Professional Documents
Culture Documents
Local taxes are taxes that are imposed and collected by the local government units in order to raise revenues to
enable them to perform the functions for which they have been organized.
The LGC of 1991 governs the tax power as well as other revenue raising powers exercised by:
1. Provinces
2. Cities
3. Municipalities
4. Barangays
Fundamental principles of Local Government Taxation
Interpretation of laws on the grant of tax powers to local government is liberally construed. Doubts on liability of a
taxpayer under a valid tax ordinance are construed strictly against the local government unit, except regarding
exemptions, incentives or reliefs.
What are the limitations on the taxing power of LGUs?
As provided in SECTION 186, LGUs cannot impose taxes that are specifically enumerated or taxed under the
provisions of the Tax Code.
The following stages are observed to enact and effect tax laws:
1. Passage. The tax ordinance deliberated by the Sanggunian shall not be enacted without prior public hearing conducted for the
purpose.
2. Approval. Local tax ordinances enacted shall be approved and signed by the local chief executive concerned. If vetoed, it could
be overridden by a 2/3 vote of the Sanggunian members.
3. Effectivity. An ordinance, unless otherwise provided, shall take effect 10 days after the date of its posting.
(Taxing powers of provinces) The tax base and tax rates are shown in the following matrix:
Taxes imposable by province Tax Base Tax Rate
1. Transfer tax Selling price or market value
Not more than ½%
(Higher)
2. Tax on business of printing and Not more than ½%; on newly started
Annual gross receipts for the
publication business, not exceeding 1/20 of 1% of capital
preceding year
investment
3. Franchise tax Not more than ½%; on newly started
Annual gross receipts for the
business, not exceeding 1/20 of 1% of capital
preceding year
investment
4. Sand and gravel tax Fair market value per cubic meter Not more than 10%
5. Professional tax Not exceeding P300
6. Amusement tax on admission Gross receipts from admission fees Amended RA 9640 Not more than 10%
7. Fixed tax on delivery vehicles of
manufacturers, producers,
Not exceeding P500 per delivery vehicle
wholesalers, dealers or retailer in
certain products
Tax Base
Whichever is higher :
1. The total consideration involved in the acquisition of the property or
2. The fair market value in case the monetary consideration involved in the transfer is not substantial
Tax Rate
Not more than fifty percent (50%) of the one percent (1%) in the case of province.
Note: 75% of 1% in the case of a city or a municipality in MMA of the total consideration involved in the
acquisition of the property or of the FMV in case the monetary consideration involved in the transfer is not
substantial, whichever is higher.
Exception
Transfer under the comprehensive agrarian reform program
Time of Payment
Within 60 days from the date of the execution of the deed or from the date of the decedent’s death
Exception
The receipts from the printing and/or publishing of books or other reading materials prescribed by the DepEd as
school texts or references shall be exempt from the business tax.
To be liable for local franchise tax, the following requisites should concur:
1. That one has a “franchise” in the sense of a secondary or special franchise;
2. That it is exercising its rights or privileges under this franchise within the territory of the pertinent local
government unit.
Tax Base
Fair market value in the locality per cubic meter of ordinary stones, sand, gravel, earth and other quarry resources.
Tax Rate
Not more than ten percent (10%)
Tax Base
At such amount and reasonable classification as the sanggunian panlalawigan may impose
Tax Rate
Not to exceed P300
Exception
Professional exclusively employed in the government shall be exempt from the payment of this tax
Date of payment
Payable annually on or before January 31 or before beginning the practice of the profession
Tax to be paid only once. 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.
Note: Municipalities cannot impose professional tax since such power is reserved only to provinces and cities.
Tax Base
Gross receipts from admission fees.
In the case of theaters or cinemas, the tax shall first be deducted and withheld by their proprietors, lessees, or operators and paid
to the provincial treasurer before the gross receipts are divided between said proprietors, lessees, or operators and the distributors
of the cinematographic films.
Tax Rate
Not more than 10% of gross receipts from admission fees (amended RA 9640)
Exception
The holding of operas, concerts, dramas, recitals, painting and art exhibitions, flower shows, musical programs, literary and
oratorical presentations.
