1%
d. On exporters and on manufacturers, millers, At the rate of 50% of the At the rate of 50% of the At the rate of 37.5% of the
producers, wholesalers, distributors or retailers of rates under a, b and c rates under a, b and c rate under a, b, and c
essential commodities
Amount of Tax Per Annum (In PhP)
Type of Business Naga City,

Makati City Malaybalay City,
Camarines Sur Bukidnon
e. On contractors and other independent contractors
- Less than PhP5,000.00 to PhP 1.9M 1,144.00 -15,000.00 46.50 – 14,950.00 100.00 – 8,250.00
(PhP 10,000.00 –
- PhP 2M or more 15,000.00 plus 75% of 1% At a rate of 50% of 1% PhP 500,000.00)
f. On banks and other financial institutions 20% of 1% of the gross 45% of 1% of the gross 50% of 1% of the gross
receipts of the preceding receipts of the preceding receipts of the preceding
calendar year calendar year calendar year
g. On real estate developers/operators 1,144.00 – 15,000.00 plus 80.00 – 150.00 per sq. m. 1,000.00 – 2,000.00 per sq.
75% of 1% m.
h. On owners or operators of cafes, cafeterias, ice 50,000.00 –150,000.00 plus 300.00 – 3,000.00 50.00 – 225.00
cream and other refreshment parlour, restaurants and 80% of 1% (exempted if
soda fountains, carinderias or food caterers gross sales or receipts for the
preceding calendar year is
less than PhP50,000.00)
References: http://www.makati.gov.ph/portal/uploads/staticmenu/docs/taxes_and_fees.pdf(Accessed 24 March 2014).

http://naga.gov.ph/invest/doing-business-2/cost-of-doing-business-3/local-business-fees-and-taxes-2/ (Accessed 24 March 2014)
www.bukidnon.gov.ph/home/index.php/business-and-economy/cost-of-doing-business; Malaybalay City Hall – Licensing Office (Accessed 24 March
2014).
36
Chapter IV
Common Revenue-Raising Powers
A. Service Fees and Charges53

LGUs may impose and collect such reasonable fees and charges for services
rendered.
The introduction of user fees on health service in the Municipality of Malalag,

Davao del Sur was a ground-breaking step implemented by an LGU to guarantee the cost
of delivering health services to its community. The charging of health user fees was
initially opposed, but later accepted, is a jumpstart in the right direction for the
community to be more open and responsible in shelling out for benefits received from
their local government.
The LGU was obliged to do carry out such imposition to supplement their
budget constraints and thus, support decentralizing the health function of the local
government. Although considered as political unpopular, the municipality of Malalag
has unspired other LGUs to follow in their footsteps.
Although revenue derived from charging user fees is only slight to augment the
the budget for health services of the Municipality, it still establish a significant increase
to the Malalag’s income that would aid defray the cost of health services.
The Malalag local government and othe LGUs who adopted the user fees for
health and other social services also recognized some problems with regards to
categorizing patients who were willing to pay and those that seek free health services. A
threshold was established for free medical services for indigents and adjustment of fees
rates were established.
It is worth mentioning that the Municipality of Malalag received the Gawad

Galing Pook award in 2003 for Trailblazing Programs. The merit was given notably for
having improved the quality of life of its constituents by increasing its constituents by
maximizing its insufficient resources and directing them to those who need them most.54
__________
Source: Local Government Fiscal and Financial Management: Best practices by Juanita D.
Amatong. 2005
53
Section153, Ibid.
54
Juanita D. Amatong, Local Government Fiscal and Financial Management: Best Practices (Department
of Finance, 2005), pp. 20-33.
B. Public Utility Charges55
LGUs may also impose for the operation of public utilities owned, operated and maintained by
LGUs within their respective jurisdiction
Business and real property taxes are considered as the top earners that helped
increase Quezon City’s revenue-generating collection. The remaining collection comes
from the regulatory and miscellaneous fees imposed by the city government. The
implementation of an intensified tax collection from delivery, service and public utility
vehicles (PUVs) help the local government of Quezon City to boost their revenues.
The local government created a task force to intensify tax collection from
delivery, service and PUVs and conducting inspections of business establishments that
utilize such vehicles. The task force also determines payment of fixed tax, and issue
notices for failure to comply with the Code and settle tax obligations. The task force also
put into effect that no motor vehicle used for delivery shall be allowed in the city without
a valid sticker issued by the mayor’s office.
Based on Article 19 of the Quezon City revenue Code, operators of motor

