L. Local Taxation (R.A. No. 7160, Book II, Title I)

Question 1

1. General Principles – Sections 130 and 132

Answer 1

Nature of the Local Taxation
a) Limitations - 3 - Constitutional, Inherent, & Legislative restrictions like Reservation rule, National tax imposed by national government cannot be imposed by Local government, No withholding duty in LGU, As a delegated power, LGU can not further delegated

b) LGU taxation power is a delegated power vs Inherent in National government

c) Basis of Data in LGU taxation is the Prior Year period - calendar

d)

Question 2

2. Common Limitations on the Taxing Powers of Local Government Units
   – Section 133

Answer 2

Section 186 of the LGC gives a general
view of the limitations
1. Those already subject to tax under the NIRC or other applicable laws cannot be taxed again
2. Local taxes shall not be
unjust, excessive, confiscatory or contrary
to national policy
3. No ordinance can be enacted
without any prior public hearing
conducted for the purpose. [Tax
Made Less Taxing (2021) by Ingles

Unless otherwise provided, the following CANNOT be levied by the LOCAL governments:
a. Income tax,
except when levied on banks and other financial institutions under Sec. 143(f) of the LGC;
b. Documentary stamp tax;
c. Taxes on Estate, inheritance, gifts, legacies and other acquisitions mortis causa;
XPN: Tax on transfer of real property)
(Sec. 135, LGC; Art. 221(c), LGC IRR)
d. Customs duties, registration fees of vessel and wharfage on wharves, tonnage dues, and all other kinds of customs fees, charges and dues;
Exception: wharfage on wharves constructed

Question 3

3. Local Business Tax – Sections 143, 145 and 146

Question 4

4. Validity of a Local Tax Ordinance – Section 187

Tests of a valid ordinance:
1. It must not contravene the Constitution or any statute;
2. It must not be unfair or oppressive;
3. It must not be partial or discriminatory;
4. It must not prohibit but may regulate trade;
5. It must be general and consistent with public policy; and
6. It must not be unreasonable
(Magtajas v. Pryce Properties, G.R. No. 111097, 234 SCRA 255 (1994))

Answer 4

An ordinance is presumed valid unless declared otherwise by a court in an appropriate proceeding. (Rural Bank of Makati v. Municipality of Makati, G.R. No. 150763 (2004))

Local tax ordinance:
The power to impose a tax, fee, or charge or to generate revenue under the LGC shall be exercised by the Sanggunian concerned through an appropriate ordinance. (Sec. 132, LGC)

Question 5

5. Taxpayer’s Remedies - LOCAL TAX
   a. Administrative – Section 195
   b. Judicial
   c. Refund or Credit – Section 196

Answer 5

In local taxation, the taxpayer has three remedies:
1. Question the newly enacted ordinance;
2. Protest against an assessment;
3. Claim for refund or tax credit

Question 6

6. Assessment and Collection of Local Taxes – Section 194
   a. Remedies of Local Government Units
   b. Prescriptive Period
   c. Injunction

Answer 6

civil action for collection within 5 years from due date

b. Prescriptive Period
(1) Assessment - 5 years from date it became due or 10 years from discovery of Fraud;
(2) Collection - 5 years from date of Assessment. No such action shall be filed AFTER EXPIRATION

Question 7

5. Taxpayer’s Remedies - LOCAL TAX

a. Administrative – Section 195 = PROTEST

Answer 7

Key Points: Tax Assessment Process

Step 1: Taxpayer’s Challenge
* You have 60 days to dispute the tax assessment of the LOCAL TREASURER

Step 2: Local Government’s Decision
* The LOCAL TREASURER has 60 days to decide on your protest.
* If they agree with you, the tax is reduced or cancelled.

Step 3: Appeal to Court
* If the LOCAL TREASURER disagrees & DENIES the challenge, you have 30 days to go to court - First Level courts or RTC
* If you don’t go to court, the tax assessment is final.

Question 8

5. Taxpayer’s Remedies - LOCAL TAX

b. Judicial
1) Court action
2) Action for Declaratory relief
3) Injunction

Answer 8

1. Court Action

a. Within 30 days from receipt of decision or
lapse of 60 days in case of DOJ’s inaction
b. Within 30 days from receipt of decision denying protest or lapse of 60 days in case of LTs inaction
c. Inaction of LT in Refund cases and 2 year period about to lapse
d. No other plain, speedy, & adequate remedy

Question 9

Professional Tax
Amusement Tax

Question 10

What are the local taxes?

Answer 10

Provincial
a) Real Property tax
b) Other Privilege tax

Municipal
a) community
b) local business tax

Barangay
a) tax on small retailers