NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE
S. B. No, 904
of tf)f Si'rfl'Pt.up
*22 JUL27 P4 *42
RllCElViiDBV;
Introduced by Senator SONNY ANGARA
AN ACT
TO ENHANCE THE TAXING POWERS OF LOCAL GOVERNMENT UNITS BY 
AMENDING CERTAIN PROVISIONS IN BOOK II OF REPUBLIC ACT NO. 
7160, OTHERWISE KNOWN AS THE "LOCAL GOVERNMENT CODE OF 1991"
EXPLANATORY NOTE
A key objective of the R.A. No. 7160, otherwise known as the Local 
Government Code of 1991 (Code) was to provide LGUs greater means to create their 
own sources of revenue in order to carry out their expanded responsibilities. 
Through the years however, the effectiveness of certain provisions in the Code have 
been overtaken by changes in the economy.
These changes include annual increases in the national inflation rate which 
has reduced the value of tax collections, the undue emphasis on the head office of 
corporations as a taxable unit, and leakages from local tax revenues resulting from 
local tax exemptions enjoyed by government corporations and business entities 
covered by investment promotion laws.
Thus, this measure proposes several reforms to address these very issues, 
born out of several reviews of the Code during the 17th Congress. In particular, the 
amendments proposed under this bill are:
• 
Increasing the annual fixed tax for delivery truck or vans of manufacturers 
or producers from 500 pesos to 1,500 pesos while ensuring that the rate 
remains current by indexing this to the inflation rate;
• 
Simplifying determination of situs of taxation for businesses maintaining or 
operating branch or sales outlets.


• 
Reducing the taxable base of the head office from thirty percent (30%) to 
ten percent (10%) of gross sales or revenues and Increasing the share of 
factories, plantations, branches, sales outlets and the like from seventy 
percent (70%) to ninety percent (90%);
• 
Removing the authority of the national government to provide exemptions 
on local taxes, fees and charges; and
• 
Imposing a limitation on the extent local government units can provide 
local exemptions from taxes, fees, and charges.
With these proposed amendments, local governments would be strengthened 
and further empowered towards the attainment of national development goals.
In view of the foregoing, approval of this bill is earnestly requested.
SONNY ANGARA


NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
SENATE
S. B. No. 904
.#>1 g>euatp
oI I1)C ftrcrttmy
■22 JUL 27 P4 =42
RtCEIVtOBV...
Introduced by Senator SONNY ANGARA
AN ACT
TO ENHANCE THE TAXING POWERS OF LOCAL GOVERNMENT UNITS BY 
AMENDING CERTAIN PROVISIONS IN BOOK II OF REPUBLIC ACT NO. 
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:
1 
Section 1. Section 141 of Republic Act No. 7160, otherwise known as the
2 
Local Government Code of 1991, hereinafter referred to as the "Code", is hereby
3 
amended to read as follows:
4 
"Sec. 141. Annual Fixed Tax for Every Delivery Truck or Van of
5 
Manufacturers or Producers, Wholesalers of, Dealers, or Retailers in,
6 
Certain Products. - (a) The province may levy an annual fixed tax for
7 
every truck, van or any vehicle used by manufacturers, producers,
8 
wholesalers, dealers or retailers in the delivery or distribution of
9 
distilled spirits, fermented liquors, soft drinks, cigars and cigarettes,
10 
and other products as may be determined by the Sangguniang
11 
Panlalawigan, to sales outlets, or consumers, whether directly or
12 
indirectly, within the province in an amount not exceeding [five
13 
hundred-pesos (P500)] ONE THOUSAND FIVE HUNDRED PESOS
14 
(Pl,500). THE SANGGUNIANG PANLALAWIGAN MAY
15 
INCREASE THE ANNUAL FIXED TAX FOR EVERY TRUCK, VAN
16 
OR ANY VEHICLE USED BY MANUFACTURERS, PRODUCERS,
17 
WHOLESALERS, DEALERS OR RETAILERS IN THE DELIVERY