Note: Resorts, swimming pools, bath houses, hot springs and tourist sports do not belong to the same category or class as theaters,
cinemas, concert halls, and boxing stadia. It follows that they cannot be considered as among the other places of amusement
contemplated by Section 140 of LGB and which may properly be subject to amusement taxes.
Distribution of Proceeds
Tax shall be shared equally by the province and municipality where such amusement places are located.
Note: Amendments to the VAT law have been consistent in exempting persons subject to amusement tax under the NIRC from the
coverage of VAT. Only lessor or distributor of cinematographic films are included in the coverage of VAT. This reveals the legislative
intent not to impose VAT on persons already covered by the amusement tax. This holds true even in the case of cinema/theater
operators taxed under the LGC of 1991 precisely because the VAT law was intended to replace the percentage tax on certain
services.
The following are the amusement places upon which provinces or cities cannot impose amusement taxes
1. Cockpits
2. Cabarets
3. Night and day clubs
4. Boxing exhibitions
5. Professional basketball games
6. Jai-Alai
7. Racetracks
There can be no imposition of amusement taxes on the above amusement places since the NIRC already imposes amusement taxes
on the under Section 125 thereof.
SEC. 141. Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers
of, Dealers, or Retailers in, Certain Products
Transaction subject to tax
Used by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits,
fermented liquors, soft drinks, cigars and cigarettes, and other products as may be determined by the sangguniang
panlalawigan, to sales outlets, or consumers, whether directly or indirectly
Tax Base
Every truck, van or any vehicle
Tax Rate
Not exceeding P500
Schedules
(a) On 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 in accordance with the following schedule:
Preceding Amount of calendar year in the amount of Tax Per Annum
Less than 10,000.00 P 165.00
P10,000.00 or more but less than 15,000.00 220.00
15,000.00 or more but less than 20,000.00 302.00
20,000.00 or more but less than 30,000.00 440.00
30,000.00 or more but less than 40,000.00 660.00
40,000.00 or more but less than 50,000.00 825.00
50,000.00 or more but less than 75,000.00 1,320.00
75,000.00 or more but less than 100,000.00 1,650.00
100,000.00 or more but less than 150,000.00 2,200.00
150,000.00 or more but less than 200,000.00 2,750.00
200,000.00 or more but less than 300,000.00 3,850.00
300,000.00 or more but less than 500,000.00 5,500.00
500,000.00 or more but less than 750,000.00 8,000.00
750,000.00 or more but less than 1,000,000.00 10,000.00
1,000,000.00 or more but less than 2,000,000.00 13,750.00
2,000,000.00 or more but less than 3,000,000.00 16,500.00
3,000,000.00 or more but less than 4,000,000.00 19,800.00
4,000,000.00 or more but less than 5,000,000.00 23,100.00
(b) On wholesalers, distributors, or dealers in any article of commerce of whatever kind or nature in accordance with the following
schedule:
With gross sales or receipts for the preceding calendar in the amount of Tax Per Annum
Less than 1,000.00 P 18.00
P 1,000.00 or more but less than 2,000.00 33.00
2,000.00 or more but less than 3,000.00 50.00
3,000.00 or more but less than 4,000.00 72.00
4,000.00 or more but less than 5,000.00 100.00
5,000.00 or more but less than 6,000.00 121.00
6,000.00 or more but less than 7,000.00 143.00
7,000.00 or more but less than 8,000.00 165.00
8,000.00 or more but less than 10,000.00 187.00
10,000.00 or more but less than 15,000.00 220.00
15,000.00 or more but less than 20,000.00 275.00
20,000.00 or more but less than 30,000.00 330.00
30,000.00 or more but less than 40,000.00 440.00
40,000.00 or more but less than 50,000.00 660.00
50,000.00 or more but less than 75,000.00 990.00
75,000.00 or more but less than 100,000.00 1,320.00
100,000.00 or more but less than 150,000.00 1,870.00
150,000.00 or more but less than 200,000.00 2,420.00
200,000.00 or more but less than 300,000.00 3,300.00
300,000.00 or more but less than 500,000.00 4,400.00
500,000.00 or more but less than 750,000.00 6,600.00
750,000.00 or more but less than 1,000,000.00 8,800.00
1,000,000.00 or more but less than 2,000,000.00 10,000.00
2,000,000.00 or more at a rate Not exceeding 50% of 1%
Tax Base
Gross sales or receipts
Tax Rate
Not exceeding one-half (1/2) of the rates prescribed under subsections (a) (b) and (d) of this section.
