Pamantasan ng Lungsod ng Valenzuela

College of Business and Accountancy

Department of Accountancy

LOCAL AND OTHER TAXATION (TAX3)

Local Government Taxation

Philippine Local Government (DILG Figures as of March 31, 2023)

REGION PROVINCE CITIES MUNICIPALITIES BARANGAYS
NCR - 16 1 1,710
CAR 6 2 75 1,178
I (ILOCOS REGION) 4 9 116 3,267
II (CAGAYAN VALLEY) 5 4 89 2,311
III (CENTRAL LUZON) 7 15 115 3,105
IV-A (CALABARZON) 5 21 121 4,019
MIMAROPA 5 2 71 1,460
V (BICOL REGION) 6 7 107 3,471
VI (WESTERN VISAYAS) 6 16 117 4,051
VII (CENTRAL VISAYAS) 4 16 116 3,003
VIII (EASTERN VISAYAS) 6 7 136 4,365
IX (ZAMBOANGA PENINSULA) 3 5 67 1,904
X (NORTHERN MINDANAO) 5 9 84 2,022
XI (DAVAO REGION) 5 6 43 1,162
XII (SOCCSKSARGEN) 4 4 45 1,096
XIII (CARAGA) 5 6 67 1,311
BARMM 6 3 116 2,592
TOTAL 82 148 1,486 42,027

Administrative Structure
ARMM/CAR Province City Municipality Barangay
Head of LGU
Governor Governor Mayor Mayor Chairman
Local Legislative Council (LLC)
Regional Legislative Sangguniang Sangguniang Sangguniang
Sangguniang Bayan
Assembly Panlalawigan Panglungsod Barangay
LLC Presiding Officer
Vice-Governor Vice-Governor Vice-Mayor Vice-Mayor Chairman

SPECIFIC IMPOSITIONS

Provinces and Cities

1. Tax on Transfer of Real Property Ownership (Section 135, LGC)

Transaction subject to tax by
Tax Base Tax Rate
Provinces / Cities
Total consideration involved in the
Sale, Donation, Barter or any other mode
acquisition or FMV in case monetary For Provinces: Not > 50% of 1%
of transferring ownership or tital of real
consideration involved is not substantial, For Cities: Not > 75% of 1%
property.
whichever is higher
Exception
The sale, transfer or other disposition of real property pursuant to Rep. Act No. 6657 (CARP) shall be exempt.
Others
Person Liable to Pay:
Seller, Donor, Transferor, Executor or Administrator
Time of Payment:
Within 60 days from date of execution of deed or date of decedent’s death
Tax Rate for Cities:
Rates may exceed the maximum rates by not more than 50%. That’s why its Not > 75% of 1%

2. Tax on Business of Printing & Publication (Section 136, LGC)

Transaction subject to tax by
Tax Base Tax Rate
Provinces / Cities
For Provinces: Not > 50% of 1%
Business of persons engaged in the Annual Gross Receipts (AGR) for For Cities: Not > 75% of 1%
printing and/or publication of books, preceding CY
cards, posters, leaflets, handbills, and New Business:
others of similar nature. Capital Investment For Provinces: Not > 1/20th of 1%
For Cities: Not > 7.5% of 1%

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Exception
Printing and/or publishing of books or other reading materials precribed by DECS as school texts/references shall be exempt.
Others
Imposition:
For New Business, the tax stated is only applicable on the first year.
Tax Rate for Cities:
Rates may exceed the maximum rates by not more than 50%. That’s why its Not > 75% of 1% and for new business at 7.5% of
1%

3. Local Franchise Tax (Section 137, LGC)

Transaction subject to tax by
Tax Base Tax Rate
Provinces / Cities
For Provinces: Not > 50% of 1%
Annual Gross Receipts (AGR) for For Cities: Not > 75% of 1%
preceding CY
Business enjoying Franchises
New Business:
Capital Investment For Provinces: Not > 1/20th of 1%
For Cities: Not > 7.5% of 1%
Exception
None
Others
Basis of AGR:
Incoming Receipt, or Realized within Territorial Jurisdiction
Imposition:
For New Business, the tax stated is only applicable on the first year.
Tax Rate for Cities:
Rates may exceed the maximum rates by not more than 50%. That’s why its Not > 75% of 1% and for new business at 7.5% of
1%

