BBUSINESS PERMIT AND USINESS PERMIT AND LICENSESLICENSES

RICARDO L. BOBIS, JR.RICARDO L. BOBIS, JR.Municipal TreasurerMunicipal Treasurer

San Antonio, ZambalesSan Antonio, Zambales

AUTHORITY OF LGUs TO COLLECT TAXESAUTHORITY OF LGUs TO COLLECT TAXES

Emanates fromEmanates fromRepublic Act 7160Republic Act 7160also known as thealso known as the

Local Government Code of 1991Local Government Code of 1991

Book II.Book II.LOCAL TAXATION AND FISCAL MATTERSLOCAL TAXATION AND FISCAL MATTERS

Title OneTitle OneLOCAL GOVERNMENT TAXATIONLOCAL GOVERNMENT TAXATION

Chapter I. General ProvisionsChapter I. General Provisions

Sec. 129. Sec. 129. POWER TO CREATE SOURCES OF REVENUEPOWER TO CREATE SOURCES OF REVENUE. – Each . – Each local government unit shall exercise its power to create its own local government unit shall exercise its power to create its own sources of revenue and levy taxes, fees and charges subject to sources of revenue and levy taxes, fees and charges subject to the provisions herein, consistent with the basic policy of local the provisions herein, consistent with the basic policy of local

autonomy. Such taxes, fees, and charges shall accrue autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units.exclusively to the local government units.

Sec. 132. Sec. 132. LOCAL TAXING AUTHORITYLOCAL TAXING AUTHORITY. – The power to impose a . – The power to impose a tax, fee or charge or to generate revenue under this Code shall tax, fee or charge or to generate revenue under this Code shall be exercised by the sanggunian of the LGU concerned through be exercised by the sanggunian of the LGU concerned through

an appropriate ordinance.an appropriate ordinance.

… … vests the power to impose vests the power to impose taxes and generate revenues in taxes and generate revenues in

the the sanggunianssanggunians..

However, taxing and revenue-However, taxing and revenue-generating powers shall be generating powers shall be

exercised through exercised through appropriate appropriate ordinances.ordinances.

Two Major Sources of IncomeTwo Major Sources of Income

Externally SourcedExternally Sourced

Internally SourcedInternally Sourced

Externally Sourced IncomeExternally Sourced Income

consists of share in BIR gross consists of share in BIR gross collection or IRA,collection or IRA,

a share in the proceeds from a share in the proceeds from utilization & development of the utilization & development of the national wealth,national wealth,

loans, credits and bonds,loans, credits and bonds,

and grants or subsidies.and grants or subsidies.

Internally Sourced IncomeInternally Sourced Income

Business Tax & other local taxes,Business Tax & other local taxes,

Real Property Taxes,Real Property Taxes,

Income from economic enterprises,Income from economic enterprises,

Fees and charges.Fees and charges.

PRINCIPLES OF TAXATIONPRINCIPLES OF TAXATION

Taxes must be equitableTaxes must be equitable

Based on the taxpayer’s ability to payBased on the taxpayer’s ability to pay

Levied and collected only for public Levied and collected only for public purposespurposes

Must not be unjust, excessive, oppressive, Must not be unjust, excessive, oppressive, or confiscatoryor confiscatory

Must not be contrary to law, public policy, Must not be contrary to law, public policy, national economic policy, or in restraint of national economic policy, or in restraint of tradetrade

Levels of Taxing PowerLevels of Taxing Power

ProvincesProvinces

MunicipalitiesMunicipalities

CitiesCities

BarangaysBarangays

For MunicipalitiesFor Municipalities

Tax on BusinessTax on Business

Fees and ChargesFees and Charges

Community Tax CertificateCommunity Tax Certificate

Fees for Sealing and Licensing of Weights and Fees for Sealing and Licensing of Weights and MeasuresMeasures

Fishery Rentals, Fees and ChargesFishery Rentals, Fees and Charges

Motorized Tricycle Operator’s Permit (MTOP)Motorized Tricycle Operator’s Permit (MTOP)

