MALACAÑANG
M a n i l aPRESIDENTIAL DECREE No. 426 March 30, 1974
AMENDING CERTAIN PROVISIONS OF THE LOCAL TAX CODE ENACTED UNDER PRESIDENTIAL DECREE NO. 231, DATED JUNE 28, 1973
WHEREAS, the Local Tax Code enacted under Presidential Decree No. 231 took effect on July 1, 1973;
WHEREAS, there is an imperative necessity to enact amendatory measures to make the Local Tax Code more responsive and attuned to the changing patterns of business and economic trends and thereby transform it into a more effective instrument by which local governments may generate urgently-needed revenues without unduly disturbing price levels in the domestic market;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree, order, and make as part of the law of the land the following amendments to the Local Tax Code:
Section 1. (a) Paragraphs (a), (p), (r), (f-1), (k-1), and (p-1) of Section 3 of the Local Tax Code shall read as follows:
"Sec. 3. Definitions. When...
Details
Amends
n/a
Amended by
n/a
Presidential Decrees
Amending Certain Provisions Of The Local Tax Code Enacted Under Presidential Decree No. 231, DatedJune 28, 1973
Presidential Decree No. 426
Summary of Presidential Decree No. 426 Amending the Local Tax Code
Definitions (Section 3)
- Defines various terms used in the Local Tax Code, including agricultural products, hotels, licenses/permits, public markets, services, and wharfage.
- Introduces new definitions for boarding houses, business agents, cabarets/dance halls, carinderias, collecting agencies, compounders, contractors, dancing schools, distillers, lending investors, manufacturers of cigars/cigarettes/tobacco, money shops, real estate brokers/dealers, rectifiers, repackers of wines/spirits, restaurants, retail/wholesale dealers in fermented liquors/spirits/wines/tobacco, stockbrokers/dealers in securities.
Limitations on Taxing Powers (Sections 5, 17, 25)
- Prohibits local governments from imposing taxes on forest concessions/products, transportation contractors/common carriers, banks/insurance companies, agricultural products sold by farmers/fishermen, sales percentage tax, mines/minerals, cooperatives, and national/local governments.
- Cities cannot levy taxes enumerated in Section 5, except as provided in the Code.
- Municipalities cannot levy municipal fees and charges under Section 20, except for certain enumerated items.
Real Property Transfer Tax (Section 7)
- Provinces may impose a tax of up to 0.25% on the sale, donation, barter, or transfer of real property ownership, based on the total consideration or assessed value.
- Exempts transfers under Republic Act No. 3844.
- Requires presentation of tax payment evidence before registering deeds or canceling/issuing tax declarations.
- Defines real property, buildings, and deadlines for tax payment.
Sand and Gravel Tax (Section 10)
- Provinces may levy a tax of up to ₱0.75 per cubic meter of ordinary stones, sand, gravel, earth, and other materials extracted from public/private lands or water bodies.
- Municipalities where materials are extracted shall share at least 30% of the tax proceeds.
- Extraction permits shall be issued by the Director of Mines or authorized representative.
Amusement Tax on Admission (Section 13)
- Imposes an amusement tax of ₱0.05 per admission on theaters and cinema houses, payable within 20 days for fixed establishments and 10 days for itinerant operators.
- Imposes a surcharge of 50% of the correct tax due for willful neglect to file returns or fraudulent returns.
Fees for Sealing and Licensing of Weights and Measures (Section 14)
- Provinces shall levy fees for sealing and licensing weights and measures according to a prescribed schedule.
- Provincial boards shall prescribe regulations for the use of weights and measures, fix penalties for fraudulent practices, and authorize the provincial treasurer to settle offenses through compromise penalties of ₱200-₱500.
Annual Fixed Tax per Delivery Truck/Van (Section 15-A)
- Manufacturers/producers/dealers of distilled spirits, fermented liquors, soft drinks, cigars, and cigarettes shall be subject to an annual fixed tax of up to ₱75 per delivery truck/van.
- Manufacturers/producers/dealers of other products shall be subject to an annual fixed tax of up to ₱50 per delivery truck/van.
- Exempts them from the tax on peddlers and municipal permit fees, but allows provinces to levy a permit fee of up to ₱20 per annum.
Tax on Business (Section 19)
- Municipalities may impose taxes on various businesses, including manufacturers, retailers, wholesalers, exporters, cafes, restaurants, service establishments, amusement places, pawnshops, money shops, lending investors, finance/investment companies, insurance companies, banks, real estate dealers, golf links, fishponds, billboards, and privately-owned public markets.
