B USINESS PERMIT AND LICENSES RICARDO L. BOBIS, JR. Municipal Treasurer San Antonio, Zambales

AUTHORITY OF LGUs TO COLLECT TAXES Emanates from Republic Act 7160 also known as the Local Government Code of 1991 Book II. LOCAL TAXATION AND FISCAL MATTERS Title One LOCAL GOVERNMENT TAXATION Chapter I. General Provisions Sec POWER TO CREATE SOURCES OF REVENUE. – Each local government unit shall exercise its power to create its own sources of revenue and levy taxes, fees and charges subject to the provisions herein, consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the local government units. Sec LOCAL TAXING AUTHORITY. – The power to impose a tax, fee or charge or to generate revenue under this Code shall be exercised by the sanggunian of the LGU concerned through an appropriate ordinance.

… vests the power to impose taxes and generate revenues in the sanggunians. However, taxing and revenue- generating powers shall be exercised through appropriate ordinances.

Two Major Sources of Income  Externally Sourced  Internally Sourced

Externally Sourced Income  consists of share in BIR gross collection or IRA,  a share in the proceeds from utilization & development of the national wealth,  loans, credits and bonds,  and grants or subsidies.

Internally Sourced Income  Business Tax & other local taxes,  Real Property Taxes,  Income from economic enterprises,  Fees and charges.

PRINCIPLES OF TAXATION  Taxes must be equitable  Based on the taxpayer’s ability to pay  Levied and collected only for public purposes  Must not be unjust, excessive, oppressive, or confiscatory  Must not be contrary to law, public policy, national economic policy, or in restraint of trade

Levels of Taxing Power  Provinces  Municipalities  Cities  Barangays

For Municipalities  Tax on Business  Fees and Charges  Community Tax Certificate  Fees for Sealing and Licensing of Weights and Measures  Fishery Rentals, Fees and Charges  Motorized Tricycle Operator’s Permit (MTOP)

TAX ON BUSINESS  Manufacturers  Wholesalers  Exporters  Manufacturer, Wholesaler, or Retailers of Essential Commodities  Retailers  Contractors  Banks and other Financial Institutions

COMMON FEES AND CHARGES  Regulatory Fees  Mayor’s Permit  Garbage Collection Fee  Zoning/Locational Clearance  Other Fees & Charges  Real Property Tax Clearance  Fire Inspection Fee  Sanitary Inspection Fee  Occupancy Permit  Occupation/Calling Fee

PROGRESSIVE TAX STRUCTURE  Calibrated/Graduated Scale of Gross Sales or Receipts  Percentage Base

GRADUATED SCALE Manufacturer With Gross Sales or Receipt for theAmount of Tax Previous Year in the amount of per annum Less than 30, Less than 30, ,000 or more but less than 40, ,000 or more but less than 50, ,000 or more but less than 75,000 1, :::: :: 5,000,000 or more but less than 6,500,000 26, ,500,000 or more % of Gross Sales

PERCENTAGE BASE Retailers of Other Commodities With Gross Sales or Receipt for theRate of Tax Previous Year in the amount of per annum 400,000 or less2.2% More than 400,0001.1%

PHILIPPINE DEFINITION OF BUSINESS SIZE Characteristics Asset Size Number of Workers CottagePhP 500,000 and below 1-10 SmallPhP 500K - PhP 5M MediumPhP 5M - PhP 20M LargeOver PhP 20M 200 & above

BASES OF TAXATION  For Newly started Business  Based on Capital Investment  For Renewal  Based on Gross Sales or Receipts of the preceding calendar year

RETIREMENT OF BUSINESS  A business subject to tax shall, upon termination, submit a sworn statement of its gross sales or receipts for the current year.  If the tax paid during the year be less than the tax due on said gross sales or receipts of the current year, the difference shall be paid before the business is considered officially retired.

PAYMENT OF BUSINESS TAX  Taxes imposed shall be payable for every separate or distinct establishment or place where business subject to the tax is conducted and one line of business does not become exempt by being conducted with some other businesses for which such tax has been paid.  The tax on a business must be paid by the person conducting the same.

TAX PERIOD AND MANNER OF PAYMENT  the tax period of all local taxes, fees and charges shall be the calendar year.  Such taxes free and charges may be paid in quarterly installments.

ACCRUAL OF TAX  all local taxes, fees and charges shall accrue on the 1 st day of January of each year.  New taxes, fees, and charges or changes in the rates thereof, shall accrue on the 1 st day of the quarter next following the effectivity of the ordinance imposing such new levies or rates.

TIME OF PAYMENT  All local taxes, fees, and charges shall be paid within the first twenty (20) days of January or of each subsequent quarter, as the case may be.  The sanggunian may, for a justifiable reason or cause, extend the time for payment of such taxes, fees or charges without surcharges or penalties, but only for a period not exceeding six (6) months.

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

SITUS OF TAX Manufacturers, 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% 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 AND LICENSES OPERATION  Before the Operation of any business or of an entity to engage in any business, within its taxing powers, one must Apply for Mayor’s Permit to Operate Business  Upon its Expiration and or  Before the retirement of Business

BASIC REQUIREMENTS  Community Tax Certificate of the Owner  Barangay Business Clearance  BIR Registration  DTI Registration  For Corporation, SEC Registration Certificate

BASIC STEPS APPLICATION. The Applicant shall secure and prepare the Basic Requirements in the Checklist Checklist of Basic Documentary Requirements:. Community Tax Certificate. Barangay Business Clearance. BIR Certificate of Registration. DTI Certificate of Registration. For Corporation, SEC Registration Certificate

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

Sample of Assessment Mayor’s Permit Fee:2, Nature: Retailer of Essential Comm. Classification: Small Business Tax:1, Gross Sales or Receipt for the Previous Year PhP230, Regulatory Charges: Police Clearance Sanitary Inspection Business Plate Service Charges: Health Examination Garbage Collection Fee Occupation/Calling Fee , Fire Inspection (10%) TOTAL AMOUNT DUE:5,241.50

STEP 4. PAYMENT PAYMENT NO PAYMENT shall be made or collected OUTSIDE of the TREASURER’S OFFICE and without corresponding OFFICIAL RECEIPT.

STEP 5. INSPECTION INSPECTION. Present Official Receipt and Application Form to the 1.) Municipal Health Office for the Issuance of Application for Sanitary Permit 2.) 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. RELEASE RELEASE. Release of Mayor’s Permit to Operate and Business Registration Plate.

OFFICES INVOLVED IN THE BPLS  Mayor’s Office  Issuance/Release of Application for Permit to Operate  Treasurer’s Office  Issuance of CTC & Real Property Tax Clearance  Assessment, Payment and Recording  MPDO  Zoning/Locational Clearance  Engineering Office  Issuance/Release of Application for Building/Occupancy Permit  Municipal Health Office  Issuance/Release of Application for Sanitary Inspection/Health Certificate  Bureau of Fire Protection  Issuance/Release of Application for Fire Safety Inspection