(c) On contractors and other independent contractors, in accordance with the following schedule:
With gross sales or receipts for the preceding calendar in the amount of Tax Per Annum
Less than 5,000.00 P 27.50
P 5,000.00 or more but less than 10,000.00 61.60
10,000.00 or more but less than 15,000.00 104.50
15,000.00 or more but less than 20,000.00 165.00
20,000.00 or more but less than 30,000.00 275.00
30,000.00 or more but less than 40,000.00 385.00
40,000.00 or more but less than 50,000.00 550.00
50,000.00 or more but less than 75,000.00 880.00
75,000.00 or more but less than 100,000.00 1,320.00
100,000.00 or more but less than 150,000.00 1,980.00
150,000.00 or more but less than 200,000.00 2,640.00
200,000.00 or more but less than 250,000.00 3,630.00
250,000.00 or more but less than 300,000.00 4,620.00
300,000.00 or more but less than 400,000.00 6,160.00
400,000.00 or more but less than 500,000.00 8,250.00
500,000.00 or more but less than 750,000.00 9,250.00
750,000.00 or more but less than 1,000,000.00 10,250.00
1,000,000.00 or more but less than 2,000,000.00 11,500.00
2,000,000.00 or more at a rate Not exceeding 50% of 1%
Tax Base
Gross receipts of the preceding calendar year derived from interest, commission and discount from lending activities,
income from financial leasing, dividends, rentals on property and profit from exchange or sale of property insurance
premium
Tax Rate
50% of 1%
Tax Base
Per peddler
Tax Rate
Not exceeding P50
Tax Base
Gross sales or receipts
Tax Rate
Graduated schedule imposed by the Sanggunian concerned, but in no case to exceed the rates prescribed in Sec. 143,
LGC.
Business Permit
In order that a business operation would be made legal, a business must first acquire a business permit.
A business permit is a license given to a person by the local executive to engage in business upon payment of
required licensing or annual fee.
The fee is intended to cover the cost of proper enforcement of existing laws and ordinances and the supervision of the
business or occupation.
The business permit could be issued only upon payment of local business tax and other fees and charges provided for
in the local tax ordinance.
C. CITY TAXES
SEC. 144. Rates of Tax within Rates of business within Metropolitan Manila Area:
the Metropolitan Manila Area
The municipalities in Metro Manila may levy taxes at rates which shall not exceed
by 50% the maximum rates prescribed in Section 143, LGC
Notes:
a. Cities have the broadest tax powers, embracing both specific and general tax powers as provinces and
municipalities may impose. (Sec. 151, LGC)
b. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province and
municipality by not more than fifty percent (50%) except the rates of professional and amusement tax.
SEC. 145. Retirement of 1. A business subject to tax shall, upon termination thereof, submit a sworn
Business statement of its gross sales or receipts for the current year.
2. 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 (Sec. 145, LGC).
Fees and charges that a The municipality may impose and collect such reasonable fees and charges on business and
municipality may impose: occupation except professional taxes reserved for provinces (Sec. 147, LGC).
1. Fees for sealing and licensing of weights and measures (Sec. 148, LGC)
Principal is the head or main office 2. Fishery rentals, fees and charges, including the authority to grant fishery privileges within
of the business appearing in the municipal waters, as well as issue licenses for the operation of fishing vessels of three tons or
pertinent documents submitted to less
the SEC or DTI or other 3. The sanggunian may penalize the use of explosives, noxious or poisonous substances,
appropriate agencies, as the case electricity, muro-ami and other deleterious methods of fishing and prescribe a criminal
may be. penalty therefore (Sec. 149 LGC)
How are the sales of route If the sale is made in a place with a branch office: the sale is reported in the LGU
trucks and vans taxed? where the branch office is located.
If the sale is made in a place without a branch office: the sale is reported in the
LGU where the sales are withdrawn.