- Provides schedules and rates for different types of businesses based on gross sales/receipts.
- Includes provisions for essential commodities, rice and corn, situs of tax, tax credits, and special provisions for newly started businesses, related businesses, and businesses terminating operations.
- Cities may levy the same taxes as municipalities, with rates not exceeding 50% of the maximum rates allowed for municipalities, except for certain uniform rates.
- Provides tax ceilings for the implementation of graduated fixed taxes based on the class of municipality/city and the year of implementation.
Fishery Rentals or Fees (Section 21)
- Municipalities may issue individual licenses for fishing zones if no bidders opt to lease them.
- Provides schedules of annual fees for fish corrals erected in the sea and fish corrals/pens in inland fresh waters, based on depth and area.
Scope of Power for Cities (Section 23)
- Cities may levy and collect any taxes, fees, and other impositions that provinces or municipalities may levy and collect, except as otherwise provided in the Code.
- Cities may exercise additional taxing powers not specifically enumerated in the Code, subject to certain provisions.
Market Fees (Section 30)
- Municipalities may impose a market entrance fee on transient vendors based on weight, bundle, sack, can, cartload, or any other convenient unit of measure, in lieu of regular market fees based on space occupied.
Slaughterhouse Fees (Section 31)
- Requires a permit from the health officer and payment of a corresponding fee before slaughtering animals for public consumption.
- For slaughtering large cattle, requires production of certificates of ownership and transfer before issuing the permit.
Effectivity of Tax Ordinance (Section 42)
- Tax ordinances shall take effect on the 15th day after approval by the local chief executive.
Similar Tax or Fee Not Specifically Enumerated (Section 49)
- Local boards/councils may impose a tax or fee on a similar tax base or subject not specifically enumerated in the Code, with a rate not exceeding that fixed for the similar tax base or subject, subject to a public hearing and approval by the Secretary of Finance.
Tax or Fee Not Provided For (Section 50)
- Local boards/councils may impose a tax, fee, or other imposition on a tax base or subject not similar or comparable to those mentioned in the Code, subject to a public hearing and approval by the Secretary of Finance.
Accrual of the Tax (Section 54)
- All local taxes shall accrue on January 1st of each year for existing subjects, while new taxes or changes in rates shall accrue at the beginning of the quarter following the ordinance's effectivity.
Examination of Books of Accounts (Section 59)
- Allows the provincial or city treasurer to examine the books of accounts and pertinent records of businessmen during regular business hours, not more than once a year for each business establishment, using forms prescribed by the Secretary of Finance.
Special Transitory Provisions (Section 64-A)
- Provides guidelines for the adjustment of tax rates and the implementation of the amended Local Tax Code.
- Extends existing tax ordinances of cities and municipalities until June 30, 1974.
- Requires local boards/councils to enact new tax ordinances in accordance with the amended Code, effective not earlier than July 1, 1974.
- Nullifies all existing tax ordinances on June 30, 1974.
Definitions (Section 3)
- Defines various terms used in the Local Tax Code, including agricultural products, hotels, licenses/permits, public markets, services, and wharfage.
- Introduces new definitions for boarding houses, business agents, cabarets/dance halls, carinderias, collecting agencies, compounders, contractors, dancing schools, distillers, lending investors, manufacturers of cigars/cigarettes/tobacco, money shops, real estate brokers/dealers, rectifiers, repackers of wines/spirits, restaurants, retail/wholesale dealers in fermented liquors/spirits/wines/tobacco, stockbrokers/dealers in securities.
Limitations on Taxing Powers (Sections 5, 17, 25)
- Prohibits local governments from imposing taxes on forest concessions/products, transportation contractors/common carriers, banks/insurance companies, agricultural products sold by farmers/fishermen, sales percentage tax, mines/minerals, cooperatives, and national/local governments.
- Cities cannot levy taxes enumerated in Section 5, except as provided in the Code.
- Municipalities cannot levy municipal fees and charges under Section 20, except for certain enumerated items.
Real Property Transfer Tax (Section 7)
- Provinces may impose a tax of up to 0.25% on the sale, donation, barter, or transfer of real property ownership, based on the total consideration or assessed value.
- Exempts transfers under Republic Act No. 3844.
- Requires presentation of tax payment evidence before registering deeds or canceling/issuing tax declarations.
- Defines real property, buildings, and deadlines for tax payment.
Sand and Gravel Tax (Section 10)
- Provinces may levy a tax of up to ₱0.75 per cubic meter of ordinary stones, sand, gravel, earth, and other materials extracted from public/private lands or water bodies.
