SEVENTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
Second Regular Session ) 1B WR-3 P22
SENATE neo: fp- _
s.B.No.L775

Introduced by Senator SONNY ANGARA

AN ACT
TO SIMPLIFY LOCAL TAXES TO ENHANCE TAX COMPLIANCE IN LOCAL
GOVERNMENT UNITS BY AMENDING CERTAIN PROVISIONS IN BOOK II OF
REPUBLIC ACT 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT
CODE OF 1991

EXPLANATORY NOTE

Nearly three decades ago, the Local Government Code of 1991 (Republic Act
7160) was enacted and created an environment of greater local autonomy, devolving
and decentralizing powers, resources, and responsibilities from the central
government to local government units. Although the implementation of the Code was
difficult, this landmark legislation made it possible for many LGUs to develop new
businesses, create new jobs, and revitalize and work for economic growth in their
respective communities.

A key objective of the Code was to provide LGUs greater means to create their
‘own sources of revenue in order to carry out their expanded responsibilities. In the
course of reviewing the Code over the last seventeen years, it has been evident that
the effectiveness of certain provisions in the Code have been overtaken by changes
in the economy. These changes necessitate key reforms in implementation of the
law, particularly towards simplifying the taxing process.

The foregoing bill proposes one such reform for LGUs, particularly harmonizing
the business tax to a single rate of 1.5% of gross sales or receipts. With these
proposed amendments to Book I! of the Local Government Code, local governments
{would be strengthened and furthered empowered towards the attainment of national
development goals.

In view of the foregoing, approval of this bill is earnestly requested.

SONNY ANGARA



SEVENTEENTH CONGRESS OF THE )

REPUBLIC OF THE PHILIPPINES )
Second Regular Session )
SENATE
s.B.No.L775

Introduced by Senator SONNY ANGARA

AN ACT
TO SIMPLIFY LOCAL TAXES TO ENHANCE TAX COMPLIANCE IN LOCAL
GOVERNMENT UNITS BY AMENDING CERTAIN PROVISIONS IN BOOK II OF
REPUBLIC ACT 7160, OTHERWISE KNOWN AS THE LOCAL GOVERNMENT
CODE OF 1991

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 143 of Republic Act No. 7160, otherwise known as the
Local Government Code of 1991, hereinafter referred to as the “Code”, is hereby

amended to read as follows:

“SEC. 143. Tax on Business. - The municipality may impose taxes on [the
following] ANY  business[es], INCLUDING THOSE SUBJECT TO
FRANCHISE TAX UNDER SEC. 137, AT RATES NOT EXCEEDING ONE
AND AHALF PERCENT (1.5%) OF GROSS SALES OR RECEIPTS OF THE
PRECEDING CALENDAR YEAR.



Camoraneen

29
30





Auekune

a

16
17

18
19

400,000.90.



27

400,000.00-or more butess tha 1S bene 2 ast oe

SEC. 2. Section 146 of the Code is hereby amended to read as follows:

“SEC. 146. Payment of Business Taxes. — (a) The taxes imposed under

Section 143 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
5



13
14
15
16

17
18
19

which such tax has been paid. The tax on business must be paid by the
person conducting the same.

(b) In cases where a person conducts or operates two (2) or more [ofthe]
businesses [mentioned-in-Section-443-0f this-Code-which-are-subjecttethe

same-rate-of tax], the tax shall be computed on the combined total gross sales
or receipts of the said two (2) or more [related] businesses.

business.] THE PAYMENT OF THE LOCAL BUSINESS TAX SHALL BE
MADE NO LATER THAN MARCH 31 OF THE CURRENT YEAR.

SEC. 3. Repealing Clause. - All general and special laws, acts, city charters,
decrees, executive orders, proclamations and administrative regulations, or part or
parts thereof which are inconsistent with any of the provisions of this Act are hereby
repealed or modified accordingly.

SEC. 4. Separability Clause. - If, for any reason or reasons, any part of
provision of this Act shall be held unconstitutional or invalid, other parts or provisions

hereof which not affected thereby shall continue to be in full force and effect.

SEC. 5. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,