Accrual of tax
Business tax accrues on the 1st day of January of each year.
New taxes, fees or charges, or changes in the rates thereof which shall accrue on the 1st day of the quarter next following the
effectivity of the ordinance imposing such new levies or rates (Sec. 166, LGC).
Time of payment
Within 20 days of January or of each subsequent quarter
January 20 First quarter
April 20 Second quarter
July 20 Third quarter
October 20 Fourth quarter
It may be extended by the sanggunian for justifiable reasons, without surcharge or penalties.
In case a bond is required for the purpose, the provincial, city or municipal government shall pay the premiums thereon in addition
to the premiums of bond that may be required.
D. BARANGAY TAXES
D. Scope of the taxing power of a barangay
Scope of taxing powers of barangays
The barangays may levy taxes, fees and charges, as provided in this Article, which shall exclusively accrue to them:
Sources of revenue Tax base Tax Rate Fees and charges
1. Barangay taxes – on stores or Gross sales or receipts from Not exceeding 1% of such
retailers with fixed business preceding calendar year of gross sales or receipts
establishment P50,000 or less (for barangay in
the cities); and
E. COMMUNITY TAX
Common only to cities and municipalities
Community tax
Community tax
The community is a poll or capitation tax imposed upon residents of a city or municipality. It replaced the former residence tax.
2. Juridical persons – additional tax, which, in no case, shall exceed Ten thousand pesos (P10,000) in accordance with the following
schedule:
a. For every Five thousand pesos (P5,000) worth of real property in the Philippines owned by it during the preceding year based on
the valuation used for the payment of real property tax under existing laws, found in the assessment rolls of the city or municipality
where the real property is situated – Two pesos (P2) and
b. For every Five thousand pesos (P5,000) of gross receipts or earnings derived by it from its business in the Philippines during the
preceding year – Two pesos (P2) (Sec. 157&158, LGC).
Notes:
If the individual or corporation becomes liable after January 1 of the year, but
1. On or before March 31, the tax shall be paid within twenty days from the date that he became liable
2. After March 31, but before June 30, the tax shall be paid on the date he becomes liable
3. After June 30, the individual or corporation is exempt for the year
The city or municipal treasurer deputizes the barangay treasurer to collect the community tax in their respective jurisdictions and shall accrue entirely
to the general fund of the city or municipality concerned.
Conditions: Bonded in accordance with law (Sec. 164, LGC)
Proceeds of the community tax collected through the barangay treasurers shall be apportioned as follows:
1. 50% accrues to the general fund of the city or municipality concerned; and
2. 50% accrues to the barangay where the tax is collected
Real Property Tax is an ad valorem tax collected by a city, municipality, or province on real property such as land,
buildings, machinery, and other improvements affixed or attached to real property.
Real properties and improvements for real property tax purposes. Neither the Real Property Tax Code
nor the Local Government Code carry a definition of “real property.” In the absence of such a definition, we
apply Article 415 of the Civil Code, the pertinent portions of which state:
Machinery
The term machinery includes machines, equipment, mechanical contrivances, instruments, appliances or
apparatus which may or may not be attached, permanently or temporarily, to the real property.
Real Property Tax is the tax on real property imposed by the Local Government Unit (LGU). The legal basis is Title II
of the Local Government Code (LGC), Republic Act (R.A.) no. 7160. The implementing rules and regulations of R. A.
7160 can be found here.
2. The Local Government Code of 1991 (Republic Act 7160). The provisions of RA 7160 on real property
taxation covers Section 197 to Section 283 composed of the following:
a. General Provisions
b. Appraisal and Assessment of Property
c. Assessment Appeals
d. Imposition of Real Property Tax
e. Special Levies on Real Property Tax
f. Collection of Real Property Tax
g. Disposition of Proceeds
h. Special Provisions
3. Urban Development and Housing Act of 1992. All local government units are hereby authorized to impose an
additional one-helf percent (0.5%) tax on the assessed value of all lands in urban areas in excess of P50,000 (Section
43, RA 7279).
