When people search for business tax rate tables in Philippine cities and municipalities, they are usually trying to answer one practical question: “How much will my city hall or municipal hall charge me for my Mayor’s Permit or business permit?” The confusing part is that this is not a BIR tax table. It is a local business tax imposed by the city or municipality where the business is located, usually assessed during new business registration or annual renewal. The correct rate depends on the LGU’s revenue code, your business classification, your gross sales or receipts, and whether you are in a municipality, city, or Metro Manila LGU.
What Is a Business Tax Rate Table in a Philippine LGU?
A business tax rate table is the schedule used by a city or municipality to compute the local business tax due from a business operating within its territorial jurisdiction.
It is separate from:
- BIR income tax
- VAT or percentage tax
- withholding taxes
- SEC, DTI, or CDA registration fees
- fire safety, sanitary, zoning, garbage, signage, or other regulatory fees
The legal starting point is Republic Act No. 7160, or the Local Government Code of 1991. Section 143 authorizes municipalities to impose business taxes on specific categories such as manufacturers, wholesalers, retailers, contractors, banks, financial institutions, peddlers, and businesses not otherwise classified. Cities may impose the taxes, fees, and charges that provinces and municipalities may impose, and city rates may exceed municipal maximum rates by up to 50%, except for professional and amusement taxes. Metro Manila municipalities are also allowed higher maximum rates under Section 144. (ChanRobles Law Firm)
In practice, your local business tax is usually shown in an assessment sheet issued by the Business Permits and Licensing Office (BPLO), City Treasurer’s Office, or Municipal Treasurer’s Office. The assessment may include many line items, but the “business tax” portion is the one tied to your gross sales or receipts and business classification.
Legal Basis for Local Business Tax Rates
The power of LGUs to impose local taxes comes from the Constitution and is implemented through the Local Government Code. The Code allows LGUs to raise local revenues, but it also places limits so that local taxes are not arbitrary, excessive, or imposed without proper ordinance procedure. (Lawphil)
For business tax rate tables, the most important provisions are:
| Legal basis | What it means in practice |
|---|---|
| Local Government Code, Section 143 | Base authority of municipalities to impose business tax by classification and gross sales/receipts |
| Section 144 | Metro Manila municipalities may impose rates up to 50% higher than the Section 143 maximum rates |
| Section 151 | Cities may impose provincial and municipal taxes, and city rates may exceed municipal maximum rates by up to 50%, with exceptions |
| Section 150 | Determines where local business tax is paid when a business has a principal office, branches, sales offices, factories, plants, project offices, or plantations |
| Section 146 | Business taxes are payable for every separate or distinct establishment, and different lines of business may have to be separately reported |
| Section 167 | Local taxes are generally payable within the first 20 days of January or of each subsequent quarter |
| Section 168 | LGUs may impose surcharge and monthly interest for late payment, within statutory limits |
| Section 187 | A taxpayer may question the legality or constitutionality of a tax ordinance within 30 days from its effectivity |
| Section 195 | A taxpayer may protest a local tax assessment within 60 days from receipt |
| Section 196 | Refund or tax credit claims must be filed in writing with the local treasurer, and court action must be within two years |
The Supreme Court has also emphasized that local tax ordinances and revenue measures must be challenged promptly because they fund local government operations. In Hon. Leila M. De Lima v. City of Manila, the Court discussed the 30-day appeal period under Section 187 and the limits on LGU rate increases under Section 191. (Supreme Court E-Library)
Base Municipal Business Tax Rate Tables Under Section 143
The tables below show the statutory base maximums for municipalities under Section 143 of the Local Government Code. A specific city or municipality may have its own revenue code using these tables, adopting lower rates, or applying allowable increases within legal limits. Cities and Metro Manila municipalities may generally have higher maximums, subject to the Code. (ChanRobles Law Firm)
Manufacturers, Assemblers, Repackers, Processors, Brewers, Distillers, and Similar Businesses
This category covers manufacturers of articles of commerce, including assemblers, repackers, processors, brewers, distillers, rectifiers, and compounders of liquors, distilled spirits, and wines.