TAX ON BUSINESSTAX ON BUSINESS

ManufacturersManufacturers WholesalersWholesalers ExportersExporters Manufacturer, Wholesaler, or Manufacturer, Wholesaler, or

Retailers of Essential CommoditiesRetailers of Essential Commodities RetailersRetailers ContractorsContractors Banks and other Financial Banks and other Financial

InstitutionsInstitutions

COMMON FEES AND CHARGESCOMMON FEES AND CHARGES

Regulatory FeesRegulatory Fees Mayor’s PermitMayor’s Permit Garbage Collection FeeGarbage Collection Fee Zoning/Locational ClearanceZoning/Locational Clearance

Other Fees & ChargesOther Fees & Charges Real Property Tax ClearanceReal Property Tax Clearance Fire Inspection FeeFire Inspection Fee Sanitary Inspection FeeSanitary Inspection Fee Occupancy PermitOccupancy Permit Occupation/Calling FeeOccupation/Calling Fee

PROGRESSIVE TAX STRUCTUREPROGRESSIVE TAX STRUCTURE

Calibrated/Graduated Scale of Calibrated/Graduated Scale of Gross Sales or ReceiptsGross Sales or Receipts

Percentage BasePercentage Base

GRADUATED SCALEGRADUATED SCALE

ManufacturerManufacturer

With Gross Sales or Receipt for theWith Gross Sales or Receipt for the Amount of Amount of TaxTax

Previous Year in the amount of Previous Year in the amount of per annum per annum

Less than 30,000Less than 30,000 484.00 484.00

30,000 or more but less than 40,00030,000 or more but less than 40,000 726.00 726.00

40,000 or more but less than 50,00040,000 or more but less than 50,000 907.00 907.00

50,000 or more but less than 75,00050,000 or more but less than 75,000 1,452.00 1,452.00

:::: :::: :: ::

5,000,000 or more but less than 6,500,000 26,812.005,000,000 or more but less than 6,500,000 26,812.00

6,500,000 or more6,500,000 or more 0.4125% 0.4125%

of Gross of Gross SalesSales

PERCENTAGE BASEPERCENTAGE BASE

Retailers of Other CommoditiesRetailers of Other Commodities

With Gross Sales or Receipt for theWith Gross Sales or Receipt for the Rate of TaxRate of Tax

Previous Year in the amount of Previous Year in the amount of per annumper annum

400,000 or less400,000 or less 2.2%2.2%

More than 400,000More than 400,000 1.1%1.1%

PHILIPPINE DEFINITION OF BUSINESS SIZEPHILIPPINE DEFINITION OF BUSINESS SIZE

CharacteristicsCharacteristics Asset Size Asset Size Number of Number of WorkersWorkers

CottageCottage PhP 500,000 and belowPhP 500,000 and below 1-10 1-10

SmallSmall PhP 500K - PhP 5MPhP 500K - PhP 5M 11-99 11-99

MediumMedium PhP 5M - PhP 20M PhP 5M - PhP 20M 100-199 100-199

LargeLarge Over PhP 20MOver PhP 20M 200 & 200 & aboveabove

BASES OF TAXATIONBASES OF TAXATION

For Newly started BusinessFor Newly started Business Based on Capital InvestmentBased on Capital Investment

For RenewalFor Renewal Based on Gross Sales or Receipts Based on Gross Sales or Receipts

of the preceding calendar yearof the preceding calendar year

RETIREMENT OF BUSINESSRETIREMENT OF BUSINESS

A business subject to tax shall, upon A business subject to tax shall, upon termination, submit a sworn termination, submit a sworn statement of its gross sales or statement of its gross sales or receipts for the current year.receipts for the current year.

If the tax paid during the year be less If the tax paid during the year be less than the tax due on said gross sales than the tax due on said gross sales or receipts of the current year, the or receipts of the current year, the difference shall be paid before the difference shall be paid before the business is considered officially business is considered officially retired.retired.

PAYMENT OF BUSINESS TAXPAYMENT OF BUSINESS TAX

Taxes imposed shall be payable Taxes imposed shall be payable for for every separate or distinctevery separate or distinct establishment or place where establishment or place where business subject to the tax is business subject to the tax is conducted and one line of business conducted and one line of business does not become exempt by being does not become exempt by being conducted with some other conducted with some other businesses for which such tax has businesses for which such tax has been paid.been paid.

