The Bureau of Local Government Finance (BLGF) has reminded anew all local treasurers and assistant treasurers on the proper assessment of local taxes, fees and charges, in time for the annual renewal of business permits and deadlines for payment of local impositions.
Under Memorandum Circular (MC) No. 01-2020, dated 02 January 2020, entitled “Updated Reminders in the Assessment of Local Business Tax (LBT), Registration and Renewal of Business Permits and Licenses, and the Imposition of Local Taxes, Fees and Charges”, the BLGF clarified further its earlier 2017 guidelines on the subject to help ensure efficiency, transparency, and fairness in the collection of local tax impositions.
The latest set of reminders reiterated the proper assessment of local business tax for newly started business and for renewal of business permit, exemptions from payment of Mayor’s/Business Permit and local taxes, rules on public liability insurance, penalties for delayed payment of business permit fee, and payment of community tax.
Included in the additional clarifications are the exemption from the payment and/or acquisition of Mayor’s/Business Permit of service contractors providing temporary and outsourced services to various clients outside of the LGU, and the local tax exemption of non-stock, non-profit educational institutions.
The BLGF also reminded the local treasurers on the scope and limitations of the taxability of professionals under Local Finance Circular No. 01-2019, dated 12 June 2019, issued by the Secretary of Finance.
The situs of local business tax on banks and other banking institutions has likewise been clarified, wherein distinction is made in cases when gross receipts derived from all transactions filed with or negotiated in the branch office shall be recorded and paid in the location of said branch. On the other hand, gross receipts from transactions made by the head office, except gross receipts recorded in the branches, shall be taxable by the city or municipality where the said head office is located.
In case the existing local ordinances or revenue measures of the LGUs are inconsistent with the provisions of the guidelines, the BLGF enjoined all concerned treasurers to make the necessary and immediate representations with their respective local chief executives and sanggunians concerned.
The BLGF circular emphasized the Supreme Court Decision in Batangas City v. Philippine Shell Petroleum Corporation, which underscored the limitations of tax ordinances of local governments, thereby ruling that “ordinances passed by virtue of the implied power found in the general welfare clause must be reasonable, consonant with the general powers and purposes of the corporation, and not inconsistent with the laws or policy of the State”.
The latest circular of the BLGF also reminded the LGUs to observe the provisions of the Ease of Doing Business and Efficient Government Service Delivery (EODB-EGSD) Act of 2018 and its Implementing Rules and Regulations (IRR).
The latest circular of the BLGF was issued in line with its mandate over provincial, city, and municipal treasurers, and their assistants, being an attached agency of the Department of Finance overseeing the treasury and assessment operations of LGUs.