vehicles for hire with terminals in the city shall pay fixed annual tax rates of PhP 400 per
unit for taxis, and PhP 100 per unit for jeepneys and other vehicles for hire. It exempts
operators of taxis, jeepneys and other vehicles- excepts buses, cargo, trucks and vans –
with less than three (3) units, as well as operators of tricycles for hire and utility
tricycles, from paying taxes.
On the other hand, Article 17 of the Code states that an annual fixed rate of PhP
500 shall be imposed on trucks and vans used for delivery, Php 250 for tricycles and
PhP100 for motorcycles. The Code further state that delivery and service motor vehicles
with business establishments in the city shall only be subjected to 50% of the tax.
__________
55
Section 154, Ibid .
38
C. Toll Fees and Charges56
Toll fees and charges may be imposed for the use of any public road, pier or
wharf, waterway, bridge, ferry or telecommunication system funded and constructed by the
LGU concerned.
No such toll or charges shall be collected from officers and enlisted men of the Armed
Forces of the Philippines (AFP) and members of the Philippine National Police (PNP) on
mission, post office personnel delivering mail, physically-handicapped, and disabled citizens
who ate sixty-five (65) years or older.
Table 4. Fees and Charges Accrued by Selected LGUs.

Fees and Charges (in PhP)
Type of Business 57 Naga City, Malaybalay City,
Makati City
Camarine Sur58 Bukidnon59
Mayor’s Permit Fee on 120.00 -11,000.00 50.00 – 5,000.00 60.00 -3,000.00
Business
Building Permit 30.00/sq.m. 1.00 – 6.00/sq.m. 7.00/sq.m.
Inspection Fee60 12.50/sq. m. + 200.00 20.00 – 1,000.00 150.00-500.00;
filing fee 200.00/set (for field
density test)
Civil Registry Fee61 100.00 – 1,260.00 200.00 – 3,000.00 20.00 – 1,000.00
Health/Medical Laboratory 20.00 – 350.00 500.00 – 1,000.00 75.00 – 1,065.00
Services
Garbage Fee62 20.00 – 2,250.00 25.00 – 1,000.00 80.00 – 400.00
(collected quarterly) ( per Annum) (per annum)
56
Section 155, Ibid.
57
http://www.makati.gov.ph/portal/uploads/staticmenu/docs/taxes_and_fees.pdf; Dealing with
Construction Permits in Makati, Philippines.” International Finance Corporation. 2013.
http://www.doingbusiness.org/data/exploreeconomies/philippines/sub/makati/topic/dealing-
with-construction-permits (Accessed 24 March 2014).
58
http://naga.gov.ph/invest-in-naga; http://naga.gov.ph/sp-matters/ordinances (Accessed 24 March 2014).
59
Malaybalay City Hall (Treasurer’s Office, Licensing Office, Engineering Office, Local Civil Registry,
Rural Health Unit).
60
Includes sanitary and fire inspections.
61
Includes birth, death, marriage, adoption, annulment, legal separation and other miscellaneous
documents.
62
Fees collected is determined by the type of residence (house, unit, condominiun, apartment and the like)
and or business establishment.
39
Fees and Charges (in PhP)
Type of Business 57 Naga City, Malaybalay City,
Makati City
Camarine Sur58 Bukidnon59
Sanitary Permit 30.00-1,500.00 50.00 – 100.00 20.00 – 150.00
Mayor’s Clearance 25.00 200.00 100.00
Chapter V
Community Tax63
Cities or municipalities may levy the community tax.
A. Tax Subject
1. Individuals Liable to Community Tax

Every individual eighteen (18) years of age or over who has been regularly
employed on a wage salary basis for at least thirty (30) consecutive working days during
any calendar year, or who is engaged in business or occupation, or who owns real
property with an aggregate assessed value of one thousand pesos (PhP 1,000.00) or
more, or who is required by law to file an income tax return shall pay community
tax.
2. Juridical Persons Liable to Community Tax