The tax on a business must be paid The tax on a business must be paid by the person conducting the same.by the person conducting the same.

TAX PERIOD AND MANNER OF PAYMENTTAX PERIOD AND MANNER OF PAYMENT

the tax period of all local taxes, the tax period of all local taxes, fees and charges shall be the fees and charges shall be the calendar yearcalendar year. .

Such taxes free and charges Such taxes free and charges may be paid in may be paid in quarterly quarterly installmentsinstallments. .

ACCRUAL OF TAXACCRUAL OF TAX

all local taxes, fees and charges all local taxes, fees and charges shall accrue on the shall accrue on the 11stst day of day of JanuaryJanuary of each year. of each year.

New taxes, fees, and charges or New taxes, fees, and charges or changes in the rates thereof, shall changes in the rates thereof, shall accrue on the 1accrue on the 1stst day of the quarter day of the quarter next following the effectivity of the next following the effectivity of the ordinance imposing such new levies ordinance imposing such new levies or rates.or rates.

TIME OF PAYMENTTIME OF PAYMENT

All local taxes, fees, and charges All local taxes, fees, and charges shall be paid shall be paid within the first twenty within the first twenty (20) days of January(20) days of January or of each or of each subsequent quarter, as the case may subsequent quarter, as the case may be.be.

The sanggunian may, for a justifiable The sanggunian may, for a justifiable reason or cause, extend the time for reason or cause, extend the time for payment of such taxes, fees or payment of such taxes, fees or charges without surcharges or charges without surcharges or penalties, but only for a period penalties, but only for a period not not exceeding six (6) monthsexceeding six (6) months..

SURCHARGE AND PENALTIESSURCHARGE AND PENALTIES

The sanggunian may impose a The sanggunian may impose a surchargesurcharge not exceeding not exceeding twenty-five twenty-five percent (25%)percent (25%) of the amount of of the amount of taxes, fees or charges not paid on taxes, fees or charges not paid on time and an interest at the rate not time and an interest at the rate not exceeding exceeding two (2%) per monthtwo (2%) per month of the of the unpaid taxes, fees and charges unpaid taxes, fees and charges including surcharges, until such including surcharges, until such amount is fully paid but in no case amount is fully paid but in no case shall the total interest on the unpaid shall the total interest on the unpaid amount or portion thereof amount or portion thereof exceed exceed thirty six (36) monthsthirty six (36) months..

SITUS OF TAXSITUS OF TAXManufacturers, Wholesalers, Contractors, Banks, etc.

w/ Branch or Sales Outlet in

Municipality

Record Sales in Branch or Outlet in

Municipality

Pay Tax to Municipality where

Branch of Sales outlet is located

w/out Branch or Sales Outlet in

Municipality

Record Sales in Principal Office in

Municipality

Pay Tax to Municipality where Principal Office is

located

DISTRIBUTION OF TAXABLE 70%DISTRIBUTION OF TAXABLE 70%

Prorate taxable percentage among LGUs where factories, etc.

are located according to respective volumes of production

during taxable period

Manufacturer has 2 or more

factories, etc. in different localities

Yes

No

Plantation & factory located in

same LGU

Yes 70% Taxable by Municipality where factory, etc. is located

No

42% Taxable by Municipality where factory is located

28% Taxable by Municipality where plantation is located

THE BUSINESS PERMIT THE BUSINESS PERMIT AND LICENSES OPERATIONAND LICENSES OPERATION Before the Operation of any Before the Operation of any

business or of an entity to engage in business or of an entity to engage in any business, within its taxing any business, within its taxing powers, one must Apply for Mayor’s powers, one must Apply for Mayor’s Permit to Operate BusinessPermit to Operate Business

Upon its Expiration and orUpon its Expiration and or

Before the retirement of BusinessBefore the retirement of Business

BASIC REQUIREMENTSBASIC REQUIREMENTS

Community Tax Certificate of the OwnerCommunity Tax Certificate of the Owner

Barangay Business ClearanceBarangay Business Clearance

BIR RegistrationBIR Registration

DTI RegistrationDTI Registration

For Corporation, SEC Registration For Corporation, SEC Registration CertificateCertificate

