Guidelines and Instructions on the Proper Implementation of the Local Tax Code Enacted Under P.D. 231, as amended by P.D. 426 Promulgated on March 30, 1974, with Clarifications on Certain Amended Provisions

April 8, 1974 LOCAL TAX REGULATIONS NO. 1-74 SUBJECT : Guidelines and Instructions on the Proper Implementation of the Local Tax Code Enacted Under P.D. 231, as amended by P.D. 426 Promulgated on March 30, 1974, with Clarifications on Certain Amended Provisions TO : All Provincial Boards, City Councils or Municipal Boards, Municipal Councils, Barrio Councils and Provincial, City and Municipal Treasurers Certain provisions of the Local Tax Code enacted under Presidential Decree No. 231 have been amended under Presidential Decree No. 426 promulgated on March 30, 1974. Briefly stated, Presidential Decree No. 426 aforementioned: (a) Modifies the definitions of some of the terms used in the Code and incorporates therein the definitions of new and other important terms; (b) Amends the common and specific limitations on the taxing powers of local government units as originally provided in the Code; (c) Reduces the maximum rates of certain taxes that may be imposed by local government units; (d) Assigns to each class of municipality and city new ceilings for the revised maximum rates of the graduated fixed taxes on businesses under Section 19 of the Code and requires the gradual adoption of the maximum rates over a period of five years; (e) Grants tax credits under certain conditions to taxpayers who have paid at least the full amount of the first quarter payments for calendar year 1974 of the tax on business under Section 19 (a) of the Code on the basis of the maximum tax rates originally prescribed thereunder; (f) Adjusts the allocation of some of the specific taxing powers and resources of local government units as originally provided in the Code; (g) Provides new impositions on some businesses that may be reasonably tapped for local revenues; (h) Requires the conduct of public hearings before the enactment of local tax ordinances levying taxes, fees, or charges not specifically mentioned in the Code; (i) Revises some of the administrative provisions of the Code; (j) Extends the deadline for the 2nd quarter payment of the tax on business under Section 19(a) of the Code as originally provided from April 20, 1974 to May 31, 1974. (k) Revokes ipso facto all existing local tax ordinances on June 30, 1974; and (l) Lays down special transitory provisions in view of the changes made in the Local Tax Code. For the proper and effective implementation, therefore, of the Local Tax Code, as amended by Presidential Decree No. 426, the following clarifications, guidelines and instructions are hereby issued for the information, guidance and strict compliance of those concerned: A. ON THE DEFINITION OF TERMS Under Section 1 of Presidential Decree No. 426, the definition of the following terms as originally provided in the Code have been modified for the purposes indicated below: 1. Agricultural product The tax exemption of agricultural products which are no longer in their original form is limited to those preserved in a more convenient and marketable form through the simple processes of freezing, drying, salting, smoking, and stripping. Hence, agricultural products converted into other forms by processes other than those mentioned above, like curing, canning, bottling, or other processes, are now subject to tax under the Code regardless of whether they are sold by the farmer, fisherman, animal or poultry-raiser himself or by other persons. 2. Hotel To remove any ambiguity that may arise in the levy and collection of taxes or other impositions on hotels, the definition of the term was modified to mean an establishment used as living quarters by transients or guests and where food may be served to the guests only. Thus, the words "or customers" have been deleted from the original definition. DAESTI 3. License The word "permit" has been added to the original definition to signify that it is synonymous to the term "license". 4. Public market To exclude from the scope of the original definition of the term, public streets, plazas, parks and the like which may not be used for purposes of a public market without having been first withdrawn from public servitude. 5. Services To use the more appropriate word "functions" in place of the word "business" and to limit, for purposes of clarity, the "private person" mentioned in the definition to one under contract with the government. 