UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA

CALAMBA CAMPUS, BRGY. PACIANO RIZAL,

CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
LOCAL GOVERNMENT TAXES The power to impose a tax fee or charge or to generate revenue under the
LGC shall be exercised by the Sanggunian of the LGU concerned through an
Power to Levy Other Taxes Fees or Charges appropriate ordinance (Sec.132 LGC)

LGU’s may exercise the power to levy taxes fees or charges on any base or PROVINCES
subject not otherwise specifically enumerated herein or taxed under the
provisions of the National Internal Revenue Code as amended or other The following are the local tax that that may be imposed by provinces;
applicable laws
1. Tax on Transfer of Real property Ownership
Provided that the taxes fees or charges shall not be unjust excessive
oppressive confiscatory or contrary to declared national policy Tax imposed on The sale donation barter or on any other mode
of transferring ownership or title of real
Provided further that the ordinance levying such taxes fees or charges shall property
not be enacted without any prior public hearing conducted for the purpose Tax base The total consideration involved in the
(Sec.186 LGC) acquisition of the property or of the fair
market value thereof whichever is higher
Notes; Tax rate Not more than fifty percent (50%) of one
percent (1%)
 To aforementioned power includes the power to levy fess that Time of payment It shall be the duty of the seller donor
are regulatory in nature transferor executor or administrator to pay the
 Such power also includes the power to levy charges which are tax herein imposed within sixty (60) days from
pecuniary liabilities such as rents or fees against persons or the date of the execution of the deed or from
property. An example would be the imposition of “goodwill the date of the decedent’s death (Sec.135b
fees” upon stall holders at the municipal public market LGU)
 The requirements made mandatory by law fr the levy of such Exemption The sale transfer or other disposition of real
taxes fees or charges must be observed. Otherwise such levy property pursuant to R.A. no. 6657 the
“Comprehensive Agrarian Reform Law of 1988)
shall be void

