I. Introduction

Renewing a business permit in the Philippines is an annual ritual for almost all businesses, from sari-sari stores to large corporations. Every January, long lines form in city and municipal halls as taxpayers rush to meet deadlines for:

Mayor’s / Business Permit (regulatory fee); and
Local Business Tax (LBT) and other local taxes (e.g., fees for garbage, sanitary inspection, signage, etc.).

A recurring concern of many entrepreneurs is cash flow:

“Can I renew my business permit and pay in installments?”

The short answer is:

There is a legal basis for paying local business tax in installments (quarterly), under the Local Government Code (LGC);
Installment or staggered payment of the business permit fees themselves is largely a matter of local ordinance and policy, not an automatic right.

This article discusses what the law provides, how local governments typically implement it, and what options business owners may have when they cannot pay everything in one go.

II. Legal Framework

The key legal anchor is Republic Act No. 7160 – the Local Government Code of 1991 (LGC), which:

Grants local government units (LGUs) the power to tax and impose fees, including business taxes and regulatory fees for permits;
Prescribes general rules on assessment, collection, surcharges, and interest;
Leaves specific rates and procedures to local tax ordinances and revenue codes.

Other relevant legal instruments include:

Local Revenue Codes and Business Permit and Licensing System (BPLS) ordinances of cities and municipalities;
DILG / DTI / DOF memoranda on streamlining business permit processing (which affect process, not so much payment rights);
General provisions of the Civil Code on obligations and payments;
Special ordinances passed by LGUs granting tax amnesties, deadline extensions, or special payment arrangements, especially in times of crisis.

The result is a combination of national rules (through the LGC) and highly localized rules (through LGU ordinances).

III. Business Permit vs. Local Business Tax

It’s important to distinguish two concepts that are usually processed together:

Mayor’s / Business Permit Fee
- A regulatory fee, charged for the privilege of operating a business in a locality.
- Its main legal basis is the LGU’s power to regulate business and ensure public welfare (police power).
- In practice, the LGU will not issue the new permit (or sticker) until the fees and required taxes are paid.
Local Business Tax (LBT)
- A tax on the privilege of doing business, based on gross sales or receipts of the preceding year (for existing businesses) or presumed capital (for new ones).
- Expressly authorized by the LGC (e.g., Sections on taxes on business by provinces, cities, and municipalities).
- Historically may be paid annually or in quarterly installments.

Both are commonly processed under the same “business permit renewal” workflow, but legally they are different kinds of exactions, and the rules on whether you can pay in installments are not identical.

IV. Renewal Calendar and General Deadlines

While exact dates may vary by ordinance, the typical pattern is:

Renewal period: 1–20 January (or another date fixed by ordinance);
Businesses must declare gross sales/receipts for the preceding year, which becomes the basis for LBT;
Payment of LBT and permit-related fees is made at the Treasurer’s office or cashier;
The Business Permit (or Mayor’s Permit) is issued once the requirements and payments are completed.

Late renewal usually results in:

Surcharge (commonly 25% of the unpaid amount); and
Interest (commonly 2% per month on the unpaid amount, up to a ceiling number of months);
Possible closure or padlocking of the establishment for operating without a valid permit.

The exact percentages, caps, and enforcement practices depend on the LGC provisions and the specific local tax ordinance.

V. Installment/Quarterly Payment of Local Business Tax

A. Statutory Basis

The LGC contemplates that local business taxes may be paid:

Annually, on or before a certain date (often January 20); or
In four equal quarterly installments, on or before specified dates (commonly: January 20, April 20, July 20, and October 20), depending on how the LGU implements the law.

This quarterly scheme is not a mere concession; it is usually part of the tax collection structure allowed by law, especially for existing businesses.

However, whether it’s mandatory for an LGU to allow installments or whether the LGU can require full payment upfront for the year is a question of how the LGC is interpreted and implemented by local ordinances. In practice:

Many LGUs allow quarterly payments of LBT;
Some encourage full-year payment (sometimes with small discounts);
Others may effectively require full payment before issuing the permit, even if they technically compute in quarterly terms, for administrative simplicity.