4. Tax on Sand, Gravel, & Other Quarry Resources (Section 138, LGC)
Transaction subject to tax by
Tax Base Tax Rate
Provinces / Cities
Ordinary stones, sand, gravel, earth, and
other quarry resources extracted from
FMV in the locality per cubic meter of For Provinces: Not > 10%
public lands or from the beds of seas,
ordinary stones, sand, gravel, earth, & Cities cannot impose this. They only get
lakes, rivers, streams, creeks, and other
other quarry resources. share.
public waters within its territorial
jurisdiction.
Exception
None
Others
Extraction Permit:
Exclusivel issued by Provincial Governor upon Ordinance passed by Sangguniang Panlalawigan
Distribution of Tax:
The Proceeds shall be distributed as follows:
(1) Province – 30%;
(2) Component City/Municipality where extracted – 30%;
(3) Barangay where extracted – 40%.

5. Professional Tax (Section 139, LGC)

Transaction subject to tax by
Tax Base Tax Rate
Provinces / Cities
Person in the exercise or practice of his Such amount and reasonable Not > P300
profession requiring. Government classification as the Sangguniang The limitation is applicable to both
examination. Panlalawigan may determine. provinces and cities.
Exception
Professionals exclusively employed in the government shall be exempt from the payment of this tax.
Others
Time of Payment:
Payable annually before January 31
Place of Payment:
Province where he practices or where principal office is located
Payment Rule:
Payment in One LGU shall mean exemption from other LGU
Employer Rule:
Before employment and annually, require employee to pay the tax
PTR Rule:
Write the Official Receipt issued to him in any document

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6. Amusement Tax (Section 140, LGC)

Transaction subject to tax by
Tax Base Tax Rate
Provinces / Cities
Gross Reciepts from Admission Fees
Proprietors, lessees, or operators (PLO) Not > 10%*
Theaters/Cinemas: Tax deducted and
of theaters, cinemas, concert halls, The limitation is applicable to both
withheld by PLO and paid the provincial
circuses, boxing stadia, and other places provinces and cities.
treasurer before it is divided between said
of amusement.
PLO and the distributors of
cinematographic films.
Exception
Exempt:
Holding of operas, concerts, dramas, recital, paintings, & art exhibition, flower shows, musical programs, literary & oratorical
presentation Except: Pop, rock, or similar concerts.
Others
*Amended by Rep. Act No. 9640 reducing the rate from 30% to 10%.
Surcharge, Interest, Penalties (SIP) Rule:
Sangguniang Panlalawigan may prescribes the conditins for payment of tax, including surcharges, interest and penalties for fraud
or failure to pay the tax.
Tax Sharing Rule:
Proceeds of Amusement Taxes shall be shared equally by the province and the municipality where such amusement places are
located.

7. Delivery Truck Taxes (Section 141, LGC)

Transaction subject to tax by
Tax Base Tax Rate
Provinces / Cities
Transport Vehicles used by
manufacturers, producers, wholesalers,
dealers or retailers in the delivery or
For Provinces: Not > P500 each
distribution of distilled spirits, fermented
Every truck, van or any vehicle. For Cities: Not > P750.
liquors, soft drinks, cigars and cigarettes,
and other products, to sales outlets, or
consumers, whether directly or indirectly,
wihin the province.
Exception
The imposition of this local tax exempts these entities from Peddler’s Taxes imposed by Municipalities.
Others
Tax Rate for Cities:
Rates may exceed the maximum rates by not more the 50%. That’s why its Not > P750

Cities and Municipalities

1. Tax on Business (Section 143(a), LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
(a) On manufacturers, assemblers,
repackers, processors, brewers,
distillers, rectifiers, and Graduated Annual Fixed Tax*
compounders of liquors, distilled Gross sales or receipts for the preceding Cities, Municipality in MMA, may
spirits, and wines or calendar year. exceed maximum rate by not > 50%
manufacturers of any article of
commerce of whatever kind or
nature.
Graduated Schedules
<10k P 165 P200K or more but <P300K P 3,850
P10K or more but <P15K 200 P300K or more but <P500K 5,500
P15K or more but <P20K 302 P500K or more but <P750K 8,000
P20K or more but <P30K 440 P750K or more but <P1M 10,000
P30K or more but <P40K 660 P1M or more but <P2M 13,750
P40K or more but <P50K 825 P2M or more but <P3M 16,500
P50K or more but <P75K 1,320 P3M or more but <P4M 19,000
P75K or more but <P100K 1,650 P4M or more but <P5M 23,100
P100K or more but <P150K 2,200 P5M or more but <P6.5M 24,375
P150K or more but <P200K 2,750 P6.5M or more Rate Not > 37 ½ of 1%
Exception
Not subject to the tax on wholesalers, distributors, or dealers below.