| Gross sales or receipts for preceding calendar year | Municipal tax per annum |
|---|---|
| Less than ₱10,000 | ₱165.00 |
| ₱10,000 to less than ₱15,000 | ₱220.00 |
| ₱15,000 to less than ₱20,000 | ₱302.50 |
| ₱20,000 to less than ₱30,000 | ₱440.00 |
| ₱30,000 to less than ₱40,000 | ₱660.00 |
| ₱40,000 to less than ₱50,000 | ₱825.00 |
| ₱50,000 to less than ₱75,000 | ₱1,320.00 |
| ₱75,000 to less than ₱100,000 | ₱1,650.00 |
| ₱100,000 to less than ₱150,000 | ₱2,200.00 |
| ₱150,000 to less than ₱200,000 | ₱2,750.00 |
| ₱200,000 to less than ₱300,000 | ₱3,850.00 |
| ₱300,000 to less than ₱500,000 | ₱5,500.00 |
| ₱500,000 to less than ₱750,000 | ₱8,000.00 |
| ₱750,000 to less than ₱1,000,000 | ₱10,000.00 |
| ₱1,000,000 to less than ₱2,000,000 | ₱13,750.00 |
| ₱2,000,000 to less than ₱3,000,000 | ₱16,500.00 |
| ₱3,000,000 to less than ₱4,000,000 | ₱19,800.00 |
| ₱4,000,000 to less than ₱5,000,000 | ₱23,100.00 |
| ₱5,000,000 to less than ₱6,500,000 | ₱24,375.00 |
| ₱6,500,000 or more | Not exceeding 37.5% of 1% |
Wholesalers, Distributors, and Dealers
This applies to wholesalers, distributors, or dealers in any article of commerce.
| Gross sales or receipts for preceding calendar year | Municipal tax per annum |
|---|---|
| Less than ₱1,000 | ₱18.00 |
| ₱1,000 to less than ₱2,000 | ₱33.00 |
| ₱2,000 to less than ₱3,000 | ₱50.00 |
| ₱3,000 to less than ₱4,000 | ₱72.00 |
| ₱4,000 to less than ₱5,000 | ₱100.00 |
| ₱5,000 to less than ₱6,000 | ₱121.00 |
| ₱6,000 to less than ₱7,000 | ₱143.00 |
| ₱7,000 to less than ₱8,000 | ₱165.00 |
| ₱8,000 to less than ₱10,000 | ₱187.00 |
| ₱10,000 to less than ₱15,000 | ₱220.00 |
| ₱15,000 to less than ₱20,000 | ₱275.00 |
| ₱20,000 to less than ₱30,000 | ₱330.00 |
| ₱30,000 to less than ₱40,000 | ₱440.00 |
| ₱40,000 to less than ₱50,000 | ₱660.00 |
| ₱50,000 to less than ₱75,000 | ₱990.00 |
| ₱75,000 to less than ₱100,000 | ₱1,320.00 |
| ₱100,000 to less than ₱150,000 | ₱1,870.00 |
| ₱150,000 to less than ₱200,000 | ₱2,420.00 |
| ₱200,000 to less than ₱300,000 | ₱3,300.00 |
| ₱300,000 to less than ₱500,000 | ₱4,400.00 |
| ₱500,000 to less than ₱750,000 | ₱6,600.00 |
| ₱750,000 to less than ₱1,000,000 | ₱8,800.00 |
| ₱1,000,000 to less than ₱2,000,000 | ₱10,000.00 |
| ₱2,000,000 or more | Not exceeding 50% of 1% |
Retailers
Retailers are taxed differently. The rate is a percentage of gross sales or receipts.
| Gross sales or receipts for preceding calendar year | Municipal rate |
|---|---|
| ₱400,000 or less | 2% |
| More than ₱400,000 | 1% |
Barangays have exclusive power to tax very small fixed retailers with gross sales or receipts of ₱50,000 or less in cities and ₱30,000 or less in municipalities, at a rate not exceeding 1%. This is why some very small sari-sari stores or micro-retail establishments may deal with barangay-level charges as well as city or municipal permit requirements. (ChanRobles Law Firm)
Contractors and Other Independent Contractors
This category often covers construction contractors, service contractors, and other independent contractors, depending on the LGU revenue code.