4. Presidential Decree No. 921. Decree providing for the administration of local financial services in Metropolitan
Manila, creating local treasury and assessment districts therein, and for other purposes
The basis for assessment of real property is actual use and not ownership
Real property shall be classified, valued and assessed on the basis of its actual use regardless of where located,
whoever owns it, and whoever uses it (Sec. 17, Local Government Code).
Sec. 199 (l) of the LGC defines “Fair Market Value” as the price at which a property may be sold by a seller who is not
compelled to sell and bought by a buyer who is not compelled to buy. In practice, however, the Fair Market Value is
based on the assessment of the municipal or city assessor as written in the Tax Declaration.
The Assessment Level shall be fixed through ordinances of the Sangguniang Panlalawigan, Sangguniang Panglungsod,
or the Sangguniang Pambayan of the municipality within the Metro Manila area.
For purposes of assessment, real property shall be classified as residential, agricultural, commercial, industrial,
mineral, timberland or special.
Agricultural land is land devoted principally to the planting of trees, raising of crops, livestock and poultry
dairying, salt making, inland fishing and similar aquacultural activities, and other agricultural activities, and is
not classified as mineral, timber, residential, commercial or industrial land.
Commercial land is land devoted principally for the object of profit and is not classified as agriculture,
industrial, mineral, timber, or residential land.
Industrial land is land devoted principally to industrial activity as capital investment and is not classified as
agricultural, commercial, timber, mineral or residential land.
Mineral lands are lands in which mineral metallic or non-metallic, exist in sufficient quantity or grade to justify
the necessary expenditures to extract and utilize such mineral.
All lands, buildings and other improvements thereon, actually, directly and exclusively used for hospitals,
cultural, or scientific purposes, and those owned and used by local water districts, and government-owned or
controlled corporations rendering essential public services in the supply and distribution of water and/or
generation and transmission of electric power shall be classified as special.
Assessment level is the percentage applied to the fair market value to determine the assessed value of the property.
Assessed value is the fair market value of the real property multiplied by the assessment level. It is synonymous to
taxable value.
The assessment levels to be applied to the fair market value of real property to determine its assessed value shall be
fixed by ordinances of the sangguniang panlalawigan, sangguninang panlungsod or sangguniang bayan of a
municipality within the Metropolitan Manila Area, at the rates not exceeding the following:
1. Residential
FMV Over But Not Over Assessment Level
0.00 P175,000 0%
P175,000 300,000 10%
300,000 500,000 20%
500,000 750,000 25%
750,000 1,000,000 30%
1,000,000 2,000,000 35%
2,000,000 5,000,000 40%
5,000,000 10,000,000 50%
10,000,000 60%
2. Agricultural
FMV Over But Not Over Assessment Level
P300,000 25%
P300,000 500,000 30%
500,000 750,000 35%
750,000 1,000,000 40%
1,000,000 2,000,000 45%
2,000,000 50%
3. Commercial/Industrial
FMV Over But Not Over Assessment Level
P300,000 30%
P300,000 500,000 35%
500,000 750,000 40%
750,000 1,000,000 50%
1,000,000 2,000,000 60%
2,000,000 5,000,000 70%
5,000,000 10,000,000 75%
10,000,000 80%
4. Timberland
FMV Over But Not Over Assessment Level
P300,000 45%
P300,000 500,000 50%
500,000 750,000 55%
750,000 1,000,000 60%
1,000,000 2,000,000 65%
2,000,000 70%
II. Machineries
Class Assessment Level
Agricultural 40%
Residential 50%
Commercial 80%
Industrial 80%
Special Classes of Real Property
What are the assessment levels for special classes of real property?
Actual Use Assessment
Level
Cultural 15%
Scientific 15%
Hospital 15%
Local water districts 10%
Government-owned or controlled corporations 10%
engaged in the supply and distribution of water
and/or generation and transmission of electric
power
Aside from the basic real property tax, a province, city, or a municipality within Metro Manila may levy the following
on real properties:
1. Special Education Fund Tax (SEF)
2. Ad valorem tax on Idle Lands
3. Special Levy or Special Assessment
This is imposed on lands comprised within its territorial jurisdiction specially benefited by public works projects or
improvements funded by the local government unit concerned.
