There are two basic types of taxes in the Philippines, namely, national and local taxes. National taxes are what we pay to the government through the Bureau of Internal Revenue. This includes income tax, Value Added Tax (VAT), percentage tax, excise tax, estate tax, donor’s tax, documentary stamp tax, capital gains tax, and other taxes covered by the National Internal Revenue Code (Republic Act No. 8424 or known as the Tax Reform Act of 1997, as amended) – the tax code or law that governs national taxation in the Philippines.
On the other hand, local taxes are what we pay to the local government units, which include the provinces, municipalities, cities, and barangays. The local government taxation in our country is based on Republic Act 7160 or otherwise known as the Local Government Code of 1991, as amended. Here is the list of local government taxes in the Philippines:
Tax on Transfer of Real Property Ownership – tax imposed on the sale, donation, barter, or on any other mode of transferring ownership or title of real property.
Tax on Business of Printing and Publication – tax on the business of persons engaged in the printing and/or publication of books, cards, posters, leaflets, handbills, certificates, receipts, pamphlets, and others of similar nature.
Franchise Tax – tax on businesses enjoying a franchise, at the rate not exceeding fifty percent (50%) of one percent (1%) of the gross annual receipts for the preceding calendar year based on the incoming receipt, or realized, within its territorial jurisdiction.
Tax on Sand, Gravel and Other Quarry Resources – tax imposed on ordinary stones, sand, gravel, earth, and other quarry resources, as defined under the National Internal Revenue Code, as amended, extracted from public lands or from the beds of seas, lakes, rivers, streams, creeks, and other public waters within its territorial jurisdiction.
Professional Tax – an annual professional tax on each person engaged in the exercise or practice of his profession requiring government examination.
Amusement Tax – tax collected from the proprietors, lessees, or operators of theaters, cinemas, concert halls, circuses, boxing stadia, and other places of amusement.
Annual Fixed Tax For Every Delivery Truck or Van of Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in, Certain Products – an annual fixed tax for every truck, van or any vehicle used by manufacturers, producers, wholesalers, dealers or retailers in the delivery or distribution of distilled spirits, fermented liquors, soft drinks, cigars and cigarettes, and other products as may be determined by the sangguniang panlalawigan, to sales outlets, or consumers, whether directly or indirectly, within the province.
Tax on Business – taxes imposed by cities, municipalities on businesses before they will be issued a business license or permit to start operations based on the schedule of rates prescribed by the local government code, as amended. Take note that the rates may vary among cities and municipalities.
Fees for Sealing and Licensing of Weights and Measures – fees for the sealing and licensing of weights and measures at such reasonable rates as shall be prescribed by the sangguniang bayan of the municipality or city.
Fishery Rentals, Fees and Charges – rentals, fees or charges imposed by the municipality/city to grantees of fishery privileges in the municipal/city waters, e.g., fishery privileges to erect fish corrals, oysters, mussels or other aquatic beds or bangus fry areas and others as mentioned in the local government code, as amended.
Community Tax – tax levied by cities or municipalities to every inhabitant of the Philippines eighteen (18) years of age or over who has been regularly employed on a wage or salary basis for at least thirty (30) consecutive working days during any calendar year, or who is engaged in business or occupation, or who owns real property with an aggregate assessed value of One thousand pesos (P1,000.00) or more, or who is required by law to file an income tax return. Community tax is also imposed on every corporation no matter how created or organized, whether domestic or resident foreign, engaged in or doing business in the Philippines.
Take note that under Section 151 of code local government code (as amended), it says that “except as otherwise provided in this Code, the city, may levy the taxes, fees, and charges which the province or municipality may impose: Provided, however, That the taxes, fees and charges levied and collected by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of this Code. The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%) except the rates of professional and amusement taxes.
Other taxes that may be collected by barangays:
Taxes on stores or retailers with fixed business establishments with gross sales of receipts of the preceding calendar year of Fifty thousand pesos (P50,000.00) or less, in the case of cities and Thirty thousand pesos (P30,000.00) or less, in the case of municipalities, at a rate not exceeding one percent (1%) on such gross sales or receipts.
Service Fees or Charges – fees or charges for services rendered in connection with the regulations or the use of barangay-owned properties or service facilities, such as palay, copra, or tobacco dryers.
Barangay Clearance – a reasonable fee collected by barangays upon issuance of barangay clearance – a document required for many government transactions, such as when applying for business permit with the city or municipality.
Other fees and Charges – fees and charges that may be levied by barangayas on commercial breeding of fighting cocks, cockfights and cockpits; on places of recreation which charge admission fees; and on billboards, signboards, neon signs, and outdoor advertisements.
For more information, such as the schedule of rates on certain local taxes and other important things you may need to know about the local taxation in the Philippines, you may read the full text or PDF file of the Republic Act 7160 or otherwise known as the Local Government Code of 1991 here.
Disclaimer: The information published on this page is for general information only. New and subsequent laws and regulations may render the whole or part of the article incorrect or obsolete. This post doesn’t also constitute professional advice.