| Gross receipts for preceding calendar year | Municipal tax per annum |
|---|---|
| Less than ₱5,000 | ₱27.50 |
| ₱5,000 to less than ₱10,000 | ₱61.60 |
| ₱10,000 to less than ₱15,000 | ₱104.50 |
| ₱15,000 to less than ₱20,000 | ₱165.00 |
| ₱20,000 to less than ₱30,000 | ₱275.00 |
| ₱30,000 to less than ₱40,000 | ₱385.00 |
| ₱40,000 to less than ₱50,000 | ₱550.00 |
| ₱50,000 to less than ₱75,000 | ₱880.00 |
| ₱75,000 to less than ₱100,000 | ₱1,320.00 |
| ₱100,000 to less than ₱150,000 | ₱1,980.00 |
| ₱150,000 to less than ₱200,000 | ₱2,640.00 |
| ₱200,000 to less than ₱250,000 | ₱3,630.00 |
| ₱250,000 to less than ₱300,000 | ₱4,620.00 |
| ₱300,000 to less than ₱400,000 | ₱6,160.00 |
| ₱400,000 to less than ₱500,000 | ₱8,250.00 |
| ₱500,000 to less than ₱750,000 | ₱9,250.00 |
| ₱750,000 to less than ₱1,000,000 | ₱10,250.00 |
| ₱1,000,000 to less than ₱2,000,000 | ₱11,500.00 |
| ₱2,000,000 or more | Not exceeding 50% of 1% |
Banks, Financial Institutions, Peddlers, and Other Businesses
| Business type | Municipal maximum under Section 143 |
|---|---|
| Banks and other financial institutions | Not exceeding 50% of 1% of specified gross receipts |
| Peddlers selling merchandise or articles of commerce | Not exceeding ₱50 per peddler annually |
| Businesses not otherwise specified, including businesses subject to excise, VAT, or percentage tax under the NIRC | Not exceeding 2% of gross sales or receipts |
| Exporters and dealers in essential commodities | Not exceeding one-half of the applicable rates under the relevant Section 143 categories |
Essential commodities include items such as rice and corn, wheat or cassava flour, meat, dairy products, locally manufactured or processed food, sugar, salt, agricultural and marine products, cooking oil, cooking gas, laundry soap, detergents, medicine, agricultural implements, fertilizers, poultry feeds, animal feeds, school supplies, and cement. (ChanRobles Law Firm)
Why City Rates Are Often Higher Than Municipal Rates
A common mistake is comparing a municipal table directly with a city assessment. Under Section 151, a city may levy the taxes, fees, and charges that provinces or municipalities may impose, and city tax rates may exceed the municipal or provincial maximum by not more than 50%, except for professional and amusement taxes. Metro Manila municipalities also have a special rule under Section 144 allowing rates up to 50% higher than the Section 143 maximums. (ChanRobles Law Firm)
For example, if a municipal maximum rate is 0.5% of gross receipts, a city may generally have authority to impose up to 0.75%, if properly adopted by ordinance and not otherwise limited by law. But the actual rate still depends on the city’s revenue code.
How to Find the Correct Business Tax Rate in Your City or Municipality
Do not rely only on screenshots, old Facebook posts, or another business owner’s assessment. Local revenue codes change, and businesses with similar names may fall under different classifications.
Follow this process:
Identify the exact LGU. Use the city or municipality where the business is actually located, not where the owner resides. For corporations, check the principal office and any branches or sales offices.
Get the current revenue code or tax ordinance. Look for the LGU’s “Revenue Code,” “Omnibus Revenue Code,” or “Revised Tax Code.” If it is not online, ask the BPLO, City Treasurer’s Office, Municipal Treasurer’s Office, or Sangguniang Panlungsod/Bayan Secretary for the applicable ordinance and amendments. Local tax ordinances must be published or posted, and copies are furnished for public dissemination. (ChanRobles Law Firm)
Find your business classification. The classification matters. A café, online seller, contractor, lessor, wholesaler, retailer, manufacturer, or financial institution may be treated differently.
Use the correct tax base. Renewing businesses are usually assessed based on the preceding calendar year’s gross sales or receipts. New businesses are commonly assessed based on capital investment or the LGU’s rules for newly started businesses.
Check whether the LGU is a municipality, city, or Metro Manila municipality. This affects the maximum rates that may be legally used.
Separate different lines of business when required. If one establishment has several business lines subject to different rates, the gross sales or receipts of each business should be separately reported for computing the correct tax. (ChanRobles Law Firm)
Ask for a line-by-line assessment. The business tax should be separated from mayor’s permit fee, garbage fee, sanitary fee, zoning fee, signage fee, fire safety-related charges, and other regulatory charges.
Keep copies of all declared figures and receipts. The local treasurer may examine books, accounts, and records to verify the correct tax, and BIR records may be made available to the local treasurer for this purpose. (ChanRobles Law Firm)
Where to Pay if You Have Branches, Sales Offices, or Project Sites
The location of the taxable business is called the situs of taxation. This matters when a business has a head office in one city, branches in another city, and plants or project sites elsewhere.