2. Tax on Business of Printing and publication

Fundamental Principles in Local Taxation Taxed imposed to The business persons engaged in the
printing and or publication of books cards
The following fundamental principles shall govern the exercise of the posters leaflets handbills certificate
taxing and other revenue raising powers of LGUs receipts pamphlets and other of similar
nature
a) Taxation shall be uniform in each LGU Tax based and tax rate 1) In the case of a newly started business
b) Taxes fees charges and other impositions shall the tax shall not exceed one twentieth
1) Be equitable and based as far as practicable on the taxpayer’s (1/20) of one percent (1%) of the
ability to pay capital investment
2) Be levied and collected only for public purposes 2) In the succeeding calendar year
3) Not be unjust excessive oppressive or confiscatory regardless of when the business
started to operate the tax shall not
4) Not be contrary to law public policy national economic policy or
exceed fifty percent (50%) of one
in the restraint of trade
percent (1%) of the gross annual
receipts for the preceding calendar
c) The collection of local taxes fees charges and other impositions shall year or any fraction thereof
in no case be left to any private person Exemption The receipts from the printing and or
d) The revenue collected pursuant to the provisions of the Local publishing of books or other reading
Government code of 1991 (LGU) shall inure solely to the benefit of and materials prescribed by the
be subject to the disposition by the LGU levying the tax fee charge or Department of Education culture and
other imposition unless otherwise specifically provided in the LGC Sports as school texts or references
e) Each LGU shall as far as practicable evolve a progressive system of
taxation and 3. Franchise Tax
f) Territoriality an LGU cannot ordinarily tax property or persons unless
the situs thereof is within its territory Tax imposed on Business enjoying a franchise
Tax base and tax rate a) In the case of a newly started business.
Taxing authority The tax shall not exceed one- twentieth
(1/20) of one percent (1%) of the
capital investment
b) In the succeeding calendar year
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
regardless of when the business started examination conducted by the Professional Regulation
to operate the tax shall not exceed fifty Commission (PRC) for example a lawyer who is also a Certified
percent (50%) of one percent (1%) of Public Accountant (CPA) must pay the professional tax on
the gross annual receipts for the lawyers and that fixed for CPAs if he is to practice both
preceding calendar year or any fraction professions (Art.228(f) LGC IRR)
thereof f) Before accepting payment of the professional tax for the
current year the provincial treasurer or his duly authorized
4. Tax on Sand Gravel and Other Quarry Resources representative shall require from such professionals their
current annual registration cards issued by competent authority
Tax imposed on Ordinary stones and sand gravel earth and other (Art.228(f) LGC IRR)
quarry resources as defined under Tax code g) The PRC shall likewise require proof of payment of the
extracted from professional tax before registration of professionals of their
a) Public lands or licenses (Art.228(f) LGC IRR)
b) The beds of seas lakes rivers streams
6. Amusement tax
creeks and other public waters
Within the territorial jurisdiction of the Tax imposed on Proprietors lessees or operators of (a) theatres,
province (b) cinemas (c) concert halls (d) circuses (e)
Tax base Fair market value in the locality boxing stadia and (f) other places of amusement
Tax rate Not more than ten percent (10%) Tax base Gross receipts from admission fees
Tax rate Not more than ten percent (10%)
5. Professional tax Exemption Operas, concerts, dramas recitals painting and art
exhibitions flower shows musical programs
Tax imposed Each person engaged in the exercise or literary and oratorical presentations shall be
practice of his profession requiring exempt
government examination Exception; Pop rock or similar concerts shall not
Tax Such amount and reasonable classification as be exempt from amusement tax
the sangguniang panglalawigan may determine
but shall in no case exceed three Hundred
Note: a percentage tax of 15% is imposed on the gross receipts from
Pesos (P300)
professional basketball games under section 125 of the Tax Code.
Place of payment Province where taxpayer practices his
This precludes the province from imposing a local tax there on
profession or where he maintains his principal
office in case he practices his profession in pursuant to Section 133 (i) of the LGC
several places 7. Annual Fixed Tax for Every Delivery Truck or Van of Manufacturers or
Time of Payment Annually on or before the thirty first (31 st) day producers Wholesalers of Dealers or Retailers in Certain Products
of January
Exception Professional exclusively employed in the Tax imposed on Every truck van or any vehicle used by
government manufacturers producers wholesalers dealers or
retailers in the delivery or distribution of distilled
spirits fermented liquors soft Drinks cigars and
Notes cigarettes and other products to sales outlets or
a) Such person who has paid the corresponding professional tax consumers whether directly or indirectly within
shall be entitled to practice his professional in any past of the the province
Philippines without being subjected to any other national or Tax An amount not exceeding Five Hundred Pesos
local tax license or fee for the practice of such profession (Sec. (P500)
139(b) LGC)
b) A line of profession does not because exempt even if conducted
Note: the manufacturers’ producers’ wholesaler’s dealers and retailers
with some other profession for which the tax has been paid
referred to above shall be exempt from the tax on peddlers prescribed
(Sec.139 (d) LGC)
in Section 143g of the (LGC)
c) Any individual or corporation employing a person subject to
professional tax shall required payment by that person of the MUNICIPALITIES
tax on his profession before employment and annually
thereafter (Sec.139c LGC) The following may be imposed by municipalities
d) Any person subject to the professional tax shall write in deeds
receipts prescriptions reports books of account plans and
design surveys and maps as the case may be the number of the 1. Tax on Business
official receipt issued to him (Sec.13(e) LGC a) On manufacturers, assemblers, repackers, processors, brewers,
e) The professionals subject to this professional tax are only those distillers, rectifier and compounders of liquior distilled spirits
who has passes the bar examinations or any board or other and wines or manufacturers of any article of commerce of
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
whatever kind or nature in accordance with the schedule found 1) The rate of 2% per annum shall be imposed in sales not
in Section 143(a) of the LGC exceeding P400,000. The rate of 1% per annum shall be
imposed on sales in excess of the first P400,000 (art.232
The amount of tax per annum shall be a fixed amount that (d) LGC IRR)
increases with the taxpayer’s domestic gross sales or receipts 2) The barangays shall have exclusive power to levy taxes as
for the preceding calendar year. However which such gross provided in section 152 of the LGC on gross sales or
sales or receipts for the preceding calendar year. However receipts of the preceding calendar year of fifty thousand
when such gross sales or receipts for the preceding calendar pesos (P50,000) or less in the case of barangays in cities.
year. However when such gross sales or receipts is P6.5 million And thirty thousand pesos (P30,000) or less in the case of
or more the tax shall equal the sales/receipts multiplied by a tax barangays in municipalities (sec.143 (d) LGC
rate not exceeding 37.5% of 1.0%)
e) On contractors and other independent contractors in
b) On wholesalers distributors or dealers in any article in any accordance with the schedule provided in Section 143 (e) of the
article of commerce of whatever kind or nature in accordance LGC
with the schedule found in Section 143(b) of the LGC The amount of tax per annum shall be a fixed amount that
increases with the taxpayer’s gross sales or receipts for the
The amount of tax per annum shall be a fixed amount that preceding calendar year. However when such gross sales or
increases with the taxpayer’s gross sales or receipts for the receipts is P2 million or more the tax shall equal the
preceding calendar year. However when such gross sales or sales/receipts multiplied by a tax rate not exceeding 50% of 1%
receipts is P2 million or more the tax shall equal the
sales/receipts multiply by a tax rate not exceeding 50% of 1% f) On banks and other financial institutions at a rate not exceeding
fifty percent (50%) of one percent (1%) on the gross receipts of
Note: the businesses in paragraph (a) above shall no longer be the preceding calendar year derived from interest commissions
subject to the tax on wholesalers, distributors or dealers and discounts from lending activities income from financial
provided in paragraph (b) leasing dividends rentals on property and profit from exchange
c) On exporters and on manufacturers millers producers or sale of property and insurance premium
wholesalers distributors dealers or retailers of essential
commodities enumerated hereunder at a rate not exceeding Note All other income and receipts of banks and financial
one half (1/2) of the rates prescribed under subsection (a) (b) institutions not otherwise enumerated above shall be excluded
and (d) of section 143 of the LGC from the taxing authority of the LGU concerned (Art.232 (g) LGC
1) Rice and corn IRR)
2) Wheat or cassava flour meat dairy products locally
manufactured processed or preserved food sugar salt and g) On peddlers engaged in the sale of any merchandise or article
other agricultural marine and fresh water products of commerce at a rate not exceeding Fifty Pesos (P50) per
whether in their original state or not peddler annually
3) Cooking oil and cooking gas
4) Laundry soap detergents and medicine Note: Delivery trucks vans or vehicles used by manufacturers
5) Agricultural implements equipment and post harvest producers wholesalers or retailers enumerated in Section 141
facilities fertilizers pesticides insecticide herbicides and of the LGC shall be exempt from the peddler’s tax
other farm inputs
6) Poultry feeds and other animal feeds h) On any business not otherwise specified in the preceding
7) School supplies and paragraphs which the sanggunian concerned may deem proper
8) Cement (Sec.143 (c) LGC to tax. Provided that on may business subject to the exercise
tax VAT or OPT under the Tax Code as amended the rate of tax
Note for purposes of Section 143 of the LGC the term exporters
shall not exceed two percent (2%) of gross sales or receipts of
shall refer to those who are principally engaged in the business
the preceding calendar year
of exporting goods and merchandise as well as manufacturers
and producers whose goods or products are both sold
The sanggunian concerned may prescribe a schedule of
domestically or abroad. The amount of export sales shall be
graduated tax rates but in no case to exceed the rates
excluded from the total sales and shall be subject to the rates
prescribed in the LGC
not exceeding ½ of the rates prescribed in paragraphs (a) (b)
and (d) of section 143 of the LGU (Art.232 (c) LGC IRR)
Note In line with existing national policy any business engaged
d) On retailers in accordance with the following schedule in the production manufacture refining distribution or sale of oil
provided in Section 143 (d) of the LGC gasoline and other petroleum products shall not be subject to
any local tax imposed under Section 143 (h) of the LGC (Art.232
(h) LGC IRR)
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
Notes warehouse elsewhere shall record the sale in the
branch or sales outlet or warehouse making the sale
i. Passive income of a holding company particularly interest or transaction and the tax thereon shall accrue and
rental and dividend income as well as the gain on the sale shall be paid to the municipality where such branch
of fixed assets do not constitute “gross receipts” that are or sales outlet or warehouse is located
subject to local business tax (City of Makati v. Metro
Pacific Investments Corporation CTA AC No.143 July 20, In cases where there is no such branch or sales
2016) outlet or warehouse in the city or municipality
where the sale or transaction is made the sale shall
ii. Rates of Tax Within the Metropolitan Manila Area – the be duly recorded in the principal office along with
municipalities within the Metropolitan Manila Area the sales made by said principal office and the taxes
(MMA) may levy taxes on business enumerated in Section due shall accrue and shall be paid to such city or
143 of the LGC at rates which shall not exceed by Fifty municipality where said principal office is located
Percent (50%) in the maximum rates prescribed for said (Sec. 150(a) LGC Art.243 (b)(1) LGC IRR)
business under the same section of the LGC ?(Sec.144 LGC
Art. 236(a), LGC IRR) b. Where the tax payer has a factory project office
plant or plantation and all sales are recorded in the
iii. Retirement of Business – a business subject to tax on principal office the following sales allocation shall
business pursuant to Section 143 of the LGC shall upon apply
termination thereof submit a sworn statement of its gross 1) Thirty percent (30%) of all sales recorded in the
sales or receipts for the current year. If it is found that the principal office shall be taxable by the city or
retirement or termination of the business is legitimate municipality where the principal office is
and tax paid during the year be less than the tax due on located and
said gross sales or receipts of the current year the 2) Seventy percent (70%) of all sales recorded in
difference shall be paid before the business is considered the principal office shall be taxable by the city
officially retired or terminated (Sec. 145 LGC Art. 241(b) or municipality where the factory project office
LGC IRR) plant or plantation is located