6. Wharfage To include vessels engaged in domestic trade by adding the words "or domestic" to the original definition. Additional definitions of terms . New and other important terms, which, in effect, broaden the field of local taxation or which are necessary in the proper imposition of certain taxes by the local government units , have been added to the definitions of terms originally provided in the Code: boarding house, business agent, cabarets or dance halls, carinderia, collecting agency, compounder of wines or distilled spirits, contractor, general engineering contractor, dancing school, distillers of spirits, lending investor, manufacturers of cigars or cigarettes, manufacturer of tobacco, money shop, real estate broker, real estate salesman, real estate dealer, rectifier of distilled spirits, repacker of wines or distilled spirits, restaurant, retail dealer in fermented liquors, retail leaf tobacco dealer, retail liquor dealer, retail vino dealer, stockbroker, dealer in securities, wholesale dealer in fermented liquors, wholesale dealer of distilled spirits and wines, wholesale tobacco dealer and independent wholesaler. B. ON THE COMMON LIMITATIONS ON THE TAXING POWERS OF LOCAL GOVERNMENTS UNDER SECTION 5 OF THE CODE, AS AMENDED BY SECTION 2 OF P.D. 426 The following amended paragraphs of Section 5 of the Code are here presented and discussed briefly for clarity: 1. Paragraph (b) "Taxes on forest concessions and forest products when sold domestically by the concessionaire himself." Under the amendment, only forest products sold domestically by the concessionaire himself are exempt. Hence, forest products sold domestically by persons other than the concessionaire himself shall be subject to the graduated fixed tax on business under Section 19(a) or (a-1) of the Code, as amended. Furthermore, forest products exported abroad whether by the concessionaire himself or by other persons shall be subject to the graduated fixed tax under paragraph (a-2) of Section 19 of the Code, as amended. 2. Paragraph (e) "Taxes on the business of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carriers by air, land or water except as otherwise provided in this Code, and taxes or fees for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof." In addition to the prohibition originally provided in the Code against the imposition of local taxes or fees for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof, local governments under the aforequoted amendment are likewise prohibited from imposing any tax on the business of transportation contractors and persons engaged in the transportation of passengers or freight by hire and common carrier by air, land or water. However, pursuant to Section 15-A of the Code, as inserted under Section 7 of Presidential Decree No. 426, provincial governments may levy annual fixed taxes per delivery truck or van of manufacturers or producers of, or dealers in, certain products, which power may also be exercised by city governments pursuant to the provisions of Section 23 of the Code, as amended. 3. Paragraph (g) "Taxes of any kind on banks and insurance companies except as otherwise provided in this Code." The exceptions to this common limitation are the nominal fixed taxes that may be imposed on money shops, lending investors, finance and investment companies, insurance companies and banks (except the Central Bank the Philippines) under Section 19 (n) of the Code, as amended. 4. Paragraph (k) "Taxes or fees on agricultural products when sold by the farmer, fisherman, poultry or animal raiser himself." This common limitation, as amended, includes, along with the farmer, the fisherman, poultry raiser and animal raiser inasmuch as the term agricultural products include all kinds of fishes, poultry, livestock and animal products. 5. Paragraph (1) "Percentage tax on sales." Where before this common limitation admitted of an exception in that cities could impose percentage tax on sales, now , under the same limitation, as amended, percentage tax on sales is beyond the taxing powers of local government units at all levels to impose . This taxing power of cities has been deleted from Section 23 of the Code, as amended by Section 12 of P.D. 426. TDAcCa The following paragraphs are now embodied as common limitations on the taxing powers of local governments in Section 5 of the Code, as amended by Section 2 of P.D. 426. 