Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 231)
The Local Tax Code governs the exercise by provinces, cities, municipalities, and barrios of their taxing and other revenue-raising powers.
The principles include uniform taxation within each local unit, taxation based on the taxpayer's ability to pay, taxes for public purposes only, avoidance of unjust, excessive, oppressive or confiscatory taxes, compliance with laws and national policy, prohibition of letting tax collection to third parties, benefit of monies collected to the local government imposing them, and the responsibility of local governments to develop progressive taxation systems.
Agricultural products mean yields of the soil like corn, rice, wheat, etc., including fish and their by-products, poultry, livestock and animal products, whether in original or processed form, provided processing is simple and aimed at preserving or preparing the product for market.
The provincial board for provinces, the city council or municipal board for cities, the municipal council for municipalities, and the barrio council for barrios.
They cannot impose documentary stamp taxes, taxes on forest products, inheritance and estate taxes (except as provided), income taxes, motor vehicle registration fees, customs duties, taxes on banks and insurance companies, export taxes, certain agricultural product taxes, and percentage tax on sales except as provided, among others.
A rate not exceeding one-fourth of one percent of the total consideration or assessed value, whichever is higher.
The occupation tax is an annual fixed fee levied on persons practicing professions or callings, with rates such as seventy-five pesos for doctors, lawyers, engineers, etc., and fifty pesos or less for other specified occupations.
Provinces impose a tax collected from operators of places of amusement at 20% for admissions costing one peso or less, and 30% for admissions exceeding one peso, payable quarterly.
Municipalities may levy taxes on business, fees and charges including cart registration, building permits, marriage fees, police clearances, impounding fees, dog licenses, fishery rentals, and numerous other taxes and fees at rates not exceeding the set maximums.
The tax ranges from 10 pesos for sales less than 1,000 pesos, with graduated increases up to 16,000 pesos for sales of 750,000 to 1,000,000 pesos, and additional fixed increments for sales beyond one million pesos.
Cities have the power to levy any taxes, fees, or charges that provinces or municipalities may impose, plus additional taxing powers including higher maximum rates for business taxes and the ability to impose percentage taxes on sales of commodities.
Barrios may only levy taxes, fees, and contributions at rates limited to 25% of similar taxes imposed by the municipality or 10% if in a city, and only on specific subjects like stores, signboards, and gamecocks.
Local governments may enforce payment through distraint of personal property, legal action, or both, utilizing liens on relevant properties and other judicial remedies.
The treasurer may seize personal property after written notice, issue a certificate of delinquency, list the goods, notify the owner by leaving a copy, publish notices of sale, conduct public auction after 20 days, and apply proceeds to satisfy tax debts, returning any excess to the owner.
Tax ordinances are passed by local councils, approved or vetoed by local chief executives, published within ten days after approval, and reviewed by the Secretary of Finance or treasurers who may suspend or disapprove ordinances on grounds like excessiveness or illegality.
Officers or employees attempting enforcement after notice shall be dismissed from service.
It is an annual tax imposed on individuals aged 18 or over who earn a wage or own property, and on corporations engaged in business in the Philippines, with set rates and schedules for additional taxes based on property and income.
A surcharge of up to 25% of the amount due plus an interest of 14% per annum from the due date until full payment, except tuition fees which are exempt from surcharge and interest.
Cities may impose percentage taxes on sales of non-essential commodities up to 2% and essential commodities up to 1%, but shall not impose both percentage and fixed graduated taxes on the same subject.