Provided, however, That the special levy shall not exceed sixty percent (60%) of the actual cost of such projects and
improvements, including the costs of acquiring land and such other real property in connection therewith.
Provide, further, That the special levy shall not apply to lands exempt from basic real property tax and the remainder
of the land portions of which have been donated to the local government unit concerned for the construction of such
projects or improvements.
The sale, transfer or other disposition of real property pursuant to RA 6657 (Comprehensive Agrarian Reform Law)
shall be exempt from this tax.
For this purpose, the Register of Deeds of the province or city concerned shall, before registering a deed, require the
presentation of the evidence of payment of this tax.
The Assessor shall likewise make the same requirement before cancelling an old tax declaration and issuing a new one
in place thereof.
It shall be the duty of the seller, donor, transferor, executor, or administrator to pay the tax herein imposed within
sixty (60) days from the date of the execution of the deed or from the date of the decedent’s death.
In general, the requirements for the payment of transfer tax are the following:
1. Certificate Authorizing Registration (CAR) from the Bureau of Internal Revenue;
2. Realty tax clearance from the Treasurer’s Office; and
3. Official receipt for payment of documentary stamp tax paid to the Bureau of Internal Revenue.
3. Application of payment of real property taxes. – The payments shall first be applied to prior years’
delinquencies, interests, and penalties, if any, and only after said delinquencies are settled may tax payments be
credited for the current period.
5. Interests on unpaid real property tax. – In case of failure to pay the real property tax (basic and special
levies) upon the expirations of the periods for payment, or when due, as the case maybe, shall subject the
taxpayer of interest at the rate of two percent (2%) per month on the unpaid amount or a fraction thereof, until
the delinquent tax shall have been fully paid, but not to exceed thirty-six (36) months.
Condonation or reduction of real property tax and interest maybe done either thru an ordinance, or by the President
of the Philippines.
a. Condonation/reduction thru an ordinance. – In case of general failure of crops or substantial decrease in the
price of agricultural of agribased products, or calamity, the saggunian concerned, by ordinance passed prior to the
first (1st) day of January of any year and upon recommendation of the Local Disaster Coordinating Council (LDCC),
may condone or reduce, wholly or partially, the taxes and interest thereon for the succeeding year or years in the
municipality affected by the calamity.
b. Condonation/reduction by the President. – The President of the Philippines may, when public interest to
requires, condone or reduce the real property tax and interest for any year in any province or city or a
municipality within the Metropolitan Manila Area.
In case of fraud or intent to evade payment of the tax, such action may be instituted for the collection of the same
within ten (10) years from the discovery of such fraud or intent to evade payment.
The running of the prescriptive period within which to collect shall be suspended for the time during which:
1. The local treasurer is legally prevented from collecting the tax;
2. The owner of the property or the person having legal interest therein requests for reinvestigation and executes a
waiver in writing;
3. The owner of the property or the person having legal interest therein is out of the country or otherwise cannot be
located.
The city of municipal treasurer may deputize the barangay treasurer to collect all taxes on real property located in the
barangay.
Provided, That the barangay treasurer is properly bonded for the purpose which shall be paid by the city or municipal
government concerned.
2. Municipalities
a. Fees and charges on business and occupation and, except as reserved to the province in Section 139 of the LGC, on
the practice of any profession or calling, commensurate with the cost of regulation, inspection and licensing at rates to
be prescribed by the Sangguniang Bayan.
b. Fees for the sealing and licensing of weights and measures at rates to be prescribed by the Sangguniang Bayan.
c. Rentals, fees or charges on the use of municipal waters at rates prescribed by the Sangguniang Bayan.
3. Cities
Fees and charges imposed by the province or municipality.
4. Barangays
Fees and charges:
1. For services rendered in connection with the regulation or the use of barangay-owned properties or service
facilities.
2. For the issuance of a barangay clearance for any business or activity located or conducted within the territorial
jurisdiction of the barangay before the city or municipality may issue a license or permit to said business or activity.