1. Paragraph (m) prohibits the imposition of taxes on mines; mining operations; and minerals, mineral products, and their by-products when sold domestically by the operator . Under the amendment, only minerals, mineral products and their by-products sold domestically by the mining operator himself are exempt . Hence, minerals, mineral products and their by-products sold domestically by persons other than the mining operator himself shall be subject to the graduated fixed tax on business under Section 19(a) or (a-1) of the Code, as amended. Furthermore, minerals, mineral products and their by-products exported abroad whether by the mining operator himself or by other persons shall be subject to the graduated fixed tax under paragraph (a-2) of Section 19 of the Code, as amended. 2. Paragraph (n) prohibits the imposition of taxes on cooperatives duly organized and registered with the proper government office . 3. Paragraph (o) prohibits the levy of taxes of any kind on the national and local governments . C. ON THE COMPUTATION OF THE GRADUATED FIXED TAXES ON BUSINESSES UNDER SECTION 19(A), (A-1), (A-2), (A-3), (A-4) AND (A-5) OF THE CODE, AS AMENDED BY SECTION 9 OF P.D. 426, AND SECTION 23 OF THE CODE, AS AMENDED BY SECTION 12 OF P.D. 426. The maximum rates of graduated fixed taxes on businesses originally prescribed under Section 19(a) of the Code have been revised under Section 9 of P.D. 426. The amendments, moreover, include the following changes: 1. Businesses subject to the tax were grouped into three, with each group being provided with a separate schedule of graduated fixed taxes based on gross sales for the preceding calendar year. Section 19 (a), as amended, covers manufacturers, importers and producers, including brewers, distillers, rectifiers, repackers and compounders of liquors, distilled spirits and/or wines. Section 19(a-1) covers retailers, independent wholesalers and distributors. Section 19(a-2) pertains to all exporters. 2. In the separate schedules mentioned above, the term "gross annual sales" was changed to "gross sales" for the preceding calendar year to signify that the basis of the tax need not be the gross sales for one complete year of twelve months. This amendment contemplates of a situation where a business started to operate on a date other than January first of the calendar year and, therefore, realized "gross sales" for only a fraction of the year. 3. The imposition by municipalities of the graduated fixed taxes prescribed in paragraphs (a), (a-1), and (a-2) of Section 19 of the Code, as amended by Presidential Decree No. 426 should not exceed the tax ceilings provided under Section 19(a-3) shown hereunder: Initial years of implementation up to December 31, 1975, 1st & 2nd class municipalities 3rd & 4th class municipalities Municipalities, 5th class & below 70% of the maximum 55% of the maximum 40% of the maximum Third and fourth calendar years, 1st & 2nd class municipalities 3rd & 4th class municipalities Municipalities, 5th class & below 85% of the maximum 70% of the maximum 55% of the maximum Fifth calendar year and thereafter 1st & 2nd class municipalities 3rd & 4th class municipalities Municipalities, 5th class & below 100% of the maximum 85% of the maximum 70% of the maximum 4. Paragraph (a-4) of Section 19 of the Code, as amended, prescribes lower rates for taxes on manufacturers, producers, importers, exporters, wholesalers and retailers of essential commodities therein listed to help arrest the spiralling costs of day-to-day necessities. Under the provision, the maximum rates of taxes that may be imposed on them shall not exceed one-half of what may be levied on other businesses under the three schedules of graduated fixed taxes in relation to the tax ceilings provided by paragraph (a-3) of the same Section, as amended. 5. The tax on the business of importing, wholesaling or retailing of, or dealing in, rice and corn, including rice and corn millers engaged in the wholesaling or retailing of said cereals, shall be one-fourth of the maximum rates prescribed under paragraph (A-1) of Section 19 of the Code, as amended, as an exception to the staggered tax ceilings provided by paragraph (A-3) of the same Section, also as amended, and shall be uniform for all classes of municipalities and cities . Hence, the tax shall be in accordance with the following schedule: With gross sales for the preceding Amount of Tax calendar year in the amount of: per annum Less than 1,000.00 P 3.75 P 1,000.00 or more but less than 2,000.00 7.50 2,000.00 or more but less than 3,000.00 11.25 3,000.00 or more but less than 4,000.00 16.25 4,000.00 or more but less than 5,000.00 22.50 5,000.00 or more but less than 6,000.00 27.50 6,000.00 or more but less than 7,000.00 32.50 7,000.00 or more but less