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Others
Applicable only to amount of domestic sales of the stated entities. It does not apply to those enumerated in Section 143(c), LGC
(Article 232(a), Administrative Order No. 270 IRR of LGC of 1991).

1. Tax on Business (Section 143(b), LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
(b) On wholesalers, distributors, or Graduated Annual Fixed Tax*
dealers in any article of Gross sales or receipts for the preceding Cities, Municipality in MMA, may
commerce of whatever kind or calendar year. exceed maximum rate by not > 50%
nature
Graduated Schedules
<1k P 18 P30K or more but <P40K P 400
P1K or more but <P2K 33 P40K or more but <P50K 660
P2K or more but <P3K 50 P50K or more but <P75K 990
P3K or more but <P4K 72 P75K or more but <P100K 1,320
P4K or more but <P5K 100 P100K or more but <P150K 1,870
P5K or more but <P6K 121 P150K or more but <P200K 2,420
P6K or more but <P7K 143 P200K or more but <P300K 3,300
P7K or more but <P8K 165 P300K or more but <P500K 4,400
P8K or more but <P10K 187 P500K or more but <P750K 6,600
P10K or more but <P15K 220 P750K or more but <P1M 8,800
P15K or more but <P20K 275 P1M or more but <P2M 10,000
P20K or more but <P30K 330 P2M or more Rate Not > 50 ½ of 1%
Exception
None
Others
The Businesses enumerated in Section 143 (a), LGC shall no longer be subject to the tax on wholesalers, distributors, or dealers
proviced in this Article (Article 232(b), AO No. 270 IRR of LGC of 1991)

1. Tax on Business (Section 143(c), LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
(c) On exporters, and on
Not > ½ of rates precribed under Section
manufacturers, millers,
Gross sales or receipts for the preceding 143(a), (b) & (d), LGC Cities,
producers, wholesalers,
calendar year. Municipality in MMA, may exceed
distributors, dealers or retailers
maximum rate by not > 50%
of essential commodities. *
Exception
None
Others
* Essential commodities; (1) Rice and Corn, (2) Wheat or cassava flour, meat, dairy products, locally manufactured, processed or
preserved food, sugar, salt & other agricultural, marine, & fresh water products, whether in their original state or not; (3) Cooking Oil &
cooking gas; (4) Laundry soap, detergents, & medicine; (5) Agricultural implements, equipment and post-harvest facilities, fertilizers,
pesticides, insecticides, herbicides & other farm inputs; (6) Poultry feeds and other animal feeds; (7)School supplies; & (8) Cement.

1. Tax on Business (Section 143(d), LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
(d) On retailers: Gross sales or receipts for the preceding Annual Percentage Tax:
calendar year.
Municipalities: P30K or less Not Taxable
Cities: P50K or less Not Taxable
P400K or less 2%
> P400K 1%
Cities, Municipalities in MMA, may
exceed max, rate by not > 50%
Exception
Taxed by Barangays under Section 152:
GSR for the preceding CY:
Mun.: P30K or less, Cities: P50K or less

1. Tax on Business (Section 143(e), LGC)

Transaction subject to tax by Cities/
Municipalities
(e) On contractors and other
independent contractors
Tax Base Tax Rate
Graduated Annual Fixed Tax*
Gross sales or receipts for the preceding
Cities, Municipality in MMA, may
calendar year.
exceed maximum rate by not > 50%

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Graduated Schedules
<P5K P 27.50 P150K or more but <P200K P 2,640
P5K or more but <P10K 61.60 P200K or more but <P250K 3,630
P10K or more but <P15K 104.50 P250K or more but <P300K 4,620
P15K or more but <P20K 165 P300K or more but <P400K 6,160
P20K or more but <P30K 275 P400K or more but <P500K 8,250
P30K or more but <P40K 385 P500K or more but <P750K 9,250
P40K or more but <P50K 550 P750K or more but <P1M 10,250
P50K or more but <P75K 880 P1M or more but <P2M 11,500
P75K or more but <P100K 1,320 P2M or more Rate Not > 50 ½ of 1%
P100K or more but <P150K 1,980
Exception
None

1. Tax on Business (Section 143(f), LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
Not > 50 % of 1% Cities, Municipality in
(f) On banks and other financial Gross sales or receipts for the preceding
MMA, may exceed maximum rate by not
institutions calendar year.*
> 50%
Exception
None
Others
*Derived from interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on
property and profit from exchange or sale of property, insurance premium.