Every corporation, whether domestic or resident foreign, engaged in or doing
business in the Philippines shall pay a community tax.
B. Tax Base and Rate
1. Individuals
Every individual shall pay an annual community tax of five pesos (PhP 5.00)
and an annual additional tax of one peso (PhP 1.00) for every one thousand pesos (PhP
63
Section 156, LGC; and Article 251 of the 1991 Internal Revenue Regulations (IRR).
40
1,000.00) of income regardless of whether from business, exercise of profession or from
property which in no case shall exceed five thousand pesos (PhP 5,000.00).
2. Corporations
Corporations, whether domestic or resident foreign, shall pay an annual
community tax of five hundred pesos (PhP500.00) and an additional tax that shall not
exceed ten thousand pesos (PhP 10,000.00) in accordance with the following schedule:
a. for every PhP5,000 worth of real property in the Philippines owned during the
preceding year based on the valuation used for the real property tax under existing
laws, found in the assessment rolls of the city or municipality where the real
property is situated – two pesos (PhP 2.00)
b. for every PhP 5,000 worth for gross receipts/earnings derived from business
during the preceding year - PhP 2.00
3. Exemptions64
a. Diplomatic and consular representatives;
b. Transient visitors when their stay in the Philippines does not exceed three
(3) months.

The tax shall accrue on the first (1st) day of Janaury annually which shall be paid
not later than the last day of February and paid to the place of residence of the individual, or in
the place where the principal office of the juridical entity is located.
64
Section 240, LGC.
41
6. Community Tax Certificate
A community tax certificate shall be issued to every person or corporation upon
payment of the community tax. This may also be issued to any person or corporation not
subject to the community tax upon payment of one peso (PhP 1.00).
The local government of Iligan City began to systematize its tax records in 2001
with the aid of the Philippine Regional Municipal Development Project (PRMDP),
funded by the ADB and AusAid. The development of the Tax Revenue Assessment and
Collection System (TRACS) is a system that computerizes and integrates the tax records
of the local government. This project was made the pilot system for other LGUs under
the PRMDP.
The TRACS involve three (3) modules: Real property assessment, collection and
business permit modules. The TRACs run through a taxpayer’s records which may
include real property, business and permits such as building permits, business licensing,
clearance from the fire department, sanitation compliance and even community tax
certificate (CTC), and all other revenue concerns to treasury operations. The TRACS
also consists of assessment calculations and issuance of billing receipts.
Currently, the local government of Iligan City upgraded TRACS and is now
called as Enhance Tax Revenue Assessment and Collection System (ETRACS) which
allows faster efficient access in computerized tax and revenue assessment and enhance
the ability of the LGU to effectively monitor and collect taxes and fees. This would lead
to increase in revenue and better delivery in basic services.
Sources: Gems in LGU Fiscal Management: a Compilation of Good practices (2006)

By R.G. Manasan and E.C. Villanueva.
Ugnayan: Philippine Information Agency (Accessed 13 October 2014)
(http://www.ugnayan.com/ph/gov/PIA/ArticleView/3H0Y)
42
Chapter VI
Barangay Impositions
A. Tax on Retailers
Tax on stores or retailers with fixed business establishments with annual gross sales or
receipts of PhP 50,000.00 or less in the case of cities; and PhP 30,000.00 or less, in the case of
municipalities, at a rate not exceeding 1% of gross sales or receipts.65
B. Service Fees and Charges
Reasonable fees and charges for services rendered in connection with regulation or the
use of barangay-owned properties or service facilities at rates to be prescribed by the
Sangguniang Barangay. 66
C. Fees for Issuance of Barangay Clearance
Any business located or conducted within the territorial jurisdiction of the Barangay
before the city or municipality may issue a license or permit to the said business. 67
D. Other Fees and Charges
1. On commercial breeding of fighting cocks, cockfights and cockpits;
2. On places of recreation which charge admission fees at rates prescribed by the

Sangguniang Barangay; and
65
Section 152(a), Ibid.
66
Section 152(b), Ibid.
67
Section 152(c), Ibid.
43
3. On billboards, 68 signboards, neon signs and outdoor advertisements at rates not less
than the following:69
a. Billboards or signboards for advertisement of business, per square meter or

fraction thereof :
Single-Faced - PhP 10.00
Double-Faced - 20.00
b. Billboards or signs for professionals per square meter or fraction thereof - PhP
8.00
c. Billboards, signs or advertisement for business and professions painted on any

buildings or structures or otherwise separated or detached therefrom, per square
meter thereof - PhP 9.00
d. Advertisement for business or professions by means of slides in movies

payable by the advertisers - PhP 100.00
e. Advertisement by means of vehicles, balloons kites, etc.:

