EIGHTEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
First Regular Session
S E N A T E
S. B. No. 843
iP Ifiif ofliK Jfrrcrctarp
T9 JUL 31 P4 :07
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 I I  
OF REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS THE "LOCAL 
GOVERNMENT CODE OF 1991"
EXPLANATORY NOTE
Nearly three decades ago, Republic Act No. 7160 otherwise known as the 
Local Government Code of 1991 (Code) was enacted to create 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 local government units (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 proposed bill introduces one such reform by harmonizing the business tax 
imposed by LGUs to a single rate of 1.5% of gross sales or receipts. With the 
adoption of a uniform rate, the administration, enforcement and collection of taxes is 
expected to be simpler and faster and will thereby increase competitiveness of our 
LGUs.


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


EIGHTEENTH CONGRESS OF THE 
REPUBUC OF THE PHILIPPINES 
First Regular Session
S E N A T E
S. B. No. 843
n{[l'. g'rrrrtnrp
*19 JUL 31 P4 «7
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 I I  
OF REPUBLIC ACT NO. 7160, OTHERWISE KNOWN AS THE "LOCAL 
GOVERNMENT CODE OF 1991"
Be it enacted by the Senate and House o f Representatives o f the Philippines in 
Congress assembled:
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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 feltewmg] ANY business[e5], INCLUDING THOSE SUBJECT 
TO 
FRANCHISE TAX 
UNDER SEC. 
137, 
AT 
RATES 
NOT 
EXCEEDING ONE AND A HALF PERCENT (1 .5 % ) OF GROSS 
SALES OR RECEIPTS OF THE PRECEDING CALENDAR YEAR.
[ (a) On manufacturers, assemblers, repackcrs, processors,-b re wers/ 
distillers, ■ rectifiers, ond compounders of liquors, distilled spirits, and
noture, in oecordance with the following schedule;
With-gross sales or receipt&^fer-the------------------------------------
preceding calendar year inThe-ameuntoff
-PecAnnufft
-R16&T)0
P-I^GOrOO-oF-fHere-but-les&Tharr-
Ti-1^,000T)0-
-^2a,00


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SCKOOOrOO-ofmQFe-btiMessthaR-
aOyOOO.00-
-40,-000.00-
302.00
-440.00
- 000.00
40tOOOtOO or moFe-OuOless thaa-
-OOtOOO.00-
-320.00
-TOtOOO.00-
-173204)0
70t0004X) or moFe-but tess-tt>aa-
400,000.00-
4,000.00
2t200.00
24^004)0
200r000.00 or mefe-buOless-thaa-
200 tOOO.OO-
-3004)00.00-
-378004)0
300,000.00-oF-FRGFe-0tit4ess-t0aR-
-000.0004)0-
oooa.oo
000T0004K)-ofL moFe-but4ess- thaa-
isOhaa-
-7004)0000-
-800000
-4000.00000-
-4000000
4000,000.OOGF-faof€-buOless thaa-
-2000,00000-
43000.00
2000.00000 OF-faore-buMes&40aa-
4000.0004)0ef-aw fe-0at4ess-thaa-
-3,000.00000-
4 8 0 0 0 0 0
-4.00000000-
49.80000
-8000.00000-
-23.400.00
8 0 0 0 0 0 0 0 0 or aiore t>ut4ess48aa- 
8 0 0 0 0 0 0 0 0 or- taore--------------------
-8000.00000-
-3407600
-ot a Fate-aot exceedla§
(b) On wholesalers; distributeFS,- of dealers in any article of commerce 
of whatever kiad or aature in oeeoFdoaee wifeh fehe fellowing-seheduler
------------------------------------AraouaOof-Tax
preeedtag cateadar year4rr4be-ofaouaf-o4- 
Less-thaa-P-4000.00-------------------------------
-Per-Aaaara
4^4800
P 4 0 0 0 0 0 oF-raore-4u4less4haa-
P2,000.00
0 3 0 0
-OOOOOO-
-6000
34)0000or-raore-but less thaa- 
40004)0-ofH:aore-bu0less4ban-
-4 0 0 0 0 0 -
-72.00
-6000.00-
4 0 0 0 0
60000 0  or more-but-)es64barr-
-800000-
4 2 4 0 0
84)0000 or raoro-butdess-lbaa-
-7O00O0-
-443.00
700000-or-raore-bo4leo&4baa-
-8.000.00-
4 8 6 .0 0


g^OOGTOQ-epmefe-btit iess-thaft
-I-GtCOOtOQ or more buMes&4^taft
2Qt000t00 opfneFe-bub>ess4bap
7b-,000.00 or more but less-thaa
GOQ.OOG.GQ or mere-bat-tess4bafr
§007 OOQrOCbePfPore babless tbaa
^hGOGrOOGrOO-or more bubtess4baa
at a rate not exceeding
gTQOQrGOQ.OG-er-rrtere
(e)— 0fi— exporters;— arrb— ©n— manufaeturers,— millers,— predneers,
cnumcrotcd hereunder a^ a rate eet-excGcding one half (1/2) of the
(1) Rice and corn,1
—Wheat—or—cassava—flour,—meat;—dairy—products,—locally
agricultural, marine, and■ fresh -watef^products, whether in their
fertilizers, pesticides, insecticides, herbicides arid other-farm ir^puts;
(6) Poultry feeds and other animal feeds,1