1. Tax on Business (Section 143(g), LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
(g) On peddlers* engaged in the sale
of any merchandise or article of
Not > P50 per peddler annually Cities,
commerce.
* any individual or person who sells any kind of None Municipality in MMA, may exceed
goods, merchandise, commodity or service while maximum rate by not > 50%
walking, moving or traveling about, or who does not
have a fixed stall, store or place of vending or service.
Exception
None

1. Tax on Business (Section 143(f), LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
Gross sales or receipts for the preceding Graduated Schedules, Not > rates under
calendar year. Sec. 143, LGC (Article 232(h), AO No.
(h) On any business, not otherwise 270 IRR of LGC 1991)
specified in the preceding
paragraphs, which the Any business subject to the excise tax, Not > 2% of gross sales or receipts of the
sanggunian concerned may deem VAT or percentage tax under the NIRC preceding calendar year.
proper to tax
Cities, Municipality in MMA, may
exceed maximum rate by not > 50%
Exception
Common Carrier’s subject to percentage tax and Professional basketball games subject to amusement taxes, both under the NIRC
Others
In line with existing national policy, any business engaged in the production, manufacture, refining, distribution or sale of oil,
gasoline, and other petroleum products shall not be subject to any local tax (Article 232(h), AO No. 270 IRR of LGC 1991)

2. Fees & Charges (Section 147, LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
On business and occupation before any
Impose and collect such reasonable fees
person may engage in such business or Commensurate with cost of regulation,
and charges
occupation, or practice such profession or inspection and licensing*
calling.
Exception
Those reserved to provinces in Section 139, LGC, on the practice of any profession or calling
Others
*No such fee or charge shall be based on capital investment or gross sales or receipts of the person or business liable thereof

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3. Sealing & Licensing Fees (Section 148, LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
On sealing and licensing of weights and Sealing & Licensing Fees, including Reasonable Rates as maybe prescribed by
neasures criminal penalties the Sanggunian concerned
Exception
None
Others
The sanggunian concerned shall, by appropriate ordinance, penalize fraudulent practices and unlawful possession or use of
instruments of weights & measures and prescribe criminal penalty therefor. The sanggunian concerned may authorize the
municipal treasurer to settle an offense not involving the commission of fraud before a case is filed in court, upon payment of a
compromise penalty of not < P200.

4. Fishery Rentals, Fees & Charges (Section 149, LGC)

Transaction subject to tax by Cities/
Tax Base Tax Rate
Municipalities
On fishery privileges in the municipal
waters and impose rentals, fees or
Reasonable Rates as maybe prescribed by
charges, including operation of fishing Fishery Rentals, Fees and Charges
the Sanggunian concerned
vessels of 3 tons or less, and penalties for
violation
Exception
Marginal Fishermen

Situs of Local Tax under Section 150, LGC

Businesses: Manufacturers, assemblers, repackers, brewers, distillers, rectifiers and compounders of liquor, distilled spirits and
wines, millers, producers, exporters, wholesalers, distributors, dealers, contractors, banks and other financial institutions, and
other businesses
Circumstances Revenue Recognition Imposition
Branch, sales office or warehouse
a. Maintains or operates a branch, making the sale or transaction, including Municipality or City where such branch,
sales office, warehous elsewhere route sales by trucks, vans or vehicles sales office or warehouse is located.
within the locality
Municipality or City where Principal
Principal office
b. No branch, sales office, office is located.
Except: Route sales by trucks, vans or
warehouse in the Municipality or Except: Route sales by trucks, vans or
vehicles within the locality shall be
City where such sale or vehicles within the locality shall be
recorded in the branch, sales office or
transaction is made recorded in the branch, sales office or
warehouse where products are withdrawn
warehouse where products are withdrawn
Businesses: Manufacturers, assemblers, contractors, producers, and exporters, in the pursuit of their business

• 30% of all sales – Municipality

or City where Principal office is
located.
c. With factories, project offices,
• 70% of all sales – Municipality
plants, and plantations elsewhere
or City where factory, project
Principal office, irrespective of whether office, plant or plantation is
or not sales are made in the locality located.
where the factory, project office, plant or 70% under Par. (c) shall be divided:
d. In case plantation is located then plantation is located • 60% – Municipality or City
than the place where the factory where factory is located.
is located LGUs where Experimental Farms are • 40% – Municipality or City
located are not entitled to sales allocation where plantation is located.
except in cases of on-site sale in 70% under Par. (c) shall be prorated
commercial quantities. among different localities in proportion
e. 2 or more factories, project to their respective volumes of production
offices, plants or plantation during the period for which the tax is
located in different localities due. For project office of service and
other independent contractors, the basis
is cost of projects actually undertaken.