than 8,000.00 37.50 8,000.00 or more but less than 10,000.00 42.50 10,000.00 or more but less than 15,000.00 50.00 15,000.00 or more but less than 20,000.00 62.50 20,000.00 or more but less than 30,000.00 75.00 30,000.00 or more but less than 40,000.00 100.00 40,000.00 or more but less than 50,000.00 150.00 50,000.00 or more but less than 75,000.00 225.00 75,000.00 or more but less than 100,000.00 300.00 100,000.00 or more but less than 150,000.00 425.00 150,000.00 or more but less than 200,000.00 550.00 200,000.00 or more but less than 300,000.00 750.00 300,000.00 or more but less than 500,000.00 1,000.00 500,000.00 or more but less than 750,000.00 1,500.00 750,000.00 or more to less than 1,000,000.00 2,000.00 For every P100,000.00 in excess of P1 million 25.00 6. Pursuant to Section 12 of P.D. 426 amending Section 23 of the Code, cities are empowered to levy and collect any of the taxes, fees, or charges imposable by provinces and municipalities. The rates of the taxes, fees or charges that the city shall fix may exceed the maximum rates allowed for the province or the municipality by not more than 50%, except the following taxes which shall be uniform for the city and the province or municipality, as the case may be: (a) Occupation tax under Section 12 of the Code; (b) The amusement tax on admission under Section 13; (c) The fees for the sealing and licensing of weights and measures under Section 14; (d) The annual fixed tax per delivery truck or van of manufacturers or producers of, or dealers in, certain products under Section 15-A of the Code as inserted by Section 7 of P.D. 426; and (e) The tax on the business of importing, wholesaling, or retailing of, or dealing in, rice and corn , including rice and corn millers also engaged in the wholesaling or retailing of said cereals fixed under Section 19 (a-5) of the Code, as amended. aHSTID 7. The maximum rates of the graduated fixed taxes that the city may impose under paragraphs (a), (a-1), (a-2), and (a-4) of the Code as read in relation with Section 23 thereof, as amended, shall not exceed the tax ceilings prescribed for each class of city under Section 23(a), as shown hereunder: 1st-A, 1st, 2nd & Cities, 4th class 3rd class cities & below Initial years of implementation up to December 31, 1975 70% of the maximum 55% of the maximum Third and fourth calendar years 85% of the maximum 70% of the maximum Fifth calendar year and thereafter 100% of the maximum 85% of the maximum D. ON THE GRANT OF TAX CREDITS PROVIDED FOR IN THE SPECIAL PROVISIONS OF SECTION 19 OF THE CODE, AS AMENDED BY SECTION 9 OF P.D. 426 The grant of tax credits to taxpayers shall be governed by the following guidelines: 1. Tax credits shall be given only to taxpayers subject to the tax on business under Section 19(a) of the Local Tax Code in the case of municipalities, and Section 23 thereof, in the case of cities, as originally provided in P.D. 231. 2. Tax credits shall be granted only in cases where the rate imposed is higher than 70% of the maximum rates originally prescribed under Section 19(a) of the Code for municipalities and Section 23 as read in relation therewith in the case of cities. 3. The taxpayer must have paid at least the full amount of the tax for the first quarter installment pertaining to the calendar year 1974, whether the tax was levied and collected on the basis of the schedule of graduated fixed taxes under Section 19(a) abovementioned or, in the case of cities, the tax imposed was a percentage tax on sales in lieu of the graduated fixed tax pursuant to Section 23 of the Code as originally provided. 4. The tax credit that shall be given to a taxpayer who is found to be entitled thereto shall be the difference between: (a) the amount of the annual or quarterly tax paid by him for the first quarter of calendar year 1974 and 70% of the maximum rate originally prescribed in Section 19(a) of the Code under P.D. 231 in the case of municipalities and Section 23 thereof in the case of cities computed annually or quarterly, as the case may be; or (b) the amount of the annual or quarterly tax paid by him for the first quarter of calendar year 1974 and the annual or highest quarterly tax paid by him for the same business in calendar year 1973, whichever is lower . 