Under Section 150, if a business maintains a branch or sales outlet elsewhere, sales should generally be recorded in the branch or sales outlet making the sale, and the tax accrues to the city or municipality where that branch or sales outlet is located. For manufacturers, assemblers, contractors, producers, and exporters with factories, project offices, plants, or plantations, Section 150 provides allocation rules, including a 30% allocation to the principal office and a 70% allocation to the locality of the factory, project office, plant, or plantation. (ChanRobles Law Firm)
This is not just theory. In City of Makati v. Municipality of Bakun, the Supreme Court dealt with competing LGU claims over local business tax allocation involving a hydroelectric power company and considered whether an office was merely administrative or could share in the 70% allocation. (Supreme Court E-Library)
In Municipality of Villanueva v. STEAG State Power, Inc., the Supreme Court also discussed a local business tax allocation dispute involving facilities located in different municipalities, showing how situs issues can affect the proper LGU share and business permit issuance. (Supreme Court E-Library)
Deadlines, Penalties, and Renewal Timing
Local taxes, fees, and charges generally cover the calendar year and may be paid in quarterly installments. Unless the Code or local ordinance provides otherwise, they must be paid within the first 20 days of January or of each subsequent quarter. The sanggunian may extend the payment period for justifiable reasons, but the extension cannot exceed six months. (ChanRobles Law Firm)
Late payment can be costly. The sanggunian may impose:
- surcharge of up to 25% of the unpaid amount; and
- interest of up to 2% per month on the unpaid taxes, fees, or charges, including surcharge, but total interest cannot exceed 36 months. (ChanRobles Law Firm)
In practical terms, many LGUs treat January 20 as the key business permit renewal deadline, although some cities and municipalities issue ordinances or advisories extending the deadline. Always check the current year’s local advisory because extensions may apply to payment, filing, or both.
Business Permit Processing and eBOSS
Republic Act No. 11032, the Ease of Doing Business and Efficient Government Service Delivery Act of 2018, applies to LGUs and is intended to simplify government transactions, including business-related transactions. The BLGF describes RA 11032 as covering government offices and LGUs and requiring simplified procedures to reduce red tape. (Bureau of Local Government Finance)
The implementing rules discuss processing periods of three working days for simple transactions, seven working days for complex transactions, and 20 working days for highly technical transactions or activities involving public health, safety, morals, or policy concerns. (Supreme Court E-Library)
In real life, delays still happen because of incomplete documents, pending barangay clearance, unpaid prior-year taxes, zoning issues, fire safety requirements, missing lease documents, discrepancies between BIR and LGU declarations, or long January queues.
Common Documents Used for Local Business Tax Assessment
Exact requirements vary by LGU, but these are commonly requested:
| Situation | Common documents |
|---|---|
| New sole proprietorship | DTI certificate, barangay clearance, lease contract or proof of ownership, occupancy permit or zoning clearance, valid ID, location sketch, BIR registration, application form |
| New corporation or partnership | SEC certificate, Articles of Incorporation or Partnership, GIS or company information, board authorization or secretary’s certificate, lease or title documents, BIR registration |
| Renewal | Previous Mayor’s Permit, previous official receipts, gross sales declaration, income tax return or financial statements, lease contract, barangay clearance, BIR filings, fire safety-related documents |
| Branch office | Head office documents, branch registration details, lease or occupancy documents, local gross sales or receipts records |
| Contractor or project-based business | Contracts, project location details, gross receipts, PCAB license if applicable, project office information |
Foreigners and foreign-owned companies are generally assessed for local business tax based on the business activity and LGU situs, not simply nationality. However, foreign ownership, retail trade, landholding, and regulated industries may involve separate nationality, capitalization, licensing, visa, or investment rules before the business can lawfully operate.
What to Do if the LGU’s Computation Looks Wrong
If the assessment seems too high, do not argue only at the cashier window. Ask for the legal and mathematical basis.
A practical approach is:
Request the assessment breakdown. Ask which line item is local business tax and which items are regulatory fees.
Ask for the ordinance provision used. Get the section number, classification, rate, and tax base.
Compare the rate with Section 143, 144, 151, and the local revenue code. Check whether the LGU applied a city rate, municipal rate, or Metro Manila municipal rate.
Check the gross sales or receipts used. Errors often happen when the LGU uses total company-wide sales instead of branch sales, or when different business lines are lumped together.