3. On commercial breeding of fighting cocks, cockfights and cockpits.
4. On places of recreation which charge admission fees.
5. On billboards, signboards, neon signs, and outdoor advertisement.
PROBLEMS
Problem 1:Local Tax Ordinances
Case 1: The City Mayor of Manila issued an administrative order requiring all retailers of beer to pay 1% of their sale
of such product. Is the administrative order enforceable?
a. The administrative order is enforceable
b. The administrative order is may or may not enforceable
c. Either A or B
d. The administrative order is not enforceable because such is not covered by any city tax ordinance
Case 2: Supposing that in the above case, the order was supported with tax ordinance passed by the city council,
except that, no public hearing was conducted pertaining to the said tax ordinance. Is the order enforceable?
a. The tax ordinance is still unenforceable
b. The tax ordinance is enforceable
c. Either A or B
d. The tax ordinance is still unenforceable because of the lack of required public hearing
Case 3: The city council passed a tax ordinance that is vague as to its authority to impose such tax. Can the affected
taxpayer raise the defense that the vagueness of the tax ordinance should be construed in favor of the taxpayer?
a. Yes, the issue involve is the tax liability of the taxpayer.
b. No, because the issue does not involve the tax liability of the taxpayer, but the authority of the enforcing
government unit. The ambiguity of power to tax is to be resolved liberally in favor of the taxing authority.
c. Either A or B
d. Neither A nor B
Case 4: The tax ordinance passed by the city council is being contested by the taxpayer claiming his exemption from
the tax. Can the affected taxpayer raise the defense that doubts on the liability of the taxpayer under the tax
ordinance should be construed strictly against the taxing authority?
a. No, because with regards to exemption, the burden of proof must be on the part of the tax authority.
b. No, because with regards to exemption, the burden of proof must be on the part of the taxpayer.
c. Either A or B
d. Neither A nor B
Case 5: A local tax ordinance was enacted in the local Sanggunian after public hearing. Could it be enforced even
without approval of the local executive?
a. No. Although appropriately exercised by the Sanggunian (legislative branch), it will still need the approval of the
mayor or provincial governor (executive branch)
b. Yes. Appropriately exercised by the Sanggunian (legislative branch), no need the approval of the mayor or
provincial governor (executive branch)
c. Either A or B
d. Neither A nor B
6. Mr. Compton sells shoes in Makati through a retail store. He pays the VAT on his gross sales to the BIR and the
municipal license tax based on the same gross sales to the city of Makati. He comes to you for advice because he
thinks he is being subject to double taxation. What advice will you give him?
a. Yes, there is double taxation and it is progressive.
b. The City of Makati has no taxing power.
c. Yes, there is double taxation and this is illegal in the Philippines.
d. Double taxation is allowed where one tax is imposed by the National Government and the other by local
government.
7. The Municipality of Icawat passed an ordinance imposing tax on installation managers. At that time, there was only
one installation manager in the municipality. Thus, only he would be liable for the tax. Is the law constitutional?
a. It is unconstitutional because it clearly discriminate against this person.
b. It is unconstitutional for lack of legal basis.
c. It is constitutional as it applies to all persons in that class.
d. It is constitutional because the power to tax is the power to destroy.
8. Philtele is a power generation and distribution company operating mainly in the City of Makati. It owns electric
poles which it also rents out to other companies that use poles, such as telephone and cable companies. Makati
passed an ordinance imposing a fee equivalent to 1% of the annual rental for these poles. Philete questioned the
9. Where the National Government elects to tax a particular area, it impliedly withholds from the local government the
delegated power to tax the same field. This doctrine is known as?
a. Preemption
b. Separatedness of Department of Government
c. Exclusive prerogative doctrine
d. Tax Jurisdiction
10. 1st statement: Local tax relief or exemption is granted in cases of natural calamities, civil disturbances, general
failure or crops , or adverse economic conditions which is substantially decreases prices.
2nd statement: Local tax incentives are granted only to new investments in the locality.
a. True, False
b. True, True
c. False. True
d. False, False
11. You were preparing your income tax return and had some doubt on whether a commission you earned should be
declared for the current year for the succeeding year. You sought the opinion of a lawyer who advised you to report
the commission in the succeeding year. You heeded the lawyer's advice and reported the commission in the
succeeding year. The lawyer's advice turned out to be wrong. In your petition against the BIR assessment, the court
ruled against you. Are you guilty of fraud?
a. Not guilty of fraud because you simply followed lawyer's advice.
b. Guilty of fraud because it was deliberate.
c. Not guilty. It is lawyer's fault.
d. Guilty for failure to consult an accountant.