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
OR DISTRIBUTION OF DISTLLED SPIRITS, FERMENTED 
LIQUORS, SOFT DRINKS, CIGARS AND CIGARETTES, AND 
OTHER PRODUCTS TO SALES OUTLETS, OR CONSUMERS, 
WHETHER DIRECTLY OR INDIRECTLY, ONCE EVERY THREE (3) 
YEARS BASED ON GUIDELINES ISSUED BY THE BUREAU OF 
LOCAL GOVERNMENT FINANCE OF THE DEPARTMENT OF 
FINANCE UTLIZING THE CONSUMER PRICE INDEX AS THE 
BASIS FOR THE INCREASE IN THE CEILING OF THE 
AFOREMENTIONED ANNUAL FIXED TAX."
Sec. 2. Section 150 of the Code is hereby amended to read as follows: 
"Sec. 150. Situs of the Tax. -
(a) For purposes of collection of the taxes under Section 143 of this 
Code, [maf>ufacturcrs, assemblers,—rcpackors,—brewers, distillers7 
rectifiers and compounders of liquor, distilled spfrits-and wines, millers,
producers, exporters, wholesalers—distributors, dealers, contractors,
banks and other financial institutions,--and-ether] ALL businesses[7] 
maintaining or operating branch or sales outlet elsewhere shall record 
the sale in the branch or sales outlet making the sale or transaction, 
and the tax thereon shall accrue and shall be paid to the CITY OR 
municipality where such branch or sales outlet is located. In cases 
where there is no such branch or sales outlet in the city or municipality 
where the sale or transaction is made, the sale shall be duly recorded 
in the principal office and the taxes due shall accrue and shall be paid 
to such city or municipality.
(b) The following sales allocation shall apply to [manufacturers, 
assemblers, contractors, producers, and-exporters] ALL BUSINESSES 
with factories, project offices, plants, and plantations in the pursuit of 
their business:
(1) [Thirty percent (30%)] TEN PERCENT (10%) of all sales 
recorded in the principal office shall be taxable by the city or 
municipality where the principal office is located; and


1
2
3
4
5
6
7
8 
9
10
11
12
13
14
15
16
17
18
19
20 
21 
22
23
24
25
26
27
28
29
30
31
32
(2) [Seventy percent (70%)] NINETY PERCENT (90%) of all 
sales recorded in the principal office shall be taxable by the city or 
municipality where the factory, project office, plant, or plantation is 
located.
(c) In case of a plantation located at a place other than the place 
where the factory is located, said [seventy pcrcent-(-70%)] NINETY 
PERCENT (90%) mentioned in subparagraph (b) of subsection (2) 
above shall be divided as follows:
(1) Sixty percent (60%) to the city or municipality where the 
factory is located; and
(2) Forty percent (40%) to the city or municipality where the 
plantation is located.
(d) In cases where a [manufacturer, assembler, producer, exporter or 
contractor] BUSINESS has two (2) or more factories, project offices, 
plants, or plantations located in different localities, the [seventy 
percent—(-70%-)] NINETY PERCENT (90%) sales allocation 
mentioned in subparagraph (b) of subsection (2) above shall be 
prorated among the localities where the factories, project offices, 
plants, and plantations are located in proportion to their respective 
volumes of production during the period for which the tax is due."
Sec. 3. Section 192 of the Code is hereby amended to read as follows: 
"Sec. 192. Authority to Grant Local Tax Exemption Privileges. - 
EXCEPT AS PROVIDED HEREIN, NO LAW PROVIDING TAX 
EXEMPTION FROM LOCAL GOVERNMENT TAXES, FEES AND 
CHARGES SHALL BE ENACTED. UNLESS OTHERWISE 
PROVIDED IN THIS CODE, local government units [may], through 
[ordinances] duly approved ORDINANCES, MAY grant tax 
exemptions, incentives or reliefs FOR THE PURPOSE OF 
PROMOTING OR ENCOURAGING INVESTMENTS IN THEIR 
JURISDICTIONS, under such terms and conditions as they may 
deem necessary: PROVIDED, THAT THE DURATION OF SUCH 
INCENTIVES SHALL NOT EXCEED A TOTAL OF SIX (6)


1 
CONSECUTIVE YEARS FROM THE EFFECTIVE DATE GRANTING
2 
THE INCENTIVE."
3 
Sec. 4. Implementing Rules and Regulations. - The Department of Interior
4 
and Local Government and the Department of Finance shall issue the necessary
5 
rules and regulations to implement the provisions of this Act within sixty (60) days
6 
from its effectivity.
7 
Sec. 5. Repealing Clause. - All general and special laws, acts, city charters,
8 
executive orders, presidential proclamations, issuances, rules and regulations, or
9 
parts thereof which are contrary to or inconsistent with any of the provisions of this
10 
Act are hereby repealed, amended, or modified accordingly.
11 
Sec. 6. Separability Clause. - If any portion or provision of this Act is
12 
subsequently declared invalid or unconstitutional, other provisions hereof which are
13 
not affected thereby shall remain in full force and effect.
14 
Sec. 7. Effectivity Clause. - This Act shall take effect fifteen (15) days after its
15 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,