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Barangays Scope of Taxing Power (Section 152, LGC)

Transaction subject to tax by Barangays Tax Base Tax Rate Fees & Charges
Gross sales or receipts
(1) Tax on stores or retailers with fixed for preceding CY at
Not > 1% None
business establishments Cities: P50K or less
Mun: P30K or less
(2) Service Fees or Charges in connection with
Reasonable Fees as
the regulation or use of barangay-owned Reasonable Fees or
maybe prescribed by None
properties or service facilities such as palay, Charges for Services
the Sanggunian
сорга, ог tobacco dryers
(3) Barangay Clearance for any business or
activity. Note: No City or Municipality may
Reasonable Fees as
issue a permit license without a Barangay
maybe prescribed by
Clearance. If the Barangay did not issue a
the Sanggunian
clearance after 7 working days, the LGU may
issue the license or permit.
(4) Other Fees and Charges on:
• Commercial breeding of fighting cocks (with
annual sale of 5 fighting cocks)
Reasonable Fees as
• On cockfights and cockpits
maybe prescribed by
• On places of recreation which charge
the Sanggunian
admission fees*
• On signboards, billboards, signs, and outdoor
advertisements**
Others
* Places of recreation shall include places of amusement where one seeks admission to entertain himself by seeing or viewing the show or performance
or those where one amuses himself by direct participation.
**Ceiling Rates for Billboards (Art. 240(d)(4), AO 270 IRR of LGC of 1991)
1) Billboards or signboards for advertisement of business, per square meter or fraction thereof: Single-Faced P 10.00
Double-Faced 20.00
(2) Billboards or signs for professionals, per sqm. or fraction thereof: 8.00
(3) Billboards, signs, or advertisements for business & professions painted on any building or structures or otherwise
separated or detached therefrom, per square meter thereof: 9.00
(4) Advertisement for business or professions by means of slides in movies payable by the advertisers: 100.00
(5) Advertisements by means of vehicles, balloons, kites, etc:
Per day or fraction thereof: 40.00
Per week or fraction thereof: 60.00
Per month or fraction thereof: 80.00
(6) For the use of electric or neon lights in billboards under Items (1) -(4) above, in addition to the above prescribed rates,
per square meter or fraction thereof: 10.00
(7) Signs, signboards, billboards, advertisements, including stickouts, streamers, lighted signs, and other electronic media,
posters, privilege panels, stone signs, placards, price strips, buntings, and the like, belonging to manufacturers or producers or
professionals, but displayed at the place where a business or profession is conducted, or displayed on delivery or other service
and public utility vehicles Exempt
(8) Privilege panels ½ of the above rates

Retirement of Business
A business subject to tax pursuant to the preceding sections shall, upon termination thereof, submit a sworn statement of its gross
sales or receipts for the current year. If the tax paid during the year be less than the tax due on said gross sales or receipts of the current
year, the difference shall be paid before the business is considered officially retired.

Payment of Business Taxes

The business taxes imposed under Section 143 shall be payable for every separate or distinct establishment or place where business
subject to the tax is conducted and one line of business does not become exempt by being conducted with some other business for
which such tax has been paid. The tax on a business must be paid by the person conducting the same. In cases where a person conducts
or operates two (2) or more of the businesses mentioned in Section 143 of this Code which are subject to the same rate of tax, the tax
shall be computed on the combined total gross sales or receipts of the said two (2) or more related businesses. In cases where a person
conducts or operates two (2) or more businesses mentioned in Section 143 of this Code which are subject to different rates of tax, the
gross sales or receipts of each business shall be separately reported for the purpose of computing the tax due from each business.

Scope of Taxing Powers of Cities

Except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the province or municipality may
impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component
cities shall accrue to them and distributed in accordance with the provisions of this Code. The rates of taxes that the city may levy
may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates
of professional and amusement taxes.

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