iv. Payment of Business Tax – the taxes imposed under c. In case of a plantation located at a place other than
Section 143 of the LGC shall be payable for every separate the place where the factory is located said seventy
of distinct establishment or place where business subject percent (70%) mentioned in subparagraph (b) of
to the tax is conducted. One line of business does not subsection (2) above shall be divided as follows
become exempt by being conducted with some other
business for which such tax has been paid. The tax on a 1) Sixty percent (60%) to the city or municipality
business must be paid by the person conducting the same where the factory is located and
2) Forty percent (40%) to the city or municipality
a. In cases where a person conducts or operates two where the plantation is located
(2) or more of the businesses mentioned in Section
143 of this Code which are subject to the same rate d. In cases where a manufacturer assembler producer
of tax the tax shall be computed on the combine exporter or contractor has two (2) or more factories
total gross sales or receipts of the said two (2) or project offices plants or plantations located in
more related business different localities the seventy percent (70%) sales
b. In cases where a person conducts or operates two allocation mentioned in subparagraph (b) of
(2) or more businesses mentioned in Section 143 of subsection (2) above shall be prorated among the
this Code which are subject to different rates of tax localities where the factories project office plants
the gross sales or receipts of each business shall be and plantations are located in proportion to their
separately reported for the purpose of computing respective volumes of production during the period
the tax due from each business (Sec.146 LGC) for which tax is due (Sec. 150(d) LGC)

v. Situs of the Tax In the case of project offices of service and other
independent contractors the term “production” shall
refer to the cost of projects actually undertaken
a. For purposes of collection of the business taxes
during the tax period (Art. 243 (b) (5) LGC IRR)
under Section 143 of the LGC the business
maintaining or operating a branch or sales outlet or
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
2. Fees and Charges accrue to them and shall be distributed in accordance with the
a. Permits/ Licenses provisions of the LGC (Sec.151 LCG)
The municipality may impose and collect such reasonable fees
and charges on business and occupation and except as reserved 2) The city may also levy and collect a percentage tax on any business
to the province in Section 139 of the LGC on the practice of any not otherwise specified under paragraph (a) to (g) of Section 143 of
profession or calling commensurate with the cost of regulation the LGC ar rates not exceeding three percent (3%) of the gross sales
inspection and licensing before any person may engage in such or receipts of the preceding calendar year
business or occupation or practice such profession or calling 3) In addition to the annual fixed tax imposed under Section 141 of the
LGC cities may also collect from the same manufacturers producers
wholesalers retailers and dealers using route trucks a major’s permit
Provided that such fees or charges shall only be commensurate fee which shall be imposed in a local tax ordinance pursuant to
to the cost of issuing the license or permit and the expenses Section 147 in relation to Section 132 of the LGC
incurred in the conduct of the necessary inspection or
surveillance BARANGAYS

No such fee or charge shall be based on capital investment or a. Taxes of Stores/Retailers

gross sales or receipts of the person or business liable therefore
(Art.233 LGC IRR) Tax impose on Stores or retailers with fixed business
establishments with gross sales or receipts of the
preceding calendar year of
Note the conduct or operation of 2 or more related businesses
 Not more than P50,000 for stores in barangay
under art. 143 of the LGC by any one person natural or juridical
within a city
shall require the issuance of a separate permit or license to  Not more than P30,000 for stories in a
each business barangay within a municipality
Tax base Gross sales or receipts
b. Fees for Sealing and Licensing of Weights and Measures Tax rate Not more than one percent (1%) Sec.152(a) LGC
The municipality may levy fees for the sealing and licensing of
weights and measures at such reasonable rates as shall be
b. Service or Charges
prescribed by the sangguniang bayan
Barangays may collect reasonable fees or charges for services
rendered din connection with the regulation or the use of barangay
c. Fishery Rentals Fees and Charges
owned properties or service facilities such as palay, corpra or tobacco
Municipalities shall have the exclusive authority to grant fishery
dryers (Sec.152 (b) LGC)
privileges in the municipal waters and impose rentals fees or
charges there for in accordance with the provisions of Section
149 of the LGC c. Barangay Clearance
No city or municipality may issue any license or permit for any
business or activity unless a clearance is first obtained from the
Additional Taxing Power of Municipalities within the Metropolitan Manila barangay where such business or activity is located or conducted
Area (MMA)
For such clearance the sangguniang barangay may impose a
1) Except as otherwise provided in the LGC the city may levy the taxes
reasonable fee
fees and charges which the province or municipality may impose
The application for clearance shall be acted upon within seven (7)
The rates of taxes that the city may levy may exceed the maximum
working days from the filing thereof. In the event that the clearance
rates allowed for the province or municipality by not more than fifty
is not issued within the said period the city or municipality may issue
percent (50%) except the rates of professional and amusement taxes
the said license or permit (Sec.152(c) LGC)
(Sec.151 LGC)
d. Other Fees and Charges
Note the rates of the following taxes shall be uniform for the city and The barangay may levy reasonable fees and charges
the province 1) On commercial breeding of fighting cocks cockfighting and
a. Professional tax which shall not exceed Three hundred Pesos cockpits (Sec.152 (d)(1 )LGC)
(P300) and 2) On places of recreation which charges admission fees (Sec.152
b. Amusement tax on paid admission the rate of which shall not (d)(2) LGC)
be more than ten percent (10%) of the gross receipts from 3) On billboards signboards neon signs and outdoor
admission fees advertisements at rates not exceeding the rates found in
Section 240 (d) (4) of the Implementing Rules
Provided however that the taxes fees and charges levied and
collected by highly urbanized and independent component cities shall COMMON REVENUE RAISING POWERS
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
The following revenue raising powers are available to all LGUs c) An individual who owns real property with an aggregate
assessed value of One Thousand Pesos (P1,000) or more or’
1) Service Fees and Charges d) An individual who is required by Law to file an income tax
LGU’s may impose and collect such reasonable fees and charges for return (Sec.157 LGC)
services rendered (Sec.153 LGC)

Such fees and charges must be in an amount reasonably

commensurate to the service rendered by the LGU Rate of Community Tax Payable by Individuals

1) The rate of community tax that may be levied and collected

Provided that no service charge shall be based on capital investments
from said individuals shall be
or gross sales or receipts of the person or business liable therefore
a) An annual (basis) community tax of Five Pesos (P5) plus
(Art.244 (a) LGC iRR)
b) An annual additions; tax of one peso (P1) for every One
Thousand Pesos (P1,000) of income regardless of whether
2) Public Utility charges
from business exercise of profession of from property
LGU’s may fix the rates for the operation of public utilities owned
which in no case shall exceed five Thousand Pesos
operated and maintained by them within their jurisdiction (Sec.154
(P5,000)\
LGC)

2) In the case of husband and wife each of them shall be liable to

The rate shall be fixed by the sanggunian concerned (Art.244(b) LGC
pay the basic tax of P5.00 but the additional tax impossible on
IRR)
the husband and wife shall be P1.00 for every P1,000 of
income from the total property owned by them and/or the
3) Toll Fees or Charges
total gross receipts or earnings derived by them (Sec.157 LGC
LGU’s may prescribe the terms and conditions through an
Art,246(a) and (b) LGC IRR)
appropriate ordinance enacted by thier sanggunians for the use of
any public road pier or wharf waterway bridge or ferry or Community Tax of juridical Persons
telecommunication system, LGU’s thru ordinances may also fix
reasonable tool fees and service charges for the use thereof Juridical Persons Liable to the Payment of Community Tax

