1) Why this topic matters (and why “export” can be a trap word at the local level)

Philippine “service exporters” (e.g., IT-BPM/BPO, software development, shared services, creative services, engineering/design, consultancy, back-office processing) often focus on national tax concepts like VAT zero-rating and income tax incentives. But local business taxes (LBT) imposed by cities are driven by a different question:

Where is the business conducted / where is the taxpayer doing business locally?

A company can be “exporting” services to foreign clients and still be fully subject to city business tax in Taguig or Quezon City because the taxable subject is the privilege of doing business in the LGU, typically measured by gross receipts, regardless of whether customers are abroad.

The practical result: two service exporters with identical foreign clients can pay different local taxes simply because one is registered/located in Taguig and the other in Quezon City, based on each city’s revenue code and administration—within the ceilings and structure allowed by the Local Government Code (LGC, RA 7160).

2) Governing legal framework (what is uniform nationwide, vs what differs by city)

A. What is uniform nationwide (LGC rules that apply in both Taguig and QC)

Authority to tax Cities may impose local business taxes on businesses operating within their jurisdiction under the LGC. Cities generally have broader revenue powers than municipalities, including the ability to levy higher rates within LGC limits.
Classification and tax base (gross receipts) For service-oriented businesses, the usual LGC category is contractors/independent contractors or similar “service providers,” and the tax is commonly based on gross receipts for the preceding calendar year (or a reasonable basis for new businesses). Key point: the base is typically gross receipts, not net income.
Situs (place of taxation) for receipts The LGC’s situs rules are crucial for service exporters with offices in multiple places:

If you have branches or offices in multiple LGUs: receipts are generally taxable where the branch that generated/recorded the receipts is located, depending on how the ordinance implements LGC situs principles.
If you only have a principal office in one city: the receipts are generally taxed in that city.

Regulatory fees vs revenue taxes Aside from LBT, both cities can charge:

Mayor’s permit fees (often tied to size/risk classification),
sanitary, fire safety, building-related fees (though some are national/regional frameworks implemented locally),
barangay clearances and other regulatory charges.

Assessment, protest, and refund remedies (procedure-heavy and time-sensitive) Common LGC remedies that matter in both Taguig and QC:

Protest an assessment: generally requires a written protest within a strict period (commonly 60 days from receipt of assessment under the LGC framework).
Pay under protest / contest collection: procedure depends on whether you are disputing the assessment versus the validity of the ordinance.
Challenge the validity/constitutionality of an ordinance: typically follows a separate LGC route (often involving the Secretary of Justice and/or courts) with tight timelines.
Claim for refund/credit: requires compliance with statutory periods and documentation.

These procedures are where many disputes are won or lost—less by “who’s right,” more by “who met the deadlines and proof requirements.”

B. What differs by city (Taguig vs QC)

Even under the same LGC framework, each city’s revenue code can differ on:

How service businesses are classified (e.g., “contractors,” “other business,” “professional services,” “BPO/IT services,” “exporters,” “dealers,” etc.).
Rate schedules and brackets (e.g., varying gross-receipts brackets; sometimes flat percentage caps for certain categories).
Rules for new businesses (minimum tax, presumptive receipts, proration).
Administrative practices (documentation asked, audit intensity, what is accepted as proof of receipts allocation, whether they require reconciliation to AFS/ITR/VAT returns, etc.).
Local incentives (discounts, tax holidays, special programs) that may exist by ordinance or investment codes—separate from national incentives like PEZA/BOI.

3) The core issue for service exporters: “Gross receipts” and what counts

A. Receipts included

Cities generally look at total gross receipts from the business activity, typically as shown in audited financial statements and/or tax returns, subject to local rules on:

whether pass-through items are excluded (often contested),
whether intercompany charges are included,
how foreign currency receipts are converted (often based on accounting policy and documentation).

B. Timing and “preceding year” rule

Most LBT regimes compute tax based on the preceding calendar year’s gross receipts. Common implications:

A business with a revenue spike last year pays higher LBT this year.
A business that just started often pays either a minimum or based on declared/estimated receipts, then true-up later if audited/assessed.