- Municipalities where materials are extracted shall share at least 30% of the tax proceeds.
- Extraction permits shall be issued by the Director of Mines or authorized representative.
Amusement Tax on Admission (Section 13)
- Imposes an amusement tax of ₱0.05 per admission on theaters and cinema houses, payable within 20 days for fixed establishments and 10 days for itinerant operators.
- Imposes a surcharge of 50% of the correct tax due for willful neglect to file returns or fraudulent returns.
Fees for Sealing and Licensing of Weights and Measures (Section 14)
- Provinces shall levy fees for sealing and licensing weights and measures according to a prescribed schedule.
- Provincial boards shall prescribe regulations for the use of weights and measures, fix penalties for fraudulent practices, and authorize the provincial treasurer to settle offenses through compromise penalties of ₱200-₱500.
Annual Fixed Tax per Delivery Truck/Van (Section 15-A)
- Manufacturers/producers/dealers of distilled spirits, fermented liquors, soft drinks, cigars, and cigarettes shall be subject to an annual fixed tax of up to ₱75 per delivery truck/van.
- Manufacturers/producers/dealers of other products shall be subject to an annual fixed tax of up to ₱50 per delivery truck/van.
- Exempts them from the tax on peddlers and municipal permit fees, but allows provinces to levy a permit fee of up to ₱20 per annum.
Tax on Business (Section 19)
- Municipalities may impose taxes on various businesses, including manufacturers, retailers, wholesalers, exporters, cafes, restaurants, service establishments, amusement places, pawnshops, money shops, lending investors, finance/investment companies, insurance companies, banks, real estate dealers, golf links, fishponds, billboards, and privately-owned public markets.
- Provides schedules and rates for different types of businesses based on gross sales/receipts.
- Includes provisions for essential commodities, rice and corn, situs of tax, tax credits, and special provisions for newly started businesses, related businesses, and businesses terminating operations.
- Cities may levy the same taxes as municipalities, with rates not exceeding 50% of the maximum rates allowed for municipalities, except for certain uniform rates.
- Provides tax ceilings for the implementation of graduated fixed taxes based on the class of municipality/city and the year of implementation.
Fishery Rentals or Fees (Section 21)
- Municipalities may issue individual licenses for fishing zones if no bidders opt to lease them.
- Provides schedules of annual fees for fish corrals erected in the sea and fish corrals/pens in inland fresh waters, based on depth and area.
Scope of Power for Cities (Section 23)
- Cities may levy and collect any taxes, fees, and other impositions that provinces or municipalities may levy and collect, except as otherwise provided in the Code.
- Cities may exercise additional taxing powers not specifically enumerated in the Code, subject to certain provisions.
Market Fees (Section 30)
- Municipalities may impose a market entrance fee on transient vendors based on weight, bundle, sack, can, cartload, or any other convenient unit of measure, in lieu of regular market fees based on space occupied.
Slaughterhouse Fees (Section 31)
- Requires a permit from the health officer and payment of a corresponding fee before slaughtering animals for public consumption.
- For slaughtering large cattle, requires production of certificates of ownership and transfer before issuing the permit.
Effectivity of Tax Ordinance (Section 42)
- Tax ordinances shall take effect on the 15th day after approval by the local chief executive.
Similar Tax or Fee Not Specifically Enumerated (Section 49)
- Local boards/councils may impose a tax or fee on a similar tax base or subject not specifically enumerated in the Code, with a rate not exceeding that fixed for the similar tax base or subject, subject to a public hearing and approval by the Secretary of Finance.
Tax or Fee Not Provided For (Section 50)
- Local boards/councils may impose a tax, fee, or other imposition on a tax base or subject not similar or comparable to those mentioned in the Code, subject to a public hearing and approval by the Secretary of Finance.
Accrual of the Tax (Section 54)
- All local taxes shall accrue on January 1st of each year for existing subjects, while new taxes or changes in rates shall accrue at the beginning of the quarter following the ordinance's effectivity.
Examination of Books of Accounts (Section 59)
- Allows the provincial or city treasurer to examine the books of accounts and pertinent records of businessmen during regular business hours, not more than once a year for each business establishment, using forms prescribed by the Secretary of Finance.
Special Transitory Provisions (Section 64-A)
- Provides guidelines for the adjustment of tax rates and the implementation of the amended Local Tax Code.
- Extends existing tax ordinances of cities and municipalities until June 30, 1974.
- Requires local boards/councils to enact new tax ordinances in accordance with the amended Code, effective not earlier than July 1, 1974.
- Nullifies all existing tax ordinances on June 30, 1974.