Every corporation no matter how created or organized whether domestic

Provided that no such toll fees or charges shall be collected from
or resident foreign engaged in or doing business in the Philippines shall be
a) Officers and enlisted men of the Armed Force of the Philippines
liable to pay the community tax (Sec.158 LGC)
and members of the Philippine National Police on mission
b) Post office personal delivering mail Note: a cooperative enjoying exemption from local taxes including the real
c) Persons who are physically handicapped and property tax is still required to secure a major’s permit and the Community
d) Disabled citizen who are six fivb (65) years old Tax Certificate (BLGF Opinion No.26 – 2016 September 16, 2016)

When the public safety and welfare so acquire the sanggunian Rate of Community Tax Payable by Juridical Persons
concerned may discontinue the collection of the toils and charges ads
therefore the said facility shall be free and open for public use (155 1. An annual community tax of Five Hundred Pesos (P500) plus
LGC Art.244(b) LGC IRR) 2. An annual additional tax which in no case shall exceed Ten Thousand
Pesos (P10,000) in accordance with the following schedule
COMMUNITY TAX a. For every five thousand pesos (P5,000) worth of real property in
the Philippines owned by it during the preceding year based on
What LGU can levy a Community Tax?
the valuation used for the payment of real property tax under
Cities or municipalities may levy a community tax in accordance with the existing laws found in the assessment rolls of the city or
provisions of Section 156 to 164 of the LGU (Sec.156 LGC) municipality where the real property is situated – two pesos
(P2) and
Community tax of individual b. For every five thousand pesos (P5,000) of gross receipts or
earnings derived by it from its business in the Philippines during
Individuals liable to the Payment of Community Tax the preceding year – two pesos (P2)

a) Every inhibit ant of the Philippines eighteen (18) years of age Note the dividends received by a corporation from another
or over who has been regularly employed on a wage or salary corporation however shall for the purpose of the additional tax
basis for at least thirty (30) consecutive working days during be considered as part of the gross receipts or earnings of said
any calendar year or corporation (Sec. 158 LGC)
b) An individual who is engaged in business or occupation or
Exemptions from Payment of the community Tax
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
The following are exempt from the community tax however that said barangay treasurer shall be bonded in accordance with
1. Diplomatic and consular representatives and existing laws (Sec. 164(b) LGC
2. Transient visitors when their stay in the Philippines does not exceed
three (3) months (Sec.159 LGC) COLLECTION OF LOCAL TAXES

Place of payment of the Community Tax Tax period and Manner of Payment

The community tax shall be paid in the place of residence of the individual Unless otherwise provided in the LGC the tax period of all local taxes fees
or in the place where the principal office of the juridical entity is located and charges shall be the calendar year
(Sec.160 LGC)
Such taxes fees and charges may be paid in quarterly installments as may
be provided in the tax ordinance (Sec. 165 LGC Art.253 LGC IRR)

Community Tax Certificate Accrual of Tax

A community tax certificate shall b issued to every person or corporation Unless otherwise provided in the LGC all local taxes fees and charges shall
upon payment of the community tax accrue on the first (1st) day of January of each year

A community tax certificate may also be issued to any person or However new taxes fees or charges or changes in the rates thereof shall
corporation not subject to the community tax upon payment of One peso accrue on the first (1 st) day of the quarter next following the Effectivity of
(P1) (Sec. 162 LGC) the ordinance imposing such new levies or rates (Sec.166 LGC)

Presentation of Community Tax Certificate on Certain Occasions Time of Payment

a. When an individual subject to the community tax Unless otherwise provided in the LGC all local taxes fees and charges shall
1) Acknowledge any document before a notary public be paid within the first twenty (20) days of January or of each subsequent
2) Takes the oath of office upon election or appointment to any quarter as the case may be
position in the government service
The sanggunian concerned may for a justifiable reason or cause extend the
3) Receives any license certificate or permit from any public
time for payment of such taxes fees or charges without surcharges or
authority
penalties but only for a period not exceeding six (6) months (Sec.167 LGC)
4) Pays any tax or fee
5) Receives any money from any public fund Penalties
6) Transacts other official business or
7) Receives any salary or wage from any person or corporation Surcharges and Interest on Unpaid Taxes –
with whom such transaction is made or business done or from
whom any salary or wage is received to require such individual the Sanggunian may impose a surcharge not exceeding twenty five
to exhibit the community tax certificate (25%) of the amount of taxes fees or charges not paid on time and an
interest at the rate not exceeding two percent (2%) per month of the
However the presentation of community tax certificate shall not unpaid taxes fees or charges including surcharges until such amount
be required in connection with the registration of a voter is fully paid but in no case shall the total interest on the unpaid
amount of portion thereof exceed thirty six (36) months (Sec.168
b. When through its authorized officers any corporation subject to the LGC)
community tax receives any license certificate or permit from any
Penalties for Violation of Tax Ordinance –
public authority pays any tax or fee receives money from public funds
or transacts other official business it shall be the duty of the public The Sanggunian of an LGU is authorized to prescribe fines and other
official with whom such transaction is made or business done to penalties for the violation of tax ordinances. Such fines shall not be
require such corporation to exhibit the community tax certificate less than One thousand pesos (P1,000) nor shall it be more than five
thousand pesos (P5,000). The penalty of imprisonment shall not be
c. The community tax certificate required in the two preceding less than one (1) month nor shall it be more than six (6) months. Such
paragraphs shall be the one issued for the current year except for the fine or other penalty or both shall be imposed at the discretion of the
period from January until the fifteenth (15 Th) of April each year in court
which case the certificate issued for the preceding year shall suffice
(Sec. 164 LGC) The Sanggunian barangay may prescribe a fine of not less than one
Hundred pesos (P100) nor more than one thousand pesos (P1,000)
Collection of the tax and Distribution of Proceeds (Sec.516 LGC)

The city or municipal treasurer shall deputize the barangay treasurer to Interest on Other Unpaid Revenues –
collect the community tax in their respective jurisdictions; provided
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
Where the amount of any other revenue due an LGU except
voluntary contributions or donations is not paid on the date fixed in 2) Collection
the ordinance or in the contract expressed or implied or upon the Period of Collection
occurrence of the event which has given rise to its collections there Local taxes fees or charges may be collected within five (5) years
shall be collected as part of the amount an interest thereon at the from the date of assessment by administrative or juridicial action.
rate not exceeding two percent (2%) per month from the date it is No such action shall be instituted after the expiration of said period
due until it is paid but in no case shall the total interest on the unpaid (Sec.194(c) LGC)
amount of a portion thereof exceed thirty six (36%) months (Sec.169
LGC) The civil remedies for the collection of local taxes fees or charges and
related surcharges and interest resulting from delinquency shall be
Collection of local Revenue by Treasurer

All local taxes fees and charges shall be collected by the provincial a. By administrative action thru
city municipal or barangay treasurer or their duly authorized deputies i. Distraint of goods chattels or effects and other
personal property of whatever character including
The provincial city or municipal treasurer may designate the stock and other securities debts credits bank
barangay treasurer as his deputy to collect local taxes fees or accounts and interest in and rights to personal
charges. in case a bond is required for the purpose the provincial city property and
or municipal government shall pay the premiums thereon in addition ii. By levy upon real property and interest in or rights to
to the premiums of bond that may be required under the LGC (Sec. real property and
170 LGC) b. By judicial action. The LGU concerned may enforce collection by
civil action in any court of competent jurisdiction. The case shall
be filled by the local treasurer
CIVIL REMEDIES FRO COLLECTION OF REVENUES