B. How Quarterly Installments Typically Work

Where quarterly payments are recognized:

The taxpayer declares projected annual gross receipts (based on prior year’s actual gross for existing businesses);
The LBT is computed on the annual basis, then divided into four equal installments;
The taxpayer pays the first installment at renewal time (January), and subsequent installments on or before the quarter deadlines.

If the taxpayer fails to pay later installments, the unpaid portion becomes delinquent, subject to surcharge and interest, and may lead to enforcement measures (e.g., closure, distraint of property, refusal to issue the next year’s permit).

C. New Businesses

For newly established businesses (starting operations mid-year):

LBT may be computed based on capital investment or projected gross receipts from date of start of operations;
LGUs may still allow proportionate quarterly payments, but some require full payment of the computed tax upon issuance of the initial permit.

VI. Installment or Staggered Payment of Business Permit Fees

Here is where things become less uniform.

A. No Nationwide Automatic Right to Installment

Unlike the more formal structure for LBT, there is no explicit nationwide rule that a business owner has an automatic right to pay Mayor’s Permit / Business Permit fees in installments.

Generally:

LGUs insist that regulatory fees must be paid in full before a permit can be issued;
This is tied to the nature of the fee: it’s the price for the regulatory approval; if you haven’t fully paid, the LGU may consider the approval incomplete.

B. LGU Discretion via Ordinance or Policy

However, LGUs have broad discretion under the LGC to:

Fix rates of fees;
Determine manner of payment;
Provide reliefs, discounts, and special schemes, as long as they stay within the bounds of law and do not violate uniformity or other principles.

Therefore:

Some LGUs may pass ordinances or adopt policies allowing staggered payments or temporary permits where only part of the fees/taxes have been paid, especially for MSMEs;
Others may categorically refuse renewal unless all fees and taxes are fully paid.

Common local practices (policy-based, not universal):

Issuing a “provisional” or “temporary” business permit upon partial payment, with the condition that the balance must be paid by a certain date;
Requiring a promissory letter or an undertaking approved by the Mayor or Treasurer;
Allowing partial payment during tax amnesties or economic crises.

Because these are local policy matters, you must always check the city or municipal revenue code and actual practice of your LGU.

VII. Delinquent Accounts, Payment Plans, and Amnesty

A. Surcharge and Interest on Unpaid Local Taxes and Fees

Under the LGC framework, delinquent local taxes and fees generally:

Incur a surcharge (often 25% of the unpaid amount);
Accrue interest (for example, 2% per month on the unpaid amount, up to a maximum number of months set by law).

The exact figures come from the LGC’s standard formula and local ordinances that mirror these provisions.

B. Compromise and Installment on Delinquencies

LGUs are given power under the LGC to:

Compromise or settle tax liabilities in cases where the taxpayer is financially incapacitated or where the tax liability is of doubtful validity;
Condone or reduce penalties, surcharges, or interest through ordinances.

In practice, this may take the form of:

Tax amnesty ordinances, where:
- Penalties and interest are reduced or waived if the taxpayer pays the basic tax within a specified period;
- Installment or staggered payments are sometimes allowed for large delinquencies.
Case-by-case payment plans, approved by the local treasurer or sanggunian, especially for big taxpayers or those heavily affected by crises (e.g., calamities, pandemics).

Again, these are discretionary measures—not guaranteed rights—and are heavily dependent on local political and fiscal considerations.

C. Closure and Enforcement

If a business repeatedly fails to pay:

The LGU may issue closure or cease-and-desist orders;
The Treasurer may resort to distraint and levy on personal or real property, after proper notices;
The business name can be tagged as delinquent, making future permits or clearances difficult until settled.

An installment agreement can sometimes avoid or suspend such enforcement, but only if the LGU agrees to it and the business faithfully complies with the schedule.

