In addition to national taxes collected by the BIR, local government units (LGUs) have their own power to impose local taxes, fees, and charges under the Local Government Code, subject to the limitations the Code sets. Common local taxes include the local business tax (imposed by cities and municipalities on businesses, based on gross sales or receipts), the real property tax (amilyar, imposed by provinces, cities, and municipalities on land, buildings, and improvements), the tax on transfer of real property ownership, franchise taxes, amusement taxes, professional taxes on those practicing a profession requiring government examination, and various regulatory fees. The community tax is a tax imposed on individuals (of a certain age and income) and juridical persons, evidenced by a Community Tax Certificate (cedula), which is often required when acknowledging documents before a notary, when receiving a government license or permit, or in other transactions. Local taxes are administered and collected by the LGU treasurer, and disputes over local tax assessments follow a protest procedure to the local treasurer and, ultimately, the courts. Because LGUs derive much of their revenue from these taxes, compliance is enforced, and unpaid local taxes can lead to penalties and, for real property tax, eventual auction of the property.
LGUs Have Their Own Taxes
Besides national taxes, LGUs impose local taxes, fees, and charges under the Local Government Code, subject to its limits.
Common Local Taxes
- The local business tax (on gross sales/receipts);
- The real property tax (amilyar);
- The transfer tax on real property, franchise and amusement taxes, and the professional tax.
The Community Tax (Cedula)
The community tax on individuals and juridical persons is evidenced by a Community Tax Certificate (cedula), often required to notarize documents or obtain a license/permit. Local taxes are collected by the LGU treasurer.
Practical Takeaways
- LGUs impose local business tax, real property tax, transfer tax, and more;
- The cedula evidences the community tax, often needed for notarization and permits;
- Local tax disputes go to the treasurer then the courts — unpaid amilyar can lead to auction.
Frequently Asked Questions
What taxes do local governments impose? Local business tax on businesses, real property tax (amilyar), the transfer tax on real property, franchise and amusement taxes, professional taxes, and various regulatory fees, under the Local Government Code.
What is a community tax certificate? The cedula, which evidences payment of the community tax imposed on individuals and juridical persons, often required when notarizing documents or obtaining a government license or permit.
Who collects local taxes? The LGU treasurer administers and collects local taxes, and disputes over local tax assessments follow a protest procedure to the local treasurer and, ultimately, the courts.
What happens if I don't pay local taxes? Unpaid local taxes can lead to penalties, and for real property tax, the property can eventually be subjected to a tax delinquency auction.
This commentary is for general informational purposes only and does not constitute legal advice. For guidance specific to your situation, please consult a licensed attorney.
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