Local Government’s Lien’ Either of these remedies or all may be pursued concurrently or
simultaneously at the discretion of the LGU concerned (Sec.174 LGC)
Local taxes fees charges and other revenues constitute a lien, superior to
all lien, charges or encumbrances in favor of any person enforceable by Personal Property Exempt from Distraint or Levy
appropriate administrative or judicial action not only upon any property or
rights therein which may be subject to the lien but also upon property The following properties shall b
used in business occupation practice of profession or calling or exercise of
privilege with respect to which the lien is imposed Exempt from distraint and the levy attachment or execution thereof for
delinquency in the payment of any local tax fee or charge including the
The lien may only be extinguished upon full payment of the delinquent related surcharge and interest
local taxes fees and charges including related surcharged and interest
(Sec.173 LGC) a. Tools and implements necessarily used by the delinquent taxpayer in
his trade or employment
b. One(1) horse cow carabao or other beast of burden such as the
delinquent taxpayer may select and necessarily used by him in his
Civil Remedies ordinarily occupation
c. His necessarily clothing and that of all his family
1) Assessment
d. Household furniture and utensils necessarily for housekeeping and
Local taxes fees or charges shall be assessed within five (5) years
use fo that purpose by the delinquent tax payer such as he may
from the date they become due. No action for the collection of such
select of a value not exceeding ten thousand pesos (P10,000)
taxes fees or charges whether administrative or judicial shall be
e. Provisions including crops actually provided for individual or family
instituted after the expiration of such period (Sec, 194(a) LGC)
use sufficient for four (4) months
f. The professional libraries of doctors engineers lawyers and judges
Note: local taxes accrue on the 1st day of January of each year unless
g. One fishing boat and net not exceeding the total value of Ten
otherwise provided in the LGC. However new taxes fees or charges or
thousand pesos (P10,000) by the lawful use of which a fisherman
changes in the rates thereof accrue on the 1 st days of the quarter
earns his livelihood and
next following the Effectivity of the ordinance imposing such new
h. Any material or article forming part of a house or improvement of
levies or rates (Sec.166 LGC)
any real property (Sec.185 LGC)
Exception to the period of Limitation Suspension of the Running of the Prescriptive Periods
In case of fraud or intent to evade the payment of taxes fees or
charges the same may be assessed within ten (10) years from
discovery of the fraud or intent to evade payment (Sec.194(b) LGC
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
The running of the periods of prescription for assessment and collection of Fundamental Principles
the local taxes fees and charges shall be suspended for the time during
which The appraisal assessment levy and collection of real property tax shall be
guided by the following fundamental principles
1. The treasurer is legally prevented from making the assessment or
collection a. Real property shall be appraised at its current fair market value
2. The tax payer requests for a reinvestigation and executes a waiver in b. Real property shall be classified for assessment purposes on the
writing before expiration of the period within which to assess or basis of its actual use
collected and c. Real property shall be assessed on the basis of a uniform
3. The tax payer is out of the country or otherwise cannot be located classification within each local government unit
(Sec.194(d) LGC) d. The appraisal assessment levy and collection of real property tax
shall not be let to any private person and
TAXPAYER’S REMEDIES e. The appraisal and assessment of real property shall be equitable

1. Protest of Assessment

Municipal corporations That May Levy Real property Taxes

Under Section 232 of the LGC only the following municipal corporations
may levy a real property tax namely
Notes; 1. Ascertain the assessment level of the property
 There is no requirement that the local tax be paid before 2. Multiply the market value by the applicable assessment level to get
the taxpayer can file a protest to contest the assessment the assessed value
 Administrative remedies must first be exhausted before 3. Find the tax rate which corresponds to the class of the property
the taxpayer can seek redress in the RTC 4. Multiply the assessed value by the applicable tax rates