- Per day or fraction thereof - PhP 40.00
- Per week or fraction thereof - 60.00
- Per month or fraction thereof - 80.00
f. Privileged panels shall be subject to ½ of the rates herein prescribed.
68
For the use of electric or neon lights in billboard under items (a) to (b) above, the amount of PhP 10.00
per square meter or fraction thereof shall be imposed in addition to the above prescribed rates.
69
Article 240(d)(4), Rules and Regulations Implementing the LGC.
44
Chapter VII
Tax Period and Manner of Payment70
1. The tax period of all local taxes, fees and charges may be paid in quarterly installments.71
2. Local taxes, fees and charges shall accrue on the first (1st) day of January of each year.
However, new taxes and charges, or changes in the rates thereof, shall accrue on the 1 st day of
the quarter next following the effectivity of the ordinance imposing such new levies or rates.72
3. Local taxes, fees and charges are paid within the first twenty (20) days of January or of each
subsequent quarter as the case may be. An extension of the grace period for payment of taxes
without penalties or surcharges is granted for a period not exceeding 6 months .73
4. The Sanggunian may impose a surcharge not exceeding 25% of the amount of taxes, fees or
charges not paid on time and an interest at the rate not exceeding 2% per month of the unpaid
taxes, fees or charges including surcharges, until such amount is fully paid but in no case shall
the total interest on the unpaid amount or portion thereof exceed 36 months.74
5. Local taxes, fees, charges and other revenues constitute a lien. The local government has a
right to seize or hold back any property used for business, desist practice of profession or
exercise of privilege with respect to which the lien is imposed. This may only be extinguished
upon full payment of the delinquent local taxes, fees and charges including related surcharges
and interest.75
70
Either of these remedies or all may be applied concurrently or simultaneously at the discretion of the
LGU concerned.
71
Section 165, LGC.
72
Section 166, Ibid.
73
Section 167, Ibid.
74
Section 168, Ibid.
75
Section 173, Ibid.
45
6. The following civil remedies may be availed by the LGU concerned on the collection of any
delinquent local tax, fee, charge or other revenue:76
a. Administrative action thru distraint of goods, chattels, or effects, and other

personal property of whatever character, and by levy upon real property and
interest in or rights to real property; and
b. Judicial action.
Chapter VIII
Related Provisions
A. Taxpayers Remedies
Periods of Assessment and Collection77

a. Local taxes, fees and charges shall be assessed within five (5) years from the
date they become due. No action for the collection of such taxes, fees or charges
shall be instituted after the expiration of such period.
b. In case of fraud or intent to evade the payment of taxes, fees or charges, the
same may be assessed within ten (10) years from discovery of the fraud or intent
to evade payment.
c. Local taxes, fees, or charges may be collected within five (5 years from the
date of assessment by administrative or judicial action. No such action shall be
instituted after the expiration of said period.
76
Section 256, Ibid.
77
Section 194, Ibid.
46
B. Power of LGUs to Levy Other Taxes, Fee and Charges78
LGUs may exercise the power to levy taxes, fees and charges on any base or subject not
otherwise specifically enumerated under the LGC, the NIRC, or other applicable laws.
However, such taxes, fees or charges shall not be unjust, excessive, oppressive, confiscatory or
contrary to declared national policy.
All taxes, fees and charges levied by the LGUs shall be in accordance with a duly enacted
ordinance. Such ordinances shall not be enacted by the Local Sanggunian without any prior
public hearing conducted for the purpose.
C. Authority of LGUs to Adjust Rates79
LGUs shall have the authority to adjust the tax rates not oftener than once every five (5)
years, but in no case shall such adjustment exceed the ten percent (10%) of the rates fixed under
the LGC.
78
Section 186, Ibid.
79
Section 191, Ibid.
47
Section 270 should be construed in relation with the other provisions of the LGC
under Section 254, the local treasurer is required to immediately post a notice of delinquency
in publicly accessible and conspicuous places and publish it in a newspaper when the real
property tax becomes delinquent. Thereafter, under Section 258, the local treasurer should
issue and execute a warrant of levy. If there is no action coming from the taxpayer, the
simultaneous institution of civil and judicial remedies such as the sale of real property at
public auction and collection through courts of appropriate jurisdiction will be enforced.
Conversely, on the part of the treasurer, the LGC provides sanctions for failure to
institute the aforementioned remedies. These include the payment of fine amounting to PhP
1,000.00 or imprisonment of not less than one (1) month or not more than six (6) months or
both or worse case, dismissal from government service.
Section 270 is also advantageous to the taxpayer since they can be secured against
unwarranted investigation if the treasurer failed to collect taxes within the five-year period.80
The taxpayers may circumvent the law by not paying their taxes until its collection has
prescribed. However, the petitioning taxpayer should present proof that the treasurer did not
initiate any measure to collect, i.e. no demand letter/notice of delinquency was sent or no
follow up measure was initiated after its release.
It should be noted that Section that Section 270 was patterned after the five-year
prescriptive period for collection of taxes as provided under the National Internal Revenue
Code (NIRC). The amended NIRC81 currently provides for the prescriptive period of three
(3) years82 starting from the date when the return has been filed or due. In case of an
amended return, the prescriptive period should start to run from the filing of the amended
return if it is substantially different from the original return. This is to prevent taxpayers
from evading taxes by merely reporting losses and deductions in the original return and later
filing an amended return when it is no longer viable for the government to make an
assessment if the notice of assessment is released, mailed or sent to the taxpayer within the
three-year period.83 It is not required that the notice by the taxpayer but its release must be
clearly proved.84
80
Vol. 1, Philippine Tax Commission, 98
81
NIRC of 1997.
82
Section 203, NIRC.
83
Flores, Florecita. National Internal Revenue Code, Annotated
84
Ibid.
48

