Page 1 of 7 | TAX 15

TAXATION
REX B. BANGGAWAN, CPA, MBA

LOCAL TAXATION
REX B. BANGGAWAN, CPA, MBA

PROVINCIAL TAXES

Real Property and Related Taxes

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1. You own a residence here in Baguio City with the following fair value per assessment rolls of the city:
Land P 1,000,000

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House 2,500,000
The City council of Baguio set the maximum assessment level for land. The house has 40% assessment level based on
its value.

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Required: Compute the Real Property Tax.

2. Mr. Pacagaling, a resident of Baguio City, disposed a residential lot located in the Municipality of Asingan, Pangasinan

at P6,000,000 and was sold for P3,000,000.

Compute the property transfer tax.

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with a zonal value of P4,000,000 and fair value per tax declaration of P2,500,000. The property is currently appraised

a. P 30,000 c. P 12,500
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b. P 15,000 d. P 2,500

3. Compute the total annual realty tax of the buyer.

a. P 20,000 c. P 5,000
b. P 10,000 d. P 2,500
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Query: What is the capital gains tax and the venue of payment?

4. Benzon owns an idle residential lot in Baguio City. He shall be subject to an annual realty tax rate of
a. 10% c. 5%
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b. 8% d. 3%

5. Mr. Nagmama, a resident of Manila City but employed in Taguig City, owns a commercial building in Quezon City with
a land zonal value of P5,000,000 and land assessed value of P1,000,000. The building has an assessed value of
P1,500,000.
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Compute the real property tax.

a. P 130,000 c. P 50,000
b. P 100,000 d. P 25,000

6. In the immediately preceding problem, Mr. Nagmama shall pay the real property tax in
a. Manila City c. Quezon City
b. Taguig City d. City or province where taxpayer registered to the BIR

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 Page 2 of 7 | TAX 15

REX B. BANGGAWAN, CPA, MBA

LOCAL TAXATION

7. Beneco has various fixed electrical machineries which were purchased and installed three years ago for P2,000,000.
The machinery has a current replacement cost of P4,200,000. Compute the current fair value of these machineries for
real property tax purposes.
a. P 800,000 c. P 1,680,000
b. P 1,040,000 d. P 2,184,000

8. On June 15, 2022, Rhad Estoque, a resident of Baguio City, Benguet, donated an agricultural land located in the
Municipality of Rosario, Province of La Union to his best friend.

The following pertains to the fair value details of the property:

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Zonal value P 1,200,000
Fair value per tax declaration 1,000,000

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Baguio City imposes 75% of 1% transfer tax while the province of La Union imposes 40% of 1% transfer tax.

Required: Determine the following:

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1. Local transfer tax and the venue of payment
2. Annual real property tax
3. Total annual tax on real property
4. Real property tax due for 2023 if paid
a. December 1, 2022
b. January 15, 2023
c. June 3, 2023
5. Venue of filing of the donor’s tax return
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PA
9. Remunding, a resident of Calamba City, Laguna Province, sold a residential building located in Baguio City, Benguet
Province to a buyer who contracted to pay P5,000,000.

The property has a land zonal value of P5,000,000 and fair value per SMV as follows:

Fair value Assessment level Assessed value

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Land P 3,500,000 20% P 700,000

Improvement 2,000,000 40% 800,000
Total P 5,500,000 P 1,500,000
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The City of Laguna imposes a property transfer tax at a rate of 60% of 1% while the Baguio City imposes a transfer tax
of 70% of 1%.

Required: Determine the following:

a. Sales tax and the venue of payment.
b. Capital gains tax and the venue of the capital gains tax
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Other privilege taxes

1. In 2022, Rex Printing Company started a printing business in Quezon City. Capital and sales data in 2022 and 2023
were as follows:

2022 2023
Capital stocks P 2,500,000 P 2,500,000
Gross receipts from private clients 1,200,000 5,000,000
Gross receipts from Dep-ED publications 200,000 1,000,000

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 Page 3 of 7 | TAX 15

REX B. BANGGAWAN, CPA, MBA

LOCAL TAXATION

Quezon City imposes the maximum rate allowable to publishing business.

Required: Compute the local business tax in 2022 and 2023, respectively. __________ __________

2. Atty. Bernard Bakilan is also a Certified Public Accountant. He started his profession by establishing an accounting firm
in municipality of La Trinidad, Benguet Province. He branched out his accounting practice to Baguio City, Benguet
Province where he studied and finished law. After passing the Bar Examination, he set-up a law office in Baguio City.

Required: Identify the venue of professional tax.

3. Baby Boy Mark Ngina is a holder of a CPA license issued by the PRC. He is also a holder of international certifications

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issued by various international organizations such as the Certified Management Accountant (CMA), Certified Internal
Auditor (CIA) and Certified Financial Analyst (CFA). Mark practices his profession in Baguio City.

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Required: Determine Baby Boy’s professional tax and venue of filing.