2. Injunction Against the collection of Local Taxes

Injunction against the collection of local taxes is available but only
when the following conditions concur APPRAISAL AND ASSESSMENT
i. Such a suit is not forbidden by law
Appraisal of Real Property
ii. The ground for issuing an injunction is to prevent the collection
of wrongful taxes by a municipality and All real property whether taxable or exempt shall be appraised at the
iii. There is no other adequate remedy to redress the injury to current and fair market value prevailing in the locality where the property
property which would be inflicted by enforcing the payment of is situated
the tax
Declaration of real Property
3. Claims for refund or Tax Credit
 By the owner or Administrator
 By the person Acquiring Real property or making Improvement
Notes;
Thereon or
a. All taxpayers entitled to a refund or tax credit shall file with the
 By the Assessor
local treasurer a claim in writing duly supported by evidence of
payment (e.g official receipts tax clearance and such other Notes
proof evidencing overpayment) within 2 years from payment of
the tax fee or charge 1. The declaration shall be in the form of a sworn statement
b. Exhaustion of administrative remedies is required. No case or declaring the true value of their property whether previously
proceeding shall be entertained in any court without the declared or undeclared taxable or exempt or exempt which
aforementioned claim in writing and after the expiration of 2 shall be the current and fair market value of the property as
years from the date of payment of such tax fee or charge determined by the declarant
c. The tax credit granted a taxpayer shall not be refundable in 2. The local assessor shall declare only real property previously
cash but shall only be applied to future tax obligations of the undeclared for taxation purposes
same taxpayer for the same business
Assessment
Any unpaid balance of the tax credit shall be refunded in cash in Listing of Real Property in the Assessment Rolls
the event the terminates operation of the business involved In every province and city including the municipalities within the
within the locality (Art.286 LGC IRR) Metropolitan Manila Area there shall be prepared and maintained by the
provincial city or municipal assessor an assessment roll wherein shall be
REAL PROPERTY TAXATION
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
listed all real property whether taxable or exempted located within the - Is the percentage applied to the fair market value to determine the
territorial jurisdiction of the LGU concerned taxable value of the property. These shall be set by the sanggunian
concerned but shall not exceed the following
Real property shall be listed valued and assessed in the name of the owner
or administrator or anyone having legal interest in the property On lands
CLASSIFICATION ASSESSMENT LEVELS
Actual Use of Real Property as Basis for Assessment Residential 20%
Agricultural 40%
Real property shall be classified valued and assessed on the basis of its
Commercial 50%
actual use regardless of where located whoever owns it and whoever uses
Industrial 50%
it (Sec.217 LGC). Class of Real Property for Assessment Purposes Mineral 50%
Timberland 20%
For purposes of assessment real property shall be classified as
 Residential
 Agricultural On Buildings and Other Structures
 Industrial  Residential
 Mineral Fair market value over Not over Assessment level
 Timberland or P175,000 0%
 Special P175,000 300,000 10%
300,000 500,000 20%
By the provincial and city assessors including the municipal assessors of the
500,000 750,000 25%
Metropolitan manila Area.
750,000 1,000,000 30%
The cities or municipalities within the Metropolitan Manila Area through 1,000,000 2,000,000 35%
their respective sanggunian shall have the power to classify land as 2,000,000 5,000,000 40%
residential agricultural commercial industrial mineral timberland or special 5,000,000 10,000,000 50%
10,000,000 60%
in accordance with thier zoning ordinances provided such classification is
on the basis of actual use as provided in Section 217 of the LGC (Sec.215
 Agricultural
LGC Art.306 LGC IRR)
Fair market value over Not over Assessment level
Appraisal and Assessment of Machinery P300,000 25%
a) The fair market value of a brand new machinery shall be the P300,000 500,000 30%
acquisition costs (including the cost of transportation handling and 500,000 750,000 35%
installation). In all other cases the fair value shall be determined by 750,000 1,000,000 40%
dividing the remaining economic life of the machinery by its 1,000,000 2,000,000 45%
estimated economic life and multiplied by the replacement or 2,000,000 50%
reproduction cost
b) If the machinery is imported the acquisition cost includes freight  Commercial
/Industrial
insurance bank and other charges brokerage arrastre and handling
Market value over Not over Assessment level
duties and taxes plus cost of inland transportation handling and
P300,000 30%
installation charges at the present site. The cost in foreign currency of
P300,000 500,000 35%
imported machinery shall be converted to peso cost on the basis of
500,000 750,000 40%
foreign currency exchange rate as fixed by the Central Bank (Sec.224
750,000 1,000,000 50%
LGC Art.315 LGC IRR)
1,000,000 2,000,000 60%
Depreciation Allowance for Machinery 2,000,000 5,000,000 70%
For purposes of assessment a depreciation allowance shall be made for 5,000,000 10,000,000 75%
10,000,000 80%
machinery at a rate not exceeding five percent (5%) of its original cost or
its replacement or reproduction cost as the case maybe for each year of
 Timberland
use
Fair market value over Not over Assessment level
Provided however that the remaining value for all kinds of machinery shall P300,000 45%
be fixed at not less than twenty percent (20%) of such original replacement P300,000 500,000 50%
or reproduction cost for so long as the machinery is useful and in operation 500,000 750,000 55%
(Sec.225 LGC) 750,000 1,000,000 60%
1,000,000 2,000,000 65%
Assessment levels 2,000,000 70%
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
The assessment levels to be applied to the fair market value of real five percent (5%) of the assessed value of the property which shall be
property to determine its assessed value shall be fixed by ordinances in addition to the basic real property tax (Sec. 236 LGC)
of the sanggunian panlalawigan sangguniang panlunsod or
sangguniang bayan of a municipality within the Metropolitan Manila For purposes of real property taxation idle land shall include the
Area following
 Agricultural lands more than one (1) hectare area suitable for
Exemptions from Real Property Tax cultivation dairying inland fishery and other agricultural uses
one half (1/2) of which remain uncultivated or unimproved by
The following are exempted from payment of the real property tax
the owner of the property or person having legal interest
 Real property owned by the Republic of the Philippines or any
therein
of its political subdivisions except when the beneficial use
thereof has been granted for consideration or otherwise to a
Agricultural lands planted to permanent or perennial crops with
taxable person
at least fifty (50) trees to a hectare shall not be considered idle
 Charitable institutions churches parsonages or convents
lands. Lands actually used for grazing purposes shall likewise
appurtenant thereto improvements actually directly and
not be considered idle lands
exclusively used for religious charitable or educational purposes
 All machineries and equipment that are actually directly and
exclusively used by local water districts and GOCCs engaged in  Lands other than agricultural located in a city or municipality
the supply and distribution of water and/or generation and more than one thousand (1,000) square meter in are one-half
transmission of electric power (1/2) of which remain unutilized or unimproved by the owner of
 All real property owned by duly registered cooperatives as the property or person having legal interest therein
provided for under R.A No.6938 and
However a province or city or municipality within the Metropolitan
 On machineries Manila Area may exempt idle lands from the additional levy by
CLASS ASSESSMENT LEVELS reason of force majeure civil disturbance natural calamity or any
Agricultural 40% cause or circumstance which physically or legally prevents the owner
Residential 50% of the property or person having legal interest therein from
Commercial 80% improving utilizing or cultivating the same (Sec.238 LGC)
Industrial 80%
On special classes assessment level for all lands buildings c) Special levy (Special assessment) by Local Government Units
machineries and other improvements A province city of municipality may impose a special levy on the lands
ACTUAL USE ASSESSMENT LEVELS comprised within its territorial jurisdiction specially benefited by
Cultural 15% public works projects or improvements funded by the LGU concerned
Scientific 15%
Hospital 15% Provided however that
Local water districts 10%  The special levy shall not exceed sixty percent (60%) of the
GOCCs engaged in the supply 10% actual cost of such projects and improvements including the
and distribution of water and cost of acquiring land and such other real property in
or generation and connection therewith and
transmission of electric power  The special levy shall not apply to (1) lands exempt from basic
real property tax and (2) the remainder of the land portions of
which have been donated to the LGU concerned for the
Assessed value is the fair market value of the real property construction of such projects or improvements (Sec.240 LGC)
multiply by the assessment level. It is synonymous to taxable
value (Sec.199 (h) LGC)

Machinery and equipment used for pollution control and COLLECTION OF REAL PROPERTY TAX
environmental protection Date of Accrual Tax
The real property tax for any year shall accrued on the first day of January
Special levies and from that date it shall constitute a lien on the property which shall be
a) Additional Levy on Real Property for the Special Education Fund (SEF) superior to any other lien mortgage or encumbrance of any kind
An annual tax of one percent (1%) on the assessed value of real whatsoever and shall be extinguished only upon the payment of the
property which shall be in addition to the basic real property tax. The delinquent tax (Sec.246 LGC)
proceeds thereof shall exclusively accrue to the Special Education
Fund (SEF) (Sec.235 LGC) Collection of Tax
b) Additional Ad Valorem Tax on Idle Lands The collection of the real property tax with interest thereon and related
A provincial or city or a municipality within the Metropolitan Manila expenses and the enforcement of the remedies provided for in Title II of
Area may levy an annual tax on idle lands at the rate not exceeding the LGC or any applicable laws shall be the responsibility of the city or
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
municipal treasurer concerned (Sec.247 LGC). The city or municipal 2. The owner of the property or the person having legal interest
treasurer may deputize the barangay treasurer to collect all taxes on real therein request for reinvestigation and executives a waiver in
property located in the barangay. Provided that writing before the expiration of the period within which to collect
a) The barangay treasurer is properly bonded for the purpose and and
b) The premium on the bond shall be paid by the city or municipal 3. The owner of the property or the person having legal interest
government concerned (Sec.247 LGC) therein is out of the country or otherwise cannot be located
(Sec.270 LGC)
Notes before any document of transfer or encumbrance of real property
may be registered the Registrar of Deeds shall require the presentation of
a certificate or clearance issued by the Local Treasurer concerned to the
effect that all current and past year basic real property tax the additional REMEDIES OF THE TAXPAYER
special educational fund levy other real property taxes and the tax on 1. PROTEST AND ASSESMENT APPEALS
transfer of real property ownership due on the subject property have been Notes:
paid including interests or penalties due thereon (Art.300(b) LGC IRR)  A taxpayer must first exhaust his administrative remedies i.e.
file a protest with the local treasurer and appeal to the LBAA
Payment of Real Property Taxes in Installments before seeking redress from the courts