5. In the case of cities which have imposed the maximum rates of one percent (1%) and two percent (2%) on essential and non-essential commodities, respectively, in lieu of the graduated fixed taxes, thirty percent (30%) of the annual or quarterly tax paid during the first quarter of calendar year 1974 shall be credited in favor of the taxpayer and applied to his future tax obligations to the city. Similarly, the tax credit that shall be given to the taxpayer shall be the difference between: (a) the amount of the annual or quarterly tax paid by him for the first quarter of calendar year 1974 and 70% of the maximum 1% tax on essential commodities and 2% on non-essential commodities originally prescribed in Section 23 of the Code under P. D. 231; or (b) the amount of the annual or quarterly tax paid by him for the first quarter of calendar year 1974 and the annual or highest quarterly tax paid by him for the same business in calendar year 1973, whichever is lower . 6. The tax credits granted a taxpayer shall not be refundable in cash but shall only be applied to future tax obligations of the same taxpayer for the same business in equal amounts beginning with the second quarter of calendar year 1974 but not to exceed four quarterly installments. If a taxpayer has paid in full the tax due for the entire year (1974) and he shall have no other tax obligations payable to the local government concerned during the year, his tax credits, if any, shall be applied in full during the first quarter of calendar year 1975 on the tax due from him for the same business in 1975. 7. All taxpayers entitled to tax credits provided for under Section 19 of the Code as amended by Section 9 of P.D. 426 shall file with the local treasurer a claim in writing duly supported by evidence of payment on or before June 30, 1974, after which date no claim for tax credit shall be entertained. 8. No tax credits shall be due from a local government for business taxes paid under a tax ordinance, the enforcement of which has been extended up to June 30, 1974 by this Department pursuant to the provisions of Section 64 of the Local Tax Code. 9. Any unapplied balance of the tax credit given to a taxpayer shall be forfeited in favor of the municipality or city in the event that he terminates operations of the business involved within the locality. Tax credits may be computed on the basis of the schedules embodied in Appendices "C-1", "C-2", and "C-3" annexed as an integral part hereof and hereby published pursuant to the provisions of Section 9 of P.D. 426, which should be applied in relation with the foregoing paragraphs. E. ADJUSTMENT OF THE MAXIMUM RATES OF THE TAX ON BUSINESS UNDER SECTION 19(A) OF THE CODE AS ORIGINALLY PROVIDED IN PRESIDENTIAL DECREE NO. 231 AND SECTION 23 AS READ IN RELATION THEREWITH IMPOSABLE FOR THE SECOND QUARTER OF CALENDAR YEAR 1974 1. Pursuant to the provisions of Section 64-A of the Local Tax Code as inserted by Section 23 of P.D. 426, the maximum rates of business taxes that may be imposed and collected by municipalities and cities for the second quarter of calendar year 1974, beginning April 1, shall be in accordance with the appropriate columns of the schedules embodied in Appendices "C-1", "C-2" and "C-3" which are annexed hereto, unless the local tax ordinance in force has fixed a lower rate, in which case the lower rate shall prevail and be collectible. DcaCSE All existing tax ordinances of cities and municipalities imposing rates higher than the allowable rates fixed in the schedules abovementioned are deemed accordingly adjusted by operation of law. 2. However, local tax ordinances the enforcement of which has been extended up to June 30, 1974 by this Department pursuant to the provisions of Section 64 of the Code shall not be affected by the aforesaid adjustment of maximum rates of business taxes and the rates imposed thereunder shall continue to be enforceable during the second quarter beginning April 1, 1974. 3. The business taxes herein referred to corresponding to the second quarter of calendar year 1974 shall be paid not later than May 31, 1974, instead of April 20, 1974, as an exception to the provisions of Section 55 of the Code. F. ON THE IMPLEMENTATION OF ADJUSTED MAXIMUM RATES, TAX CEILINGS AND NEW TAXES AND OTHER IMPOSITIONS 1. The adjusted maximum rates of the graduated fixed taxes on businesses imposable by municipalities under paragraphs (A), (A-1), (A-2), (A-4), (A-5), B and C of Section 19 of the Local Tax Code as amended by Section 9 of P.D. 426 and, in the case of cities, under Section 23 of the Code as amended by Section 12 of said decree, shall be implemented through the enactment of local tax ordinances to take effect not earlier than July 1, 1974, attention in this connection being invited to the pertinent general administrative provisions under Chapter III of the Code, as amended. Furthermore, the adjusted maximum rates abovementioned shall be in accordance with the staggered tax ceilings provided for in Section 19 (A-3) of the Code, as amended, in the case of municipalities, and Section 23 (A), in the case of cities. 