BASIC STEPSBASIC STEPS

APPLICATION. The Applicant shall secure and prepare the Basic Requirements in the Checklist

Checklist of Basic DocumentaryRequirements:

.Community Tax Certificate

.Barangay Business Clearance

.BIR Certificate of Registration

.DTI Certificate of Registration

.For Corporation, SEC Registration Certificate

STEP 2. REVIEWSTEP 2. REVIEW

REVIEW. Secure and fill out Application form from the Mayor’s Office. Upon initial review of the License Officer, comply/secure additional requirements, if any.

Other Requirements :

• Building Permit• Occupancy Permit• Locational/Zoning Clearance• Environmental Compliance Certificate (ECC)• SSS/PhilHealth Certificate of Contribution• Real Property Tax Clearance from Municipal Treasury Office•Other documents as maybe required depending on the nature of business

STEP 3. ASSESSMENTSTEP 3. ASSESSMENT

ASSESSMENT.Submit Application Form together with the Requirements to the Treasurer’s Office for Assessment.

Sample of AssessmentSample of AssessmentMayor’s Permit Fee:Mayor’s Permit Fee: 2,000.002,000.00

Nature: Nature: Retailer of Essential CommRetailer of Essential Comm..

Classification: Classification: SmallSmall

Business Tax:Business Tax: 1,815.001,815.00

Gross Sales or Receipt for theGross Sales or Receipt for the

Previous Year Previous Year PhP230,000.00PhP230,000.00

Regulatory Charges:Regulatory Charges:

Police ClearancePolice Clearance 100.00 100.00

Sanitary InspectionSanitary Inspection 100.00 100.00

Business PlateBusiness Plate 150.00 150.00

Service Charges:Service Charges:

Health ExaminationHealth Examination 100.00 100.00

Garbage Collection FeeGarbage Collection Fee 400.00 400.00

Occupation/Calling FeeOccupation/Calling Fee 100.00 100.00

4,765.004,765.00

Fire Inspection (10%)Fire Inspection (10%) 476.50 476.50

TOTAL AMOUNT DUE:TOTAL AMOUNT DUE: 5,241.505,241.50

STEP 4. PAYMENTSTEP 4. PAYMENT

PAYMENT

NO PAYMENT shall be made or collected OUTSIDE of the TREASURER’S OFFICE and without corresponding OFFICIAL RECEIPT.

STEP 5. INSPECTIONSTEP 5. INSPECTIONINSPECTION. Present Official Receipt and Application Form to the1.) Municipal Health Office for the Issuance of Application for Sanitary Permit2.) Bureau of Fire Protection Office for the Issuance of Application for Fire Safety Inspection

These Offices shall schedule inspection of the business prior to the release of certificate.

STEP 6. RELEASESTEP 6. RELEASE

RELEASE.Release of Mayor’s Permit to Operate and Business Registration Plate.

OFFICES INVOLVED IN THE BPLSOFFICES INVOLVED IN THE BPLS

Mayor’s OfficeMayor’s Office Issuance/Release of Application for Permit to OperateIssuance/Release of Application for Permit to Operate

Treasurer’s OfficeTreasurer’s Office Issuance of CTC & Real Property Tax ClearanceIssuance of CTC & Real Property Tax Clearance Assessment, Payment and RecordingAssessment, Payment and Recording

MPDOMPDO Zoning/Locational ClearanceZoning/Locational Clearance

Engineering OfficeEngineering Office Issuance/Release of Application for Building/Occupancy PermitIssuance/Release of Application for Building/Occupancy Permit

Municipal Health OfficeMunicipal Health Office Issuance/Release of Application for Sanitary Inspection/Health Issuance/Release of Application for Sanitary Inspection/Health

CertificateCertificate

Bureau of Fire ProtectionBureau of Fire Protection Issuance/Release of Application for Fire Safety InspectionIssuance/Release of Application for Fire Safety Inspection