The owner of the real property or the person having legal interest therein However if what is being questioned is the very authority and
may pay the basic real property tax and the additional tax for special power of the assessor to imposed the tax the administrative
Education Funds (SEF) due thereon without interest in four (4) equal proceedings provided in the LGC will not apply
instalments
1. The first installment to be due and payable on or before March thirty In cases where immediate resort to the courts is allowed
one (31) without the taxpayer exhausting the administrative remedies
2. The second installment on or before June thirty (30) provided by law the taxpayer can bring the matter to the
3. The third installment on or before September thirty (30) and Regional Trial Court (RTCs)
4. The last installment on or before December thirty one (31)
If a taxpayer is not satisfied with the decision of the RTC the
However the payment of the special levy (special assessment) shall be
taxpayer may file within 30 days from receipt of the assailed
governed by ordinance of the sanggunian concerned. The date for the
decision a Petition for Review with the Court of Tax Appeals
payment of any other tax imposed under this Title without interest shall be
(CTA) . a division of the CTA shall hear the case
prescribed by sanggunian concerned

Payments of real property taxes shall first be applied to prior year’s  Appeal taken to the CTA shall not suspend the payment levy
delinquencies interest and penalties if any. Only after said delinquencies distraint and or sale of any property of the taxpayer for the
are settled may tax payments be credited for the current period (Sec.250 satisfaction of his tax liability as provided by existing law
LGC)

Periods within Which To Collect Real Property Taxes  Provided however that when in the opinion of the CTA the
collection may jeopardize the interest of the government and or
The basic real property tax and any other tax levied under Title II Book II of the taxpayer the CTA at any stage of the proceeding may
the LGC shall be collected within five95) years from the date they become suspend the said collection and require the taxpayer either to
due. No actions for the collection of the tax whether administrative or deposit the amount claimed or to file a surety bond for not
judicial shall be instituted after the expiration of such period more than double the amount with the CTA(R.A. No.9282)

In case of fraud or intent to evade payment of the tax such action may be
2. CLAIMS FOR REFUND/CREDIT
instituted for the collection of the same within ten (10) years from the
When an assessment of basic real property tax or any other tax levied
discovery of such fraud or intent to evade payment
under this Title II of the LGC is found to be illegal or erroneous and
Note ; For purposes of the ordinary prescriptive period of 5 years the real the tax is accordingly reduced or adjusted the taxpayer may file a
property tax accrues on the 1 st day of January. The special levy accrues on written claim for refund or credit for taxes and interests with the
the 1st day of the quarter following the Effectivity of the ordinance provincial or city treasurer within 20 years from the date the tax
imposing the levy (Sec.245 and 246 LGC) payer is entitled to such reduction or adjustment

Suspension of the Running of Prescriptive Period The provincial or city treasurer shall decide the claim for tax refund
The period of prescription within which to collect shall be suspended for or credit within sixty (60) days from receipt thereof. In case the claim
the time during which for tax refund or credit is denied the taxpayer may avail of the
1. The local treasurer is legally prevented from collecting the tax remedies as provided in assessment Appeals
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
3. INJUNCTION a. To acknowledge execution of document before a notary public
When in the opinion of the CTA the collection may jeopardize the b. To take oath of office in the government
interest of the Government and or the taxpayer the CTA at any stage c. To receive any license or permit or certificate from public
of the proceeding may suspend the said collection and require the authority
taxpayer either to deposit the amount claimed or to file a surety d. To receive private funds
bond for not more than double the amount with the CTA (R.A
No.9282) 7. Which is not a characteristic of the real property tax?
a. Direct tax
b. Ad valorem
c. Progressive
d. Indivisible

8. Which real property is subject to the real property tax?

Local taxes preferential taxation DTA a. Real property of religious and charitable institution
b. Machineries actually directly and exclusively used by local water
1. Where does the local tax authority enumerate from?.
districts
a. Legislature
c. Real property owned by cooperatives
b. Executive
d. Machineries for pollution control
c. Sanggunian
d. Supreme Court
9. What is considered idle land?
i. Agricultural lands more than one hectare in area half of which
2. Which of the following is not a fundamental principle of local
remains uncultivated except agricultural land with perennial
taxation?
crops with at least 50 trees and those used for grazing
a. It shall be uniform in each local sub unit
ii. Land in the city or municipality more than one thousand square
b. It shall evolve a progressive system of taxation
meters in area one half of which remains unutilized or
c. The revenues collected under the Local Government Code shall
unimproved by the owner
insure solely to the benefit of and subject to disposition by the
a. True true
LGU levying the tax or other imposition (autonomy)
b. True false
d. Collection of local taxes can be delegated to any private person
c. False true
d. False false
3. Which may a Local Government Unit adjust local taxes?
a. Every 5 years
10. For the given year 2018 the following information from business
b. Every 2 years
c. Every year Gross receipts from business P900,000
d. Any time the sanggunian deems it fit Rental income 650,000
Operational expenses 400,000
4. Where the National government elects to tax a particular area it Real property 17,000,000
impliedly withholds from the local government the delegated power
to tax the same field. This doctrine is known as /
a. Pre-emption
Compute individual Community Tax?
b. Separatedness of Departments of Government
c. Exclusive prerogative doctrine a. P1,555
d. Tax Jurisdiction b. P1,155
c. P5,200
5. Zion Shoe’s head office is located in Ortigas Pasig City. However its d. P5,005
manufacturing plant is in TayTay Rizal. As the company accountant
you were asked by Zion where to pay the 2% Local Business Tax. 11. Compute Corporate Community Tax
Zion’s gross receipts is P10 million a. P7,920
a. Pay P200,000 at TayTay Rizal b. P7,560
b. Pay P200,000 at Ortigas Pasig City c. P1,120
c. Pay P60,000 at Ortigas Pasig City and P140,000 at Taytay Rizal d. P10,500
d. Pat P140,000 at Ortigas Pasig City and P60,000 at Taytay Rizal
12. Who has the authority to collect Community Tax?
a. Bureau of Internal Revenue
6. The presentation of a community tax certificate is necessary in the
b. Local Government Unit
following situations except
c. Bureau of Customs
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
d. National Treasury b. Mr. Lim is liable to real property tax because he assumed
responsibility carried from previous owner
13. What is the characteristic of Community Tax c. Mr. Lim is not liable because realty taxes attach to the property
a. Tax and are chargeable against the person who had actual or
b. Fee beneficial use and possession of it regardless of whether or not
c. Identification card he is the owner
d. License d. Mr. Lim is not liable because but realty tax attaches upon the
property. It is the property itself which is liable
14. Elorde a famous boxer intends to convert his boxing gymnasium into
arena. Elorde summons you to give him advise to go over his tax 19. Idle lands are exempt from real property tax under the following
exposure. As a certified public accountant you will recommend to circumstances except
Mr.Elorde which of the following reference/documents? a. Civil disturbance
a. National Internal Revenue Code b. Natural calamity
b. Revenue Regulation of the NIRC c. Any cause which physically or legally prevents the owner from
c. Local Government Code utilizing his land
d. Tariff and Customs Code d. Declared by the president