2. Similarly, the amended rates and new impositions of fixed taxes under paragraphs (d), (e), (g), (h), (m), (n), (o) and (q) of Section 19 of the Code as amended, as well as the graduated fixed taxes for the business of operating privately-owned public markets under Section 19(r) and the annual fixed taxes on operators or owners of rice or corn mills under Section 19(s), both inserted under Section 10 of P.D. 426, shall be implemented through the enactment of local tax ordinances to take effect not earlier than July 1, 1974, pursuant also to the pertinent provisions of Chapter III of the Code, as amended. G. SITUS OF THE TAX Pursuant to the provisions of Section 19(A-6) of the Local Tax Code as inserted by Section 9 of P.D. 426, the situs of the tax payable by manufacturers and producers beginning April 1, 1974 shall be determined in accordance with the following guidelines: 1. All sales made in branch or sales offices shall be recorded therein and the tax shall be payable to the local government where the branch or sales office is located. 2. In cases where there is no such branch or sales office in the locality where the sale is effected, the sale shall be recorded in the principal office along with the sales made by said principal office. 3. Sixty per cent (60%) of all sales recorded in the principal office shall be taxable by the local government where the principal office is located, while the remaining forty per cent (40%) shall be deemed as sales made in the factory and shall be taxable by the local government where the factory is located. 4. The forty per cent (40%) sales allocation taxable by the local government where the factory is located shall be in addition to whatever sales are made in the locality where the factory is situated in cases where sales offices are maintained therein. 5. If a manufacturer or producer has two or more factories situated in different localities, the forty per cent sales allocation shall be prorated among the localities where the factories are situated in proportion to their respective volumes of production during the period for which the tax is due. H. ON THE RATES OF TAXES PAYABLE BY NEWLY-STARTED, RELATED OR COMBINED, AND RETIRING BUSINESS Newly-started businesses : 1. The tax that shall be payable by newly-started businesses falling under paragraphs (A), (A-1), (A-2), B or C of Section 19 of the Code, as amended, shall be fixed by the quarter and shall not exceed one-fourth of one-tenth of one per cent of the capital investment for the initial quarter in which the business starts to operate. IATSHE 2. In the succeeding quarters, the tax shall be based on the gross sales of the preceding quarter at a rate not exceeding one-fourth of the maximum allowable under the pertinent schedule as applied in relation with paragraphs (A-3), (A-4) and (A-5) of Section 19 of the Code, as amended. 3. In the succeeding calendar year, the tax shall be computed on the basis of the total sales realized during the preceding calendar year, or any fraction thereof. 4. Taxes due on newly-started businesses other than those referred to in the foregoing paragraphs shall not be less than the minimum prescribed for such businesses under the applicable provisions of the Code. Related or combined businesses : 1. If a person conducts or operates two or more related businesses subject to the same rate of imposition under any one of paragraphs (A), (A-1), (A-2), B or C of Section 19 of the Code, as amended, the tax shall be computed on the basis of the combined total gross sales of said businesses. 2. However, if the businesses operated by one person are governed by separate tax schedules, the taxable gross sales of each business shall be reported independently and the tax thereon shall be computed on the basis of the pertinent schedule. Retiring businesses : 1. A person engaged in business subject to the graduated fixed tax based on gross sales and/or receipts shall upon termination thereof submit a sworn statement of its gross sales and/or receipts for the calendar year. 2. If the tax paid by the person during the year shall be less than the tax due for the current year based on the gross sales and/or receipts, the difference of tax shall be paid before the business is considered officially retired. 