Mang Antoy sold his land located in Bulacan to Mang Batak, who intends to use the land as site of his ABC Factory.
Mang Batak paid P500,000 to Mang Antoy for the land which has a fair market value of P700,000 at the date of sale.
How much would be the tax on the transfer of ownership?
How much would be Mr. Pablisher local tax payable to Provincial Treasurer?
Required: How much would be the local tax payable to the provincial treasurer by ABC Partnership?
Required: Using a 365 days in a year, how much is his maximum local tax as a peddler in La Trinidad?
Case 1: W is a wholesaler. For the preceding year, his gross sales amounted to P1,500,000 of which P200,000 were
sold to R, a retailer. R’s gross sales for the same period amounted to P600,000, of which P40% were on account. R
sales are 120% of cost.
Required:
1. How much would be the municipal tax to be collected from W?
2. How much would be the municipal tax to be collected from R?
Case 2: Supposing that the other retailer of Mr. W is Mr. JR. Mr. JR’s sales for the preceding year amounted to
P25,000, how much would be the municipal business tax of Mr. JR?
Case 1: Tax Ordinance 2000-001 of Baguio is imposing ¾ of 1% of the total consideration involved in the transfer of
real property ownership. Is the above imposition a violation of the LGC?
Case 2: The Tax ordinance of Baguio imposes a minimum annual tax of P247.50 to manufacturers, importers or
producers of any article of commerce. Is the above imposition a violation of the LGC?
Case 1: For the given year 20X1 the following information from business:
Gross Receipts from Business Php900,000
Rental Income 650,000
Operational Expenses 400,000
Real properties 17,000,000
Case 2: Juan Dela Cruz has a business with total assets of P500,000 and total receipts of P200,000 for 200A. How
much community tax he has to pay if he will pay it on April 30, 200B?
Mr. Avanza is a CPA-Lawyer who practices both professions. If the professional tax in the place where he is practicing
his profession is P150 per profession, how much professional tax is he required to pay?
Case 1: Maricel Pilar is the owner of a 1,200 sq. meter-residential lot which remains unimproved and idle. The
current fair market value of the land is P3,000,000. The property is located in the province. Assume the that the fair
value is equal to assessed value.
How much is the total real property tax including special additional tax?
Case 2:
Actual use of property: Residential
Location: City within Metro Manila
FMV per assessor’s officer (based on Tax Declaration):
Assuming the annual business permit fee in Quezon City is P500 per business establishment.
If Mr. Aris is a single proprietorship business (not falling under those enumerated in Section 143 (a-g) with annual
sales of P9,000,000, how much would be his total fees and taxes to be issued with business permit?
Case 2. A company engaged in the manufacturing business has the following offices:
a. Principal Office in Quezon City
b. Factory in Muntinlupa
c. Plantation in Sta Rosa Laguna
All sales are recorded in Quezon City. The local business tax of the company shall be paid as follows:
a. 70% in Quezon City, 30% in Sta Rosa, 0% in Muntinlupa
b. 100% in Quezon City, 0% in Sta Rosa, 0% in Muntinlupa
c. 30% in Quezon City, 28% (40% of 70%) in Sta Rosa and 42% (60% of 70%) in Muntinlupa
d. 30% in Quezon City, 42% (60% of 70%) in Sta Rosa and 28% (40% of 70%) in Muntinlupa
Case 3. Zion's Shoes head office is located on Ortigas, Pasig City. However, its manufacturing plant is in Taytay Rizal.
As the company accountant you were asked by Zion where to pay the 2% Business Permits. Zion's gross receipts is
P10 million.
a. Pay P200,000 Taytay, Rizal.
b. Pay P200,000 at Ortigas,Pasig City.
c. Pay P60,000 at Ortigas, Pasig City and, P140,000 at Taytay, Rizal.
d. Pay P140,000 at Ortigas, Pasig City P60,000 at Taytay, Rizal.