4. The Deve Llama Cerraulo Tax firm has 21 professionals on its employ. It failed to require 10 of its employees to pay

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their professional tax. The province then issued an assessment to the law firm for the unpaid professional tax. Is the
assessment valid?

5. Amazing World is a cinema operating in Urdaneta City, Province of Pangasinan. Amazing World leases cinematographic
films shows from both domestic and foreign film makers. Amazing World collected a total of P 9M on admission fees.
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By industry practice, cinemas own 30% of the collection and remits 70% of the receipts to film owners. Urdaneta City is
a component City of the Province of Pangasinan. It charges 10% amusement tax.

Compute the amusement tax and the venue of payment.

PA
6. Boy Dilena is the operator of Arana Coliseum. During the month, it had the following gross receipts from various
activities, to wit:

Concert by Rosa Mia P 85,000

Professional basketball 120,000
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Amateur basketball 36,700

Cinema 145,000

Required:
a. Compute the local amusement tax.
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b. Compute the amusement tax for the national government.

7. Goldrich Aggregates has a principal place of business in Baguio City, Benguet. It operates two stone crusher plants in
the municipality of Rosario, Province of La Union and another in the Municipality of Itogon, Benguet Province. The plant
in Rosario, La Union is nearby the national highway where customers directly buy crushed stones (aggregates) by the
trucks. The Benguet plant is remote. Deliveries are made to clients in nearby municipalities at prices double its local
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prices.

Itogon plant sales P 2,000,000

Rosario plant sales P 1,500,000

Required: Determine the local tax on gravel and sand and the venue of payment.

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 Page 4 of 7 | TAX 15

REX B. BANGGAWAN, CPA, MBA

LOCAL TAXATION

8. Doms Silvestre discovered a commercially viable deposit of quarry materials in his titled property. He developed the
same into a private quarry and began selling quarry materials to various construction firms. Doms recorded a total
receipt of P1,200,000 in the previous quarter.

Required: Determine the local tax on gravel and sand.

9. Kiyong’s Wine operates a “bignay” brewery in the Municipality of Tublay, Province of Benguet. Kiyong has 3 trucks
devoted to deliveries of wines to retail distributors in the Provinces of La Union and 2 trucks to distributors in the Province
of Abra. Kiyong’s Wines has a branch in Dagupan City, Pangasinan which also houses 2 trucks for deliveries of goods
in the provinces of Pangasinan and Tarlac.

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Required: Determine the annual fixed tax on delivery vans and the venue of payment.

MUNICIPAL TAXES

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Community Tax

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1. Drill: Compute the community tax under each of the following cases.
A. Mr. Douglas Alboria earned P800,000 salaries last year. __________
B. Mr. Douglas is unemployed resident who has a vacant lot valued at P300,000. ___________
C. Mr. Douglas Alboria earned the following income last year:

Salaries
Income from profession
Rental income from properties
____________
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P 800,000
785,800
482,900
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D. Assume Mr. Douglas earned P6,874,800 in the preceding year. ______________
E. Mr. and Mrs. Lafa are both employed and self-employed. Mr. Lafa owns a beauty parlor while Mrs. Lafa also owns
a beauty parlor in front of Mr. Lafa’s shop. The following relates to the details of the income of the spouses.

Mr. Lafa Mrs. Lafa

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Salaries P 400,000 P 420,000

Income from profession 3,200,000
Income from business 2,400,000
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Mr. Lafa opted to pay the additional community tax.

Mr. Lafa _________________ Mrs. Lafa ________________

F. A partnership which is engaged in selling shoes had the following revenue last year:

Sales (P7.2M collected in cash) P 8,000,000

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Less: Cost of sales 5,000,000

Gross income P 3,000,000
Interest income from client notes 50,000
Dividend income 214,000
Gain on sale of equipment 100,000
Total income P 3,364,000
Less: Expenses 1,500,000
Net income P 1,864,000
_______________

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 Page 5 of 7 | TAX 15

REX B. BANGGAWAN, CPA, MBA

LOCAL TAXATION

G. ABC Corporation is engaged in property leasing. Last year, it collected P3,489,000 rentals from various tenants
from its commercial building. Last year’s valuation of the building is reproduced below:
Land Building Total
Appraisal value P 4,000,000 P 4,500,0000 P 8,500,000
Zonal value 5,000,000 - 5,000,000
Assessed value 1,218,000 1,415,000 2,633,000
_______________

H. Adonis Company, a domestic corporation, had the following receipts from business and property values:

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Philippines Abroad Total
Gross receipts P 3,000,000 P 2,500,0000 P 5,500,000
Assessed value of lands and buildings 12,000,000 8,000,000 20,000,000

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Assessed value of equipment 3,200,000 2,400,000 5,600,000
_______________

I. MegaLease Corporation, a real estate company, had a total assessed value of land in the previous year aggregating

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P30,000,000. _____________
J. A corporation with total real estate properties assessed value aggregating P14,000,000 started operation on
January 2 of the year. _____________
K. A corporation with total real estate properties assessed value aggregating P8,000,000 started operation on July 21
of the year. _____________
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L. Ahmed Lofti, a Sudanese, arrived in the country to study medical technology in July of the current year, compute
the community tax. ___________
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Local Business Taxes
1. ABC Homes, Inc. manufactures house furnishings and sells them through its sales outlet in Angeles City. To maximize
sales, it also sells wholesale to DEF Marketing Corporation, a wholesaler with a principal office in La Trinidad, Benguet.
Deliveries are made by its two trucks to the warehouse of DEF Marketing in Benguet.

