Tax rule tweaks sought to boost LGUs’ revenues, capabilities

SENATOR Francis “Chiz” Escudero urged Malacan˜ang to lend its support to a proposed amendment to the situs rule on local business taxes in a bid to raise revenues for local government units (LGUs) and enhance financial capability to execute programs in their respective areas.

“We have a pending bill which seeks to amend the situs of taxation provision in the Local Government Code. Essentially, we want businesses to pay their local taxes in municipalities where the businesses operate, instead of where their main offices are located. LGUs, in effect, should have a bigger share in the revenue from these firms,” Mr. Escudero said in a convention organized by the League of Municipalities of the Philippines (LMP) Visayas Cluster in Iloilo last week.

Mr. Escudero was referring to Section 150 of the Local Government Code or Republic Act No. 7160 which states that “all sales made in a locality where there is a branch or sales office or warehouse should be recorded in said branch or sales office or warehouse and the local business tax due should be paid to the city or municipality where the same is located.”

In 2013, under the 16^th Congress, the senator refiled the proposal, or Senate Bill No. 120. He originally filed the bill in 2010 as SB No. 105.

“A hundred percent share of all sales or transactions to Local Government Units is proposed so long as such sales or transactions occur in the LGU concerned. This practically expunges the present thirty percent share of the LGU where the principal place of business is located,” Mr. Escudero said in the bill’s explanatory note.

Mr. Escudero’s bill also proposes the following sales allocation for manufacturers, assemblers, contractors, producers and exporters with factories, project offices, plants and plantations: 30% of all sales recorded in the principal office shall be taxable by the city or municipality where the principal office is located and 70% percent of all sales shall be taxable by the city or municipality where the factory, project office, plant or plantation is located.

According to Mr. Escudero, most business owners prefer to pay their taxes where their businesses are located to “foster a relationship with the LGU where they operate.” --Elizabeth E. Escaño

source:  Businessworld