C. Export status does not automatically reduce LBT

VAT zero-rating for “export of services” is a national VAT concept; it does not automatically exempt the business from local business tax, because the local taxable event is the privilege of doing business in the city, not the destination of the customer.

4) PEZA/CREATE and other incentives: the biggest “swing factor” in Taguig vs QC

Many “service exporters” in Metro Manila operate inside IT Parks/Buildings. Both Taguig (e.g., BGC areas) and QC (various IT parks) host such zones.

A. If registered and operating under a special incentive regime

Depending on the enterprise’s registration and incentive grant (e.g., PEZA/BOI or other investment promotion agency registration under the current incentive framework), the enterprise may enjoy preferential tax treatment that affects local taxes. In practice, the effect can include:

In-lieu-of-all-taxes regimes (historically associated with certain ecozone incentives) that can limit or replace some local taxes, subject to the precise law/incentive grant, transition rules, and coverage.
Limitations on what LGUs can impose versus what remains collectible (often real property tax rules differ by the nature of property ownership and the statutory carve-outs; regulatory fees may remain).

Important practical point: This is not “automatic.” The local treasurer typically requires:

proof of registration,
the specific incentive certificate/terms,
proof that the activity is within the registered project scope and within the registered location.

B. If not registered (regular taxpayer)

Then the default rule applies: full LBT exposure in the city where the business is located/situated under situs rules.

Why this matters for “Taguig vs QC”: Two otherwise identical service exporters can experience very different local tax outcomes depending on whether their office is inside a properly registered zone/building and whether their registration paperwork is in order—more than differences in the base LBT rate.

5) Comparing Taguig vs Quezon City in practice (what usually differs for service exporters)

Because cities can structure and administer their revenue codes differently, the meaningful comparison usually falls into four buckets:

Bucket 1: Classification risk (how your business is labeled)

Service exporters should watch for:

being classified as contractor/independent contractor versus “other business” (the latter sometimes results in different rates or minimums),
being treated as a professional (if the LGU treats certain services as practice of profession rather than business—this is nuanced and fact-specific),
special classifications (e.g., IT/BPO-specific lines) in the local code.

Why classification matters: it determines the rate schedule, the tax base definition, and sometimes situs/allocation rules.

Bucket 2: Rate schedule design (brackets and effective rate)

Even when both cities tax “contractors” based on gross receipts, they may:

use different brackets (resulting in different effective burdens at the same revenue level),
have different minimum taxes, surcharges, and penalty computations,
have different rules for proration if the business started mid-year.

Bucket 3: Administrative intensity (audits, reconciliations, documentation)

Common audit/document asks (both cities may request some or all):

audited financial statements (AFS),
income tax return (ITR),
VAT returns (if VAT-registered) or percentage tax filings (if not),
summary of sales/receipts and schedules reconciling to AFS,
breakdown by branch/location to support situs allocation,
customer listing or contract summaries (sometimes, especially if receipts sourcing is questioned).

Differences in “how strict” documentation is can drive compliance cost and dispute frequency.

Bucket 4: Local incentives and business climate tools

Some LGUs adopt:

local investment incentive codes (e.g., discounts, tax holidays, employment-based incentives),
streamlined processes (online renewal, one-stop shops),
industry-targeting (e.g., IT-BPM-friendly facilitation).

These are city-specific and ordinance-based—distinct from national incentives.