3. The permit issued to a business terminating its operations shall be surrendered to the local treasurer who shall forthwith cancel the same and record such cancellation in his books. I. ON THE IMPLEMENTATION OF AMENDMENTS TO CERTAIN PROVISIONS OF THE LOCAL TAX CODE In the enactment of new tax ordinances to take effect beginning July 1, 1974, the local boards and councils should also take into consideration the amendments embodied in P.D. 426 on the provisions of the Local Tax Code involving the following taxes and other impositions: 1. Tax on the transfer of real property ownership under Section 7 of the Code, as amended by Section 3 of P.D. 426; 2. Sand and gravel tax under Section 10 of the Code, as amended by Section 4 of the Decree; 3. Amusement tax on admission under Section 13 of the Code, as modified by Section 5 of the Decree; 4. Fees for sealing and licensing of weights and measures under Section 14 of the Code, as amended by Section 6 of the Decree; 5. Fishery rentals or fees under Section 21(c) of the Code, as amended by Section 11 of P.D. 426; 6. Taxes and fees under Section 27(a) of the Code, as modified under Section 15 of the Decree; 7. Market fees under Section 30(d) of the Code, as amended by Section 16 of the Decree; and 8. Paragraphs (a) and (d) of Section 31 of the Code regarding slaughterhouse fees, as modified under Section 17 of the Decree. J. GENERAL PROVISIONS 1. All existing tax ordinances of provinces, cities, municipalities and barrios shall be deemed ipso facto nullified on June 30, 1974. 2. The local boards or councils should enact their respective tax ordinances pursuant to the provisions of the Local Tax Code, as amended by P.D. 426, to take effect not earlier than July 1, 1974. 3. Pursuant to the provisions of Section 42 of the Code, as amended by Section 18 of the said decree, a local tax ordinance shall go into effect on the 15th day after its approval by the local chief executive in accordance with Section 41 of the Code. DTAHSI In view hereof, and considering the provisions of Section 54 of the Code regarding the accrual of taxes, a local tax ordinance intended to take effect on July 1, 1974 should be enacted by the local board or council and approved by the local chief executive not later than June 15, 1974. 4. The power to impose percentage taxes on sales and additional taxes on articles subject to specific tax under the provisions of the National Internal Revenue Code, as originally provided under Sections 23 and 24 of the Code have been withdrawn under P.D. 426 and therefore no such taxes shall be levied in local tax ordinances beginning July 1, 1974. 5. To be consistent with the allocation of the tax on peddlers to provinces under Section 15 of the Code and to obviate multiplicity of impositions by municipalities to the prejudice of the peddlers concerned, the power to impose taxes on (a) retail peddlers of distilled, manufactured or fermented liquors . (b) wholesale peddlers of distilled, manufactured or fermented liquors . (c) retail peddlers of manufactured tobacco , and (d) wholesale peddlers of manufactured tobacco , has been transferred from municipalities under paragraphs (d) and (e) of Section 19 to provinces under Section 15-a, all of the Code as amended. 6. Taxes or fees not specifically enumerated or provided for in the Local Tax Code, as amended, may be imposed by the local governments under Sections 49 and 50 of the Code, as amended by Sections 19 and 20 of the said decree, respectively. However, the local tax ordinance imposing such a tax or fee shall be enacted only after a public hearing is conducted for the purpose. The tax or fee imposed shall begin to accrue and be collectible upon approval by this Department of the corresponding tax ordinance effective on the date fixed therefor. 7. Under no circumstance shall a local tax, fee, or other imposition be collected by a treasurer or his deputies without a tax ordinance imposing the same having been duly enacted and approved by the authorities concerned in accordance with the provisions of the Local Tax Code, as amended. 8. In acknowledging payments of local taxes, fees and charges, it shall be the duty of the treasurer or his deputies to indicate on the official receipts issued for the purpose the number of the corresponding local tax ordinance. 9. Beginning July 1, 1974, the examination of the books of accounts of businesses shall not be made oftener than once every calendar year for each business establishment. 