15. Your client Mr. Aegis is an importer who inquired what laws will have 20. 1st statement: No regular court may intervene in assessment of real
most relevance in his daily transaction. Having several laws to take property taxes it is the primary jurisdiction of the Board of Assessors
into consideration which laws do you recommend for Mr. Aegis to 2nd statement: No injunction by court will lie against real property tax
read? collection by the Local Government
a. National Internal Revenue Code a. True false
b. Implementing Rules and Regulation of NIRC b. True true
c. Tariff and customs Code as amended by the CMTA c. False true
d. Local government Code d. False false

16. AZEP Corporation secured an income tax holiday for 4 years as a 21. 1st statement” Local tax relief or exemption is granted in cases of
pioneer enterprise. On the third year of the tax holiday, AZEP natural calamities civil disturbances general failure of crops or
Corporation declared and paid cash dividends to its stockholders all adverse economic conditions which substantially decrease prices
of whom are individuals. Are the dividends to its stockholders all of 2nd statement: Local tax incentives are granted only to new
whom are individuals. Are the dividends taxable? investments in the locality
a. The dividends are taxable the tax exemption of AZEP does not a. True false
extend to its stockholders b. True true
b. The dividends are tax exempt because of AZEP Corporation’s c. False true
income tax holiday d. False false
c. The dividends are taxable if they exceeded 50% of AZEP
Corporation’s retained earnings 22. 1st statement: Local cases may be brought to the attention of the
d. The dividends are exempt if paid before the end of AZEP Secretary of Finance
Corporation’s fiscal year 2nd statement: Customs tax cases may be brought to the attention of
the Secretary of Justice
17. The following tax incentives given to micro business enterprises a. True false
except? b. True true
a. Income tax exemption from all income of the enterprise c. False true
b. Exemption from the coverage of the Minimum Wage Law (but d. False false
employees will still receive the same social security and health
care benefits as other employees) 23. Which of the following has no power to impose taxes?
c. Priority to a special credit window set up specifically for the a. Provinces
financing requirements of BMBEs and b. Cities
d. Technology transfer production and management training and c. Barangays
marketing assistance programs for BMBE beneficiaries d. Barrios

18. Mr. Lim bought a piece of land in Manila in 2017 whereby he

discovered that it has unpaid real property tax for year 2016. Which 24. Talong Company is a domestic corporation whose principal
of the following is correct? classification is for well drilling work. It has no branches nor sales
a. Mr. Lim is liable to real property tax because he is the new outlets but maintains project offices in different localities in the
owner Philippines. It is also registered as a Specialty Contractor at the
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================
Philippine Overseas construction Board. As part of its business jurisdiction of the LBAA even without first paying the tax under
expansion plan the company intends ot offer its well drilling and protest
construction services to clients located overseas b. No under Section 252 of the LGC payment under protest is
mandatory if the taxpayer questions the reasonableness or
Are cities and municipalities authorized to impose and collect local correctness of the RPT assessment
business taxes on gross receipts realized by a specialty contractor c. It depends on the amount of RPT assessed
from its overseas construction projects? d. None of the above
a. No gross receipts must be realized from services rendered
within the jurisdiction of the LGU imposing the tax 28. A power generation company with principal office in Cebu City
b. Yes the local business tax depends on the previous year’s sales acquired and operated a power plant in Navotas City. Due to the
receipts regardless of source difficulty in hiring competent administrative personnel willing to work
c. It depends in flood prone Navotas city the company established an
d. None of the above administrative office in Malabon City. This administrative office does
not generate sales orders nor does it receive collections from sales
25. Kamay Holding Company a holding company owns 51% of Hawak
Corporation. In its Statement of Comprehensive Income the holding Which of the 3 offices shall be liable for the local business tax (LBT)?
company reported its proportionate share in the income of Hawak a. All 3 offices
Corporation as “revenue from equity in the net earnings of an b. Offices in Cebu City and in Malabon City
associate” is the ‘revenue from equity in the net earnings of an c. Office in Cebu City and in Navotas City. Pursuant to Section
associate’ considered as gross receipts subject to the LBT? 150(b) of the LGC 70% of all sales recorded in the principal
a. Yes equity in net earnings is still considered revenue office shall be subject to the LBT in Navotas City. The remaining
b. No the “revenue from equity in the net earnings of an 30% shall be subject to the LBT in Cebu City
associate” does not fall under the category of gross receipts. It d. Note of the above
is a mere paper entry mandated by accounting rules
c. Call me maybe 29. In general in order to avail of relief from double taxation on income
d. None of the above earned within the Philippines in the form of decrease tax rates
thereon or exemption therefrom what must be submitted by a non
26. Uniwide Sales Warehouse Club Inc. (uniwide) conducts and operates resident alien to the International Tax Affairs Division (ITAD) of the
its business sin buildings contracted on parcels of land covered by 3 BIR?
Transfer Certificate of Title (TCTs) issued by the Registered of Deeds a. Memorandum of agreement between the taxpayer and host
of Pasig City. The TCT’s indicate Pasig City as the location of the country
parcels of land. However Cainta is claiming that the same are within b. Tax treaty law of the host country
its territorial jurisdiction. To which LGU must Uniwide pay local c. Tax treaty relief application (TIRA)
business taxes? d. None of the above
a. Pasig City to identify the LGU entitled to collect taxes the
location stated in the certificate of title should be followed 30. In order to avail of relief from double taxation on dividends interest
until amended thru proper judicial proceedings (Supreme court and dividend income earned within the Philippines in the form of
Second Division G.R. Nos. 176703 & 176721 June 28, 2017) decreased tax rates thereon or exemption there from what must be
b. Cainta submitted by a non resident to alien to the payor of the income?
c. Baguio a. Memorandum of agreement between the taxpayer and host
d. Colombia country
b. Tax treaty law of the host country
c. Certificate of Residence for Tax Treaty Relief (CORTT)
27. The Municipal Assessor of San Francisco Agusan Del Sur assessed the
d. None of the above
national Grid Corporation of the Philippines (NGCP) for deficiency
e.
real property tax (RPT) for the years 2011 and 2012. In its petition
with the LBAA NGCP assailed the RPT assessment on the ground that
it is exempt from payment of the same under Section 9 of R.A. No.
9511 and Section 234(c) of the Local Government Code. The
Municipal Assessor filed a Motion to Dismiss citing lack of jurisdiction
on the part of the LBAA to rule on the petition due to NGCP’s failure
to first pay the tax under protest

Did the LBAA acquire jurisdiction over NGCP’s petition against RPT
assessment?
a. Yes since the taxpayer is questioning the very authority of the
assessor to impose the assessment the petition is under the
 UNIVERSITY OF PERPETUAL HELP SYSTEM DALTA
CALAMBA CAMPUS, BRGY. PACIANO RIZAL,
CALAMBA CITY, LAGUNA, PHILIPPINES

LOCAL GOV’T TAXES EDMUND E. HILARIO, CPA, MBA

SYNTHESIS IN TAXATION 2ND SEMESTER 2019 – 2020
===============================================================================================