6) Side-by-side guide (what to compare for Taguig vs QC)

Issue	Taguig City	Quezon City
Legal basis	City taxing power under LGC; implemented by Taguig revenue ordinances	City taxing power under LGC; implemented by QC revenue ordinances
Typical tax base for service exporters	Gross receipts (commonly preceding year), subject to local definitions	Gross receipts (commonly preceding year), subject to local definitions
Key variable #1	How Taguig classifies the activity (contractor/other)	How QC classifies the activity (contractor/other)
Key variable #2	Rate bracket design and minimum tax for the classification	Rate bracket design and minimum tax for the classification
Key variable #3	Documentation and reconciliation expectations; audit style	Documentation and reconciliation expectations; audit style
Big swing factor	Whether operations are within a registered incentive zone/building and properly documented	Same, especially for IT parks/buildings in QC
Multi-site allocation	Implementation of situs/allocation rules in local practice	Implementation of situs/allocation rules in local practice
Dispute handling	LGC protest/refund routes, applied locally	LGC protest/refund routes, applied locally

This table is intentionally “framework-level” because the exact rate numbers and definitions depend on each city’s current revenue code provisions and any amendments.

7) Common scenarios for service exporters and how the Taguig vs QC choice plays out

Scenario A: One office only, all staff and operations in the city

Outcome: LBT is typically straightforward—all gross receipts (as defined) are taxed by that city.
Comparison driver: rate schedule + administration.

Scenario B: Principal office in one city, operations team in another (or remote workforce)

Outcome: risk of allocation disputes if the company claims part of receipts belong elsewhere.
Best practice: align branch registration, invoicing/recording, and books with situs rules; inconsistent setups invite assessments.

Scenario C: Inside an IT park/building with incentive registration

Outcome: potentially reduced local tax burden depending on the incentive terms and documentation.
Comparison driver: whether the location and registration status are properly recognized and implemented in local administration.

Scenario D: Foreign client contracts, paid in foreign currency, VAT zero-rated

Outcome: may help for national VAT, but does not, by itself, eliminate LBT.
Comparison driver: still rate schedule + classification + receipts definition.

8) Penalties and compliance: what service exporters usually underestimate

Across Metro Manila cities, recurring risk areas include:

Late renewal / late payment surcharges and interest (often significant over time).
Underdeclaration due to mismatch between city declarations and AFS/ITR.
Misclassification (declaring under a lower-tax category).
Branch/situs errors (not registering a branch but operating like one; or registering a branch but recording all receipts at head office without support).

For service exporters, the “audit trigger” is often a simple reconciliation gap between:

declared gross receipts for LBT purposes, and
gross revenues in audited FS / tax filings.

9) Disputes and remedies: the playbook (high-level)

When a city issues an assessment or denies a claimed exemption/incentive, outcomes typically depend on:

Procedural compliance

timely protest,
proper payment/appeal steps where required,
meeting documentary submission deadlines.

Substantive proof

correct classification under the ordinance,
correct computation under the rate schedule,
credible reconciliation to financial statements,
for incentives: clear proof of registration scope and applicability.

Issue framing

disputing facts (e.g., receipts amount, allocation) is different from disputing validity of the ordinance (a legal challenge with distinct procedure).

10) Practical due diligence checklist for choosing Taguig vs QC (service exporter edition)

To compare intelligently, a service exporter typically needs to map:

Business model + activity classification

What exactly are you selling (outsourcing services, software, consulting, processing)?
Is it “contractor/independent contractor” or “other business” under each city’s code?

Receipts profile

expected gross receipts for the year(s),
volatility (affects next year tax),
intercompany charges and pass-through items.

Footprint

one site vs multiple sites,
planned branch registrations,
where contracts are performed and where books are kept.

Incentive eligibility

whether you are (or can be) properly registered under an incentive regime,
whether the building/site supports the registration,
documentation readiness.

Administrative friction

renewal process burden,
audit frequency and typical documentation demands,
dispute resolution posture.

11) Bottom line comparisons (what you can safely conclude at framework level)

Both Taguig and Quezon City can legally impose local business tax on service exporters operating in their territory because the taxable event is doing business locally, commonly measured by gross receipts.
“Export of services” for VAT purposes does not automatically exempt the business from local business tax.
The largest drivers of difference between Taguig and QC outcomes are:
1. how each city’s ordinance classifies the service activity,
2. the rate/bracket schedule applied to that classification,
3. administrative practice (documentation and audit approach),
4. whether the enterprise is covered by investment/zone incentives that affect local taxation and whether those incentives are properly documented and recognized.