QuestionsQuestions (PRESIDENTIAL DECREE NO. 231)
PD 231 governs the exercise by provinces, cities, municipalities, and barrios (LGUs) of their taxing and other revenue-raising powers.
Key principles include: uniformity within each local political subdivision; taxation based as much as possible on taxpayer ability to pay; taxes/fees for public purposes; taxes must not be unjust/excessive/oppressive/confiscatory; must not be contrary to law/public policy/national economic policy or in restraint of trade; collection of local taxes/fees cannot be let to any person; local funds must benefit the LGU imposing the tax unless otherwise provided; LGUs must evolve a progressive system of taxation.
“Tax” is an enforced contribution, usually monetary, levied by the law-making body on persons and property subject to its jurisdiction, for the purpose of supporting governmental needs.
Provincial Board for provinces; City Council or Municipal Board for cities; Municipal Council for municipalities; Barrio Council for barrios.
Examples: LGUs cannot impose documentary stamp tax; taxes on estates/inheritance/gifts (except as otherwise provided); taxes on income of any kind; customs duties; taxes/fees for registration/licensing for motor vehicles or issuance of driving permits; taxes of any kind on banks and insurance companies; taxes on premiums paid with foreign insurers; taxes on forest products/concessions; and taxes on agricultural products when sold by the farmer/producer.
Not exceeding one-fourth of one percent (0.25%) of the total consideration involved in the acquisition or of its assessed value, whichever is higher.
Transfers of real property pursuant to RA 3844, as amended are exempt from the provincial tax on transfer of real property ownership.
It must require presentation of evidence of payment of the provincial tax.
Only lands, buildings, and machineries intended by the owner for an industry or works carried on in a building or on a piece of land that tends directly to meet the needs of the said industry/works.
It is an annual tax on all persons engaged in the exercise or practice of their profession or calling, with specified fixed rates depending on the occupation/calling.
It is payable annually on or before January 31. If the person begins the occupation after January, they must pay the full tax before engaging in the occupation.
Professionals exclusively employed in the Government are exempt from payment of the occupation tax.
It is imposed on admission collected from proprietors/lessees/operators of places of amusement. Rate is 20% when admission is one peso or less; 30% when admission exceeds one peso.
It must be due and payable within the first twenty (20) days of the month following each quarter, based on a true and complete return of gross receipts during the preceding quarter.
Opera, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and/or oratorical presentations are exempt—except film exhibitions and radio/phonographic records thereof.
Among others: business tax; fishery rental and license fees; taxes on articles subject to specific tax under the NIRC; taxes/impositions enumerated in Section 5 (Chapter I); and municipal fees and charges under Section 20.
Municipalities impose taxes on businesses based on gross annual sales/receipts for the preceding calendar year, using a graduated schedule (with specified tax amounts per sales bracket).