RPT and Local Business Tax

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Chapter I

Real Property Taxes

A. Basic Real Property Tax

Market value is defined as the estimated amount for which a property is

Provinces - Not exceeding 1% of the assessed value of the real property;

Class Assessment Levels (%)

b. Buildings and Other Structures

Fair Market Value

Fair Market Value

Fair Market Value

Fair Market Value

Class Assessment Levels (%)

For all lands, buildings, machineries, and other improvements:

Actual Use Assessment levels (%)

4. Manner of Computing the RPT

Residents of the cities of Quezon, Valenzuela, Batangas and the municipality of

This system aims to facilitate government transactions, reduce operating costs

b. Charitable institutions, churches, parsonages, or convents belonging thereto,

e. Machinery and equipment used for pollution control and environmental

iTAX is a German-aided tax collection system designed to effectively collect

Mentioned below are cities offering tax discounts to taxpayers:10

Table 1. Tax Discounts Granted by Selected LGUs

- 5% discount for quarterly payments (payments

Pasig City - 10% discount on annual RPT paid on or before

Quezon City - 20% discount on annual RPT paid from January to

a. First delinquent month – sending of notices of delinquency

b. After 10 working days of no response – sending of final notice of delinquency

c. After five working days of still no response – sending of warrant of levy

Municipalities within Metro Manila

B. Other Impositions on Real Property

1. Special Education Fund (SEF) Tax14

b. Tax Base and Rate

50% - Provincial School Board

100% - City School Board

Municipality within Metro Manila

100% - Municipality School Board

2. Idle Land Tax15

i. agricultural lands planted to permanent or perennial crops with

ii. lands actually used for grazing purposes

- Lands located in a city or municipality more than 1,000 square meters in

c. Tax Base and Rate

b. Tax Base and Rate

b. Tax Base and Rate24

However, proceeds of the SHT collected by municipal treasurers, outside

b. Tax Base and Rate

Residential 1.5 1.0 1.0

Commercial 2.0 1.25 2.0

Agricultural - 1.25 2.0

Industrial 2.0 1.25 2.0

SEF 1.0 1.0 1.0

Idle Land Tax 1.0 ½ of 1% of the assessed ½ of 1% of the assessed

Kinds of Business Taxes that Municipalities and Cities May Impose

A. On Manufacturers29, Assemblers, Repackers, Processors, Brewers, Distillers, Rectifiers

Gross Sales/Receipts31 Municipality City

10,000 or more but less than 15,000 220.00 330.00

15,000 or more but less than 20,000 302.00 453.00

20,000 or more but less than 30,000 440.00 660.00

30,000 or more but less than 40,000 660.00 990.00

40,000 or more but less than 50,000 825.00 1,237.50

50,000 or more but less than 75,000 1,320.00 1,980.00

75,000 or more but less than 100,000 1,650.00 2,475.00

100,00 or more but less than 150,000 2,200.00 3,300.00