Last year, ABC Homes made total sales of P5,000,000 on its retail outlets, exclusive of P3,000,000 sales delivered to
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DEF Marketing. On the other hand, DEF Marketing reported total sales of P3,000,000 from its head office in La Trinidad,
P2,500,000 from its sales outlet in Baguio City and P500,000 sales from deliveries by its van to clients in nearby
municipalities.

Required: Compute the following for ABC and DEF and identify venue of payment for:
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ABC Homes Amount Venue

1. Local business tax

2. Tax on delivery trucks/vans

3. Community tax
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DEF Marketing
1. Local business tax

2. Tax on delivery trucks/vans

3. Community tax

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 Page 6 of 7 | TAX 15

REX B. BANGGAWAN, CPA, MBA

LOCAL TAXATION

2. Omie Sari-Sari Store maintains a head office in Baguio City and another sales office. For last year, the head office
reported sales of P400,000 while the other sales office reported sales of P300,000.

Required: Compute the business tax and identify the venue of payment if:
a. The other sales office is also located in Baguio City
b. The other sales office is situated in Dagupan City
c. What if Omie is a corporation and that the other sales office is established as a subsidiary?

3. Vhinson Export manufactures flying motorcycles and markets them to both domestic and foreign traders.
Vhinson Export had the following sales in the prior year:

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Domestic sales P 1,500,000
Export sales 900,000
Total sales P 2,400,000

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Required:
a. Compute Vhinson’s local business tax.

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b. Compute Vhinson’s local business tax assuming it is an export trader.

4. Mr. Tommy Niera is engaged in commercial farming producing poultry chicken in Baliuag City, Bulacan. He had a receipt
last year totaling P1,800,000.

Required:
a. What is his local business tax?
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b. What is his local business tax if Tommy is a subsistence farmer with P200,000 income?
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c. What is his local business tax if Tommy is registered as a BMBE?
d. What if Mr. Tommy is a trader of poultry to various retail markets?

5. A gasoline station had the following sales or receipts from the preceding year:

Sales of diesel, gasoline and other petroleum products P 8,840,100

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Sales of merchandise from convenience stores 1,240,100

Total sales or receipts P10,080,200

Compute the local business tax.

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6. The Baguio City branch of Interlink Bank had the following income receipts last year:

Interest income – long-term loans P 4,500,000

Interest income – short-term loans 7,800,000
Rental income 880,000
Gains on sale of ROPA 750,000
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Dividend 250,000
Interest income on FCDU loans 1,240,000
Service fees 450,000
Surcharges and penalties 250,000
Total income P 16,120,000

Required: Compute the local business tax.

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 Page 7 of 7 | TAX 15

REX B. BANGGAWAN, CPA, MBA

LOCAL TAXATION

7. Mark Nangina is a CPA in Baguio City. He is also engaged in various businesses with the following receipts last year:

Management consultancy P 840,000 Baguio City

Trading of vegetables 400,000 Municipality of Bokod, Mt. Province
Barber and parlor operation 700,000 Baguio City
Restaurant operation 600,000 Baguio City
Massage spa 800,000 Baguio City
Grocery store operation 600,000 Municipality of Bokod
Meat shop 500,000 Municipality of Bokod

Required: Determine the following:

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Local Tax Venue of payment
a. Local business tax

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b. Professional tax
c. Community tax

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Integrated Operations
8. Real Banana Chips (RBC), Inc. has a banana chip processing plant in the Municipality of La Trinidad, Benguet. It sells
its products through its head office in Baguio City and branches in other cities which resulted to the following receipts
last year:

Baguio City head office sales

Urdaneta City branch office sales
Dagupan City branch office sales
Sales to other places without branches
P R
3,000,000
2,000,000
1,000,000
500,0000
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RBC has a banana plantation in Pinukpuk, Kalinga and Conner, Apayao which produced 100 tons and 80 tons of
banana harvest last year.

Required: Determine the amount of gross sales or receipts subject to tax in each municipalities or cities.
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9. In the preceding year, an electric franchise grantee in Laoag City billed P360,945,000 for consumer electrical
consumption out of which it was able to collect P347,845,900.

Required: Compute the following:

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a. Franchise tax
b. Local business tax

----- END OF HANDOUTS -----

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