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-(8-)-Gemeftb
With n
o
n
Iqq nr 
fnr tho
T T llT I y I  
O C i f O  
iXvtZTxiyltyTO tv /I tl Iv^
-Amount-of Tax
pfeceding-Galendar yea^-in the amount ofe-
Per Aflaam
P400r00&700-ef-lef
-2%
m0Fe46aFhP4OOrOOOTOO-
-4%
Provided, however, That boroagoys shall-have-the-exelusive power to levy 
taxes, as provided uader Section 152 hereof, on gross soles or rceeipts of
in-l he-easc of cities, and Thirty- lheusand pesos (030,000.00) of less, in 
the cose of miinicipolitics.
With-gfoss-sales or reoeipts-fee-the-
pfecedingc-alendai^-yeaF- iB-the-afaeof4 off 
koss than P5,OOOtOO------------------------------
bokless-tkaa-
-P4br00(k00-
-taaa-
-I brOOQ-.OO-
46^000.00-or moFe-but less -tbaa-
-20,000^ 0-
20,0Q0:0Q-oefaore bot-tess-tbaa- 
204)0Qt0Q or more buyess-thao-
-3GM30OtOO-
-AOtOOOtOO-
40,000T00oMnore-bukless4harv^ 
bOrOCKkOO-or more  bukless-tharr-
-604)00.00-
-764)00.00-
767000.00-OHTiofe-bukless-tbafl-
4004)00-.00-
400T0004)0-efL-more-bokless46aFr-
460,000.00-oefOoro-bukless4haFr-
460,000.00-
-2004)004)0-
2004)004)0 OF more buklessOkarr-
300;0004)0-oeraerobuUess4haFr-
-2604)00.00-
k0004)0-
400,000.00-
600,000.00 or rnore bok)ess4bai:v
-7604)004)0-
A mm int of Tr>v 
rAfitt/ufil 
t ctA
Per AaRoro
-P27.60
-04^0
404.60
4664)0
-2-76.00
-3864)0
-6604)0
-8804)0
4-f3204)0
-4f0804)0
-2t6404)0
-3t6304)0
4,620.00
-64604)0
-3,2604)0
-Ot-260.00


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T^OrOOGrOO-er more buMes&4haR-
-I^OOOtOOOtGG-
~10t2§0:00
4700 OrGGOrGO-OMfleFe-bu Wes s-thafi-------27GOOGOOOG-
OGOOGOOrOO-eMTFGFe------------------------------------------------
-447OOOGO
-aba-fate not exeeeGm§
fifty - pereent - {§G%)—of
(f) --QR- bank5 ond othcF finond al-insblutions, ot 0 rote not--exeeedin§ 
fifty pcreenfe (50% ) ef-eae percent (1% ) ea the gfoss feeeipls ef the
discounts- f fom--lending activities, income from financial—teasla§7 
dividcndsr<:^ntals-en-pFepefty ond profit from exchange ee-sale of
(g) On peddlcFS engaged-in-the sale of any mcrchondiso of aftiele of 
commerce, at a rate not-excccding Fifty pesos
percentage—tax—under- the—National—Internal—Revenue—Cede,—as 
amended, the rate ef-tax-s fiall-neb-exeeed two percent (2%) of gross 
soles or receipts - of -tfie -preceding eolendan year; - The sanggunian 
concerned may-preseribe-o schedule of graduated -tax rates but in no
Sec. 2. Section 146 of the Code is hereby amended to read as follows: 
"Sec. 146. Payment o f 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 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 [of 
the] businesses [ mentioned in Section 143 ef this Cede which are 
subject to the some rate-o f tax], the tax shall be computed on the


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combined total gross sales or receipts of the said two (2) or more
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[related] businesses.
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(c) [ In coses, where a person cenduets-ei^-eperates twe- (2) or more of
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the- businesse s -mentiened-ln-Seetien 143 
of the Code whieh-are
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subject to different rates of tax, the gross sales or receipts of each
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tax duo from each business.] THE PAYMENT OF THE LOCAL
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BUSINESS TAX SHALL BE MADE NO LATER THAN MARCH 31
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OF THE CURRENT YEAR.
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Sec. 3. Implementing Rules and Regulations. -  The Department of Interior
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and Local Government and the Department of Finance shall issue the necessary
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rules and regulations to implement the provisions of this Act within sixty (60) days
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from its effectivity.
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Sec. 4. Repealing Clause. -  All general and special laws, acts, city charters,
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executive orders, presidential proclamations, issuances, rules and regulations, or
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parts thereof which are contrary to or inconsistent with any of the provisions of this
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Act are hereby repealed, amended, or modified accordingly.
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Sec. 5. Separability Clause. -  If any portion or provision of this Act is
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subsequently declared invalid or unconstitutional, other provisions hereof which are
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not affected thereby shall remain in full force and effect.
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Sec. 6. Effectivity Clause. -  This Act shall take effect fifteen (15) days after its
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publication in the Official Gazette or in a newspaper of general circulation.
Approved,