VIII. Effects on Other Government Requirements

Failure to renew a local business permit or settle obligations can have knock-on effects:

BIR registration and compliance: While the BIR has its own registration rules, banks and counterparties often require a valid Mayor’s Permit;
DTI / SEC / CDA dealings: For some transactions, updated local permits may be requested as proof the enterprise is actually operating;
Government bidding and accreditation: Agencies that procure from private contractors usually require updated local permits and tax clearances, which can be delayed if there are unpaid local taxes or fees.

Thus, while some LGUs may allow staggered payments, a taxpayer must consider whether a partial payment arrangement delays the issuance of official documents needed for other transactions.

IX. Special Cases: MSMEs and Crisis-Oriented Relief

Many cities and municipalities have, at various times:

Passed ordinances granting grace periods, extensions, or installment plans for business taxes and permit fees;
Targeted help towards micro, small, and medium enterprises (MSMEs);
Offered discounts for early payment or waived penalties for late renewal.

These measures are usually time-bound and do not permanently alter the general structure of business permit renewal. They tend to appear:

After natural disasters;
During national health emergencies or economic downturns;
When local governments wish to encourage formalization and reduce the number of unregistered operators.

Because each LGU acts independently, you must watch out for local announcements and ordinances each year.

X. Practical Guidance for Business Owners

Know your Local Revenue Code
- Check whether your LGU explicitly allows quarterly payments of LBT and under what conditions.
- Confirm if installment or staggered payment of Mayor’s Permit and other fees is permitted and whether a permit can be issued before full payment.
Clarify the Breakdown of Amounts
- Ask for a separate breakdown of:
  - LBT (which may be payable quarterly);
  - Mayor’s Permit fee;
  - Other regulatory fees (sanitary, garbage, fire inspection, etc.).
- Sometimes the confusion arises because everything is lumped into one figure, when legally they have different treatment.
Request an Installment Arrangement in Writing
- If your LGU does not have a clear written policy but has historically allowed arrangements, file a formal letter addressed to the Mayor or Treasurer:
  - Explaining financial difficulty;
  - Proposing a reasonable payment schedule;
  - Requesting either a temporary permit or a hold on enforcement while you pay.
Be Realistic and Compliant
- If the LGU grants an installment plan, stick to it. Defaulting can make future requests for leniency less likely.
- Even if installment is allowed, consider the impact of delayed issuance of permits on your deals, bank requirements, and regulatory compliance.
Monitor Amnesty and Relief Ordinances
- Keep an eye on local announcements, especially around year-end.
- Tax amnesties and penalty condonations can be substantial cost savers for delinquent taxpayers.
Seek Professional Advice for Complex Situations
- For large delinquencies or disputes with the Treasurer’s office, consult a Philippine lawyer or tax practitioner familiar with local government taxation.
- Sometimes, a correct understanding of the LGC and local ordinances can avoid unnecessary penalties.

XI. Conclusion

There is no single nationwide rule that guarantees a business owner the right to pay all business permit renewal obligations in installments in the Philippines. Instead:

For Local Business Tax, the legal framework generally contemplates annual or quarterly payments, and many LGUs implement quarterly installment schemes.
For Mayor’s / Business Permit fees and related regulatory charges, full payment before issuance of the permit is the common rule, but LGUs have broad discretion to craft installment or relief policies through ordinances or administrative practice.
For delinquent accounts, LGUs can grant amnesties, condonations, and payment plans, but these are discretionary and usually time-bound.

Ultimately, whether you can renew your business permit via installment depends on three layers:

The Local Government Code (general legal framework);
Your LGU’s revenue code and ordinances (specific rules and deadlines);
The actual administrative practice of your city or municipal government (how flexible they are in real life).

Understanding these layers—and engaging proactively and transparently with your LGU—can often make the difference between closed doors and padlocks and a workable payment plan that keeps your business legally afloat.