LOCAL GOVERNMENT TAX

The sanggunian has the power to impose taxes, fees, or charges provided that these shall not be
enacted without any prior hearing conducted for the purpose. It is only changed every 5 years.

Fundamental Principles shall govern the exercise of taxing and other revenue-raising powers
 Taxation shall be uniform in each LGU  Collection can’t be assigned to private persons
 Evolve a progressive system of taxation  Revenue is solely for the benefit of LGU
 Taxes, fees, charges and other impositions shall:
o Be equitable and as far as practicable o Not be unjust, excessive, oppressive
o Levied and collected for public purposes o Not contrary to law, public policy

Provinces Shall not exceed

Tax Base % Exemptions
Transfer of Real Prop. Higher of Total Consideration or FMV 0.5% Agrarian
Printing/Publication, Newly started business (Capital Investment) 0.2% DepEd Texts or
Franchise Tax Succeeding calendar year (Gross Receipt) 0.5% Books
Sand, Gravel, Others Fair Market Value per Cubic Meter 10% -
Amusement Tax Gross Receipt on Admission Fees 10% Opera/Bball
Professional Tax Per Professional ₱300 Gov’t Emp.
Delivery Truck or Van Per Truck ₱500 Peddler’s Tax
Municipalities – within MMA may also levy and collect taxes which can be imposed by provinces
Fixed amount that increases with GS/GR Tax Base is more than % Not Exceed1
Manufacturers, Assemblers ₱6,500,000 0.375%
Wholesalers, Distributors ₱2,000,000 0.50%
Retailers Up to ₱400K/In excess of ₱400K 2%/1%
Exporters, Manufacturers, Distributors, Retailers of Essential Commodities
½ of Prescribed % listed above
Contractors ₱2,000,000 0.50%
Banks and Financial No limit 0.50%
Peddlers (per peddler annually) - ₱50.00
Any other business2 not stated but subject to Excise, OPT or VAT 2.00%
1
Rates of tax within Metro Manila may exceed only by 50% of the maximum rates prescribed
2
Any business engaged in oil, gasoline and petroleum shall not be subject to any local tax

Sales are Recorded in: Location of Tax to be Paid:

Situs of Tax

Branch or Sales Outlet Municipality where branch/outlet is located

All in the Principal Office (PO) 30%  PO 70%  Factory/Plantation
 Factor and Plantation Separate Location 60%  Factory 40%  Plantation
 2 or more factories/plantations Prorated using Volume of Production

Fees and Charges Exclusive Authority:

Permits and Licenses* Sealing/Licensing of Weights Fishery Rentals, Fees and Charges
Cities – may levy taxes, fees and charges which the province or municipality may impose.
  Percentage Tax Limit of 3% on gross sales or receipts
 Rates imposed may exceed only by 50% except the rates of the ff:
Professional Tax ₱300 Amusement Tax 10%
Barangays – smallest LGU in the Philippines
Taxes on Retailers Barangay Clearance
Tax Base: Gross Receipts/Sales *No city or municipality may issue any permit
Tax Rate: Not more than 1% for any business/activity unless a clearance is
Fixed business establishments in brgys.: first obtained from the barangay w/in 7 days.
 Not more than ₱50,000 for cities  City/municipality may issue only after the
 Not more than ₱30,000 for municipalities lapse of 7 days
Service Fees or Charges Other Fees and Charges
Reasonable fees or charges for the regulation Commercial breeding of fighting cocks
or use of barangay owned properties Places of recreation
Billboards, signboards, neon signs
Only Barangays can impose these charges
Common Revenue Raising Powers – available to all LGUs
Service Fees or Charges Public Utility Charges
Reasonable fees or charges for services Operation of public utilities own/maintained
rendered. No charge shall be based on capital Toll Fees or Charges
investments or GS/GR Exempt: AFP, PNP, Post Office, Handicap, SC

Community Tax (Cedula or CTC) – levied by city or municipality only.