File a written protest if there is an assessment. Under Section 195, a taxpayer has 60 days from receipt of the notice of assessment to file a written protest with the local treasurer. The treasurer has 60 days to decide. If denied, or if the treasurer does not act within the period, the taxpayer has 30 days to appeal to the proper court. (ChanRobles Law Firm)
For payments already made, consider a refund or tax credit claim. Under Section 196, a written claim for refund or credit must first be filed with the local treasurer, and court action cannot be entertained after two years from payment or from the date the taxpayer became entitled to the refund or credit. (ChanRobles Law Firm)
If challenging the ordinance itself, watch the 30-day period. Questions on the legality or constitutionality of a tax ordinance may be raised on appeal to the Secretary of Justice within 30 days from effectivity of the ordinance. The appeal does not automatically suspend the tax. (ChanRobles Law Firm)
Common Pitfalls in Business Tax Rate Tables
Using BIR tax rules instead of LGU tax rules
VAT, percentage tax, and income tax are national taxes. Local business tax is computed under the LGU’s revenue code and the Local Government Code.
Assuming all cities use the same table
They do not. Cities have their own revenue ordinances. Even if two cities both follow Section 143, one may impose lower rates, another may impose the maximum, and another may have amended its revenue code.
Not separating business lines
A business that sells goods, provides services, leases equipment, and operates as a contractor may have several taxable activities. Section 146 recognizes that different business lines may need separate reporting when subject to different rates. (ChanRobles Law Firm)
Ignoring situs rules
A head office in Makati, a warehouse in Laguna, and a sales office in Cebu may create different local tax questions. The place where sales are recorded and where branches, project offices, factories, or plants are located can affect which LGU may tax the receipts.
Missing the January deadline
Even if the amount is small, penalties can build up quickly. Late renewal can also delay business permit issuance, supplier accreditation, bank requirements, platform verification, or participation in bidding.
Accepting an oral computation without documents
Always ask for the assessment sheet and ordinance basis. If you later protest, refund, or reconcile records, you will need paper trail.
Frequently Asked Questions
Are business tax rate tables the same in all Philippine cities?
No. The Local Government Code gives the national framework and maximum limits, but each city or municipality uses its own revenue code or tax ordinance. Always check the specific LGU where the business is registered or operating.
Is local business tax paid to the BIR?
No. Local business tax is paid to the city or municipal treasurer, usually through the BPLO or business one-stop shop. BIR taxes are separate.
What is the usual basis for local business tax renewal?
For existing businesses, the usual basis is the preceding calendar year’s gross sales or receipts, subject to the business classification and local ordinance.
Can a city charge more than the Local Government Code table?
A city may generally impose rates up to 50% higher than the municipal maximum rates under Section 151, except where the law provides otherwise. But the rate must still be supported by a valid local ordinance.
Why is my Mayor’s Permit assessment higher than the business tax table?
Because the assessment usually includes other charges, such as permit fees, sanitary fees, garbage fees, zoning or inspection fees, signage fees, fire safety-related requirements, and possible penalties. Ask for a line-by-line breakdown.
Do online sellers need to pay local business tax?
If the online seller is operating a business from a location in a city or municipality, the LGU may require business registration and assess local taxes or fees under its revenue code. Classification may vary depending on whether the seller is a retailer, wholesaler, service provider, or another category.
What happens if I do not renew by January 20?
Unless extended by the LGU, local taxes and fees are generally due within the first 20 days of January or of each subsequent quarter. Late payment may result in surcharge, interest, and difficulty renewing the Mayor’s Permit.
Can I protest a wrong local business tax assessment?
Yes. Under Section 195 of the Local Government Code, a taxpayer may file a written protest with the local treasurer within 60 days from receipt of the notice of assessment. If the protest is denied or not acted upon within the prescribed period, the taxpayer has 30 days to appeal to the proper court.
Can I get a refund if I overpaid local business tax?
Yes, but a written claim for refund or tax credit must first be filed with the local treasurer. Court action is subject to the two-year period under Section 196 of the Local Government Code.
Do foreigners pay a different business tax rate?
Usually, the local business tax rate depends on the business activity, gross sales or receipts, and location, not nationality. However, foreigners and foreign-owned companies may face separate rules on ownership, capitalization, licensing, immigration status, and regulated industries.
Key Takeaways
- Business tax rate tables in Philippine cities and municipalities are based on the Local Government Code and the LGU’s own revenue ordinance.
- Local business tax is separate from BIR taxes.
- The correct rate depends on business classification, gross sales or receipts, and whether the LGU is a municipality, city, or Metro Manila municipality.
- Cities may generally impose rates up to 50% higher than municipal maximum rates, subject to legal limits.
- Branches, sales offices, factories, plants, project offices, and principal offices can affect where business tax is paid.
- Local taxes are generally due within the first 20 days of January or each subsequent quarter, unless the LGU validly extends the deadline.
- Always request the assessment sheet and ordinance basis before accepting a computation.
- Wrong assessments may be protested within 60 days, while refund or tax credit claims must follow the written claim and two-year rules under the Local Government Code.