Scribd
Upload
32 views

Classroom Notes On LBT

This document summarizes local business taxation rules in the Philippines. It discusses that local taxes are imposed by LGUs based on provisions in the Local Government Code. The key points are: - Local business taxes are imposed on businesses operating within an LGU's jurisdiction and the tax base is generally the prior year's gross sales or receipts. - Deadlines for quarterly or annual payment are specified. New businesses may use capital or prior quarter gross sales as the initial tax base. - The document provides examples of tax rates and bases for different types of local taxes and addresses situations like property transfer, quarrying businesses, and amusement taxes. - Guidelines are provided for allocating tax situs between

Uploaded by

Lalaine Reyes
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
32 views

Classroom Notes On LBT

This document summarizes local business taxation rules in the Philippines. It discusses that local taxes are imposed by LGUs based on provisions in the Local Government Code. The key points are: - Local business taxes are imposed on businesses operating within an LGU's jurisdiction and the tax base is generally the prior year's gross sales or receipts. - Deadlines for quarterly or annual payment are specified. New businesses may use capital or prior quarter gross sales as the initial tax base. - The document provides examples of tax rates and bases for different types of local taxes and addresses situations like property transfer, quarrying businesses, and amusement taxes. - Guidelines are provided for allocating tax situs between

Uploaded by

Lalaine Reyes
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 5

Local Business Tax

 as a general law, taxation emanates from the legislative taxes of the government
o exception is local taxes which emanates from the LGU
o but ordinances imposed by such municipality/city/province should not exceed that of the LGU’s
 for purposes of discussion, we use LGU Code
 Read Local Government Code of 1991
 taxes imposed by
1. Provinces
2. Cities
3. Municipalities
 generally, tax base = GS/GR of prior year
o except if provision specifically provides the tax base to be used
o but in practice, the LGU does not follow this (they just look at the FS values)
o pero basta tayo follow the rules, disregard what’s in the FS because they might not be accurate in computing local taxes
 Deadline:
o no return to be filed, only payment
o always follow calendar year
o Accrual January 1
o Annual January 20
o Quarterly
 1st quarter – January 20
 2nd quarter – April 20
 3rd quarter – July 20
 4th quarter – Oct. 20
 Newly-started business
o subject to LBT:
1. Printing & Publication
2. Franchise Tax
o no LBT: others
o tax base = capital (but subsequent quarter after you register with the LGU, tax base = GS/GR)
o tax rate: in accordance with the LGC
 Operating already:
o subject to LBT: ALL
o tax base:
 initial year = GS/GR of prior quarter
 second year and onwards = GS/GR of prior year
o example:
 registration May 2019
 July 20 – GS/GR for 2nd quarter
 Oct 20 – GS/GR for 3rd quarter

 Problem 1
 Local taxes on real property – local tax is imposed by provinces
o whether there is consideration or no consideration: taxable
o tax base: FMV or consideration, whichever is higher
 Donation/Inheritance – subject to local transfer tax
o tax base: FMV
 Other tax implications of the problem
o Income Tax
 yes
 if ordinary asset – 30% rcit, 25 mcit
 if capital asset – 6% cgt
o Estate Tax
 none
o VAT
 depends whether held for sale or lease
 yes
o OPT
 none
o DST
 yes
o LBT
 yes
 Problem 2
 Maximum of professional tax liability is P300.

 Problem 3
 Quarrying businesses – taxable
 Benefit of engaging in quarrying businesses – free source because natural resources
o kaya magbayad sa government
 Distribution of Tax to Different Localities
o Province – 30%
o city or municipality – 30%
o barangay – 40%

 Problem 4
 Amusement Tax
o all admission fees/gate receipts of the amusement places are taxable
o different form OPT
 satellite coverage and advertising streamers
o may be subject to LBT but not as amusement tax because they are not admission fees
o not taxable as OPT

Local Government Code of the Philippines (Book II)


 Article Two – Municipalities
o all exporters: 1/2 of the rate
 manufacturers, millers, producers, wholesalers, distributors, dealers or retailers should be engaged in businesses enumerate in
Sec. 143(c) to be able to avail the 50% “discount”
o catch-all 2%
 Article Three – Cities
o may impose 150% taxes imposed by province/municipality
o all LGUs within Metro Manila may also impose 150% taxes

 Problem 5
 LBT is based on prior year’s GS/GR
 Retirement
o (Formula)
o pay quarterly so that it would be lower
o there seems no mechanism to claim as refund if mas Malaki paid kaysa sa due

Situs of Taxation

If sold in a place where there is a branch/sales outlet:


100% Branch

If sold in
(a) place where principal office is located, or
(b) a place where there is no branch/sales outlet:
Allocated between principal office and factory / project office / plant / plantation.

30% Head Office


Only 1 factory / project office / plant / plantation 100%

70% Factory / Project Office / Plant / Plantation 2 factories / project offices / plants / plantations Prorated in proportion to volumes of production

60% Factory
Factory and Plantaion are in different places
40% Plantation

 but if plant and head office are located in the same taxing jurisdiction, you don’t have to allocate 30%-70% anymore
 Problem 6
 Situation A

 Situation B

 Situation C
 Situation D

 Situation E
Tax Assessment
 we discussed only the computation of deficiency tax and penalties, read the process from the LGC
 prescription period of tax assessment for LBT: 5 years from the deadline of payment of tax or the payment of tax, whichever is later
 but if there is fraud, 10 years from discovery
 similar to national taxes, deficiency taxes are also imposed 25% surcharge (but no 0% and 50% surcharge)
o so for LBT, always 25%
 interest for deficiency tax is 2% per month maximum of 36 months
o maximum interest is 72%

 Problem 7
 Situation A
 LGC is just a guide (maximum), but if there is an ordinance, use the ordinance
 Makati Revised Revenue Code less than LGC, so use .60% (6/10x1%)
 But if greater than, that’s illegal. Follow the LGC fixed (maximum) rates.
 Situation B
 same as Situation A
 Situation C
 36 months lang interest (72%)
 for BIR, we don’t include surcharge, but for local we do
 Situation D
 for 1st to 3rd quarter: use 36 months in computing interest
 for 4th quarter: use 33 months in computing interest

You might also like