10. The provisions of Provincial Circulars and Department Orders of this Department not inconsistent with the provisions hereof shall subsist and remain in force. All Provincial and City Treasurers are hereby directed to disseminate the contents hereof as widely as possible for the information and guidance of all concerned. All Municipal Treasurers should likewise be given by the respective Provincial Treasurers the necessary and appropriate instructions. (SGD.) CESAR VIRATA Secretary ATTACHMENT Schedule I Tax Ceilings and Rates of Tax Imposable for Municipalities For the Quarter Beginning April 1, 1974 Up to June 30, 1974 With gross annual sales for the Amount of Tax P.A. 70% of the Amount of preceding calendar year in the amount of: under Sec. 19(a) Maximum Rates Tax Credit (A) (B) (C) less than P1,000 P 10.00 P 7.00 P 3.60 P 1,000 or more but less than P 2,000 20.00 14.00 6.00 2,000 or more but less than 3,000 30.00 21.00 9.00 3,000 or more but less than 4,000 45,00 31.50 13.50 4,000 or more but less than 5,000 65,00 45.50 19.50 5,000 or more but less than 6,000 80.00 56.00 24.00 6,000 or more but less than 7,000 100.00 70.00 30.00 7,000 or more but less than 8,000 120.00 84.00 36.00 8,000 or more but less than 10,000 160.00 112.00 48.00 10,000 or more but less than 15,000 240.00 168.00 72.00 15,000 or more but less than 20,000 360.00 252.00 108.00 20,000 or more but less than 30,000 520.00 364.00 156.00 30,000 or more but less than 40,000 750.00 525.00 225.00 40,000 or more but less than 50,000 1,000.00 700.00 300.00 50,000 or more but less than 75,000 1,500.00 1,050.00 450.00 75,000 or more but less than 100,000 2,200.00 1,540.00 660.00 100,000 or more but less than 150,000 3,200.00 2,240.00 960.00 150,000 or more but less than 300,000 3,900.00 2,730.00 1,170.00 300,000 or more but less than 500,000 7,000.00 4,900.00 2,100.00 500,000 or more but less than 750,000 11,250.00 7,875.00 3,375.00 750,000 or more to less than 1,000,000 16,000.00 11,200.00 4,800.00 For every P50,000 or fraction thereof in excess of P1,000,000.00 200.00 140.00 Column (B) Shows the maximum rate of tax allowable for the second quarter of calendar year 1974, to be compared to the existing rate of tax imposed in local tax ordinance. Whichever rate is lower is the amount collectible. Schedule II Tax Ceilings and Rates of Tax Imposable for Cities For the Quarter Beginning April 1, 1974 Up to June 30, 1974 With gross annual sales for the Maximum Annual 70% of the Amount of preceding calendar year in the amount of: Tax Under Sec. Maximum Rates Tax Credit 23 in relation with Sec. 19(A) (A) (B) (C) less than P1,000 P 15.00 P 10.50 P 4.50 P 1,000 or more but less than P 2,000 30.00 21.00 9.00 2,000 or more but less than 3,000 45.00 31.50 13.50 3,000 or more but less than 4,000 67.50 47.25 20.25 4,000 or more but less than 5,000 97.50 68.25 29.25 5,000 or more but less than 6,000 120.00 84.00 36.00 6,000 or more but less than 7,000 150.00 105.00 45.00 7,000 or more but less than 8,000 180.00 126.00 54.00 8,000 or more but less than 10,000 240.00 168.00 72.00 10,000 or more but less than 15,000 360.00 252.00 108.00 15,000 or more but less than 20,000 540.00 378.00 162.00 20,000 or more but less than 30,000 780.00 546.00 234.00 30,000 or more but less than 40,000 1,125.00 787.50 337.50 40,000 or more but less than 50,000 1,500.00 1,050.00 450.00 50,000 or more but less than 75,000 2,250.00 1,575.00 675.00 75,000 or more but less than 100,000 3,300.00 2,310.00 990.00 100,000 or more but less than 150,000 4,800.00 3,360.00 1,440.00 150,000 or more but less than 300,000 5,850.00 4,095.00 1,755.00 300,000 or more but less than 500,000 10,500.00 7,350.00 3,150.00 500,000 or more but less than 750,000 16,875.00 11,812.50 5,062.50 750,000 or more to less than 1,000,000 24,000.00 16,800.00 7,200.00 For every P50,000 or fraction thereof in excess of P1,000,000.00 300.00 210.00 Column (B) Shows the maximum rate of tax allowable for the second quarter of calendar year 1974, to be compared to the existing rate of tax imposed in local tax ordinance. Whichever rate is lower is the amount collectible. Schedule III Tax Credit on Percentage Tax on Sales And Rates Imposable For Cities For the Quarter Beginning April 1, 1974 to June 30, 1974 Maximum Rates Under Sec. 23 Imposable Tax Credit (A) (B) (C) 1. For essential commodities 1% 70% of 1% 30% of 1% 2. For non-essential commodities 2% 70% of 2% 30% of 2% Column (B) Shows the maximum rate of tax allowable for the second quarter of calendar year 1974 to be compared to the existing rate of tax imposed in local tax ordinance. Whichever rate is lower is the amount collectible. Column (C) percentage to be given as tax credit.