Individuals Juridical Persons
1. Must be 18 years or over, regularly Every Corporation is liable to pay for CTC.
employed for atleast 30 days  Cooperatives enjoying LT exemptions are
2. Engaged in business or occupation still required to secure a CTC and Mayor’s
3. Owns real property with aggregate of ₱1K permit
4. An individual who is required by law
Rates
Basic Community Tax ₱5.00 + Annual Community Tax ₱500
Additional for every ₱1,000 ₱1.00 For every ₱5K worth of Real Pty. ₱2.00
Additional Tax, Limit of ₱5,000 For every ₱5K worth of GR/Earning ₱2.00
Husband and Wife Additional Tax, Limit of ₱10,000
Basic for EACH ₱5.00 +  GE includes intercompany dividend for CTC
For every ₱1K from total property ₱1.00

Exemptions Place of Payment Presentation of CTC on Certain Occasions

 diplomats/consular  residence (ind.)  notary public  receipt public fund
 transient visitors  principal office  oath of office  other official bus.
Collection of Tax and Distributions of Proceeds  license, certificate  salary requirement
City/Muni. Tres. shall deputize the barangay  duty of public official to require corporations
treasurer to collect the community tax  CTC issued last year applicable Jan-Apr15

Protest of Assessment Claim for Tax Credit1

Receipt of Assessment 60 days Payment of tax 2 years
File Protest with Local Treasurer 60 days File claim for refund with LT
 Denied/No Action Denial of Claim
Appeal to RTC* 30 days Appeal to RTC* 30 days
Appeal is denied by RTC 15 days Appeal is denied by RTC 15 days
Appeal to CTA Appeal to CTA

*Administrative remedies need to be exhausted before taxpayer can seek redress in RTC
1
Tax credit granted shall not be refundable in cash but shall only be applied to future tax obligations

Injunction Against Collection of Local Taxes – allowed only when:

 Such suit is not forbidden by law;
 The injunction is to prevent the collection of wrongful taxes by a municipality; and
 There is no other adequate remedy to redress the injury to property which would be inflicted by
enforcing the payment of tax
Baranggay
Independent
Cities Component
Barangay
Cities
Provinces
Municipality Barangay
REAL PROPERTY TAX (Local Gov’t Code of 1991)

Basic RPT – Appraised at its Current and Fair Market Value1. Classified on the basis of its actual use.
 Real Properties Machineries
Exemp

Owned by Republic of PH Nonprofit/Religious Cemetery Used by local water, GOCC

t

Charitable Inst./Churches Owned by cooperatives Control pollution (environment)

1
price where a seller is not compelled to sell and a buyer but not compelled to buy

Fair Market Value – for assessment purposes, also known as “assessor’s value”
Assessment Level – percentage applied to FMV to determine assessed value of the property
Assessed Value – FMV * Assessment Level

In Provinces Not exceeding 1% of assessed value

% In Cities and Municipalities in Metro Manila Not exceeding 2% of assessed value

Special Levies
Special Education Fund + 1% of AV Idle Land + 5% of AV
Special Assessment 60% of AC  Agricultural Land – ½ of 1 hectare unused
 Exempt: Lands not subject to BRPT  Other lands in city/municipality – ½ of 1K sqm2

Maximum Tax for Used Land: 3%, Unused Land: 7%

Collection of RPT
Accrual Date: Basic RPT – Every January 1st, Special Levies – 1st day of following quarter
Collection of RPT: City/Municipal treasurer. However, they may deputize the barangay treasurer.
Application of Payment: Applied to previous years’ delinquency and interests
Period to Collect: Within 5 years from the date they become due. If in bad faith, 10 years.

Installment Method
1st Installment March 31 Tax Discount for Advanced Payment
2nd Installment June 31  20% of Annual Tax Due
3rd Installment September 31 Interest on Unpaid RPT
4th Installment December 31  2% per month limited to 36 months

Protest and Assessment Appeals

Payment of Tax under Protest 30 days Taxpayer must first exhaust all administrative
File Protest w/ Local Treasurer 60 days remedies, unless the very authority to impose
Denial/Inaction of Local Treasurer 60 days the tax is being questioned. In this case, he may
Appeal to the Local BAA 120 days proceed with the RTC then CTA.
Adverse Decision of the LBAA 30 days Claim of Refund/Credit
Appeal to Central BAA Within 2 years (treas. may decide w/i 60 days)
Adverse Decision of Central BAA 30 days Injunction
File a Petition with CTA CTA decides collection may affect Gov’t