31 January 2021 – The Anti-Red Tape Authority (ARTA) is calling on all LGUs to strictly observe the Department of Finance’s Bureau of Local Government Finance (BGLF) MC. 01-2020 or the Updated Reminders in the Assessment of the Local Business Tax, Registration and Renewal of Business Permits and Licenses, and the imposition of Local Taxes, Fees and Charges, which provides for clear guidelines on the assessment of local business taxes in order to avoid whimsical, disproportionate, and unnecessary imposition of fees or taxes upon taxpayers.
Pursuant to Section B. 1. of BLGF MC No. 001-2020, LGUs are to base their assessments on the Audited Financial Statement of the applicant, or in its absence, on the Sworn Declaration of gross sales or receipts, or the applicant’s Income Tax Returns. In case of suspected under declaration of gross sales/receipts, such application shall be tagged by the LGU and will be subjected to the examination of books of accounts by the local treasurer to be done after the business renewal period. It can be gleaned from the foregoing that the renewal of the subject business permit may still proceed and the corresponding permit may be issued, which shall be subject to revocation or suspension in the event of a finding of under or misdeclaration after the conduct of such examination.
ARTA also seeks to emphasize on the proper use of the Presumptive Income Level Assessment Approach pursuant to Section B. 3. BLGF MC No. 001-2020. This may be resorted to by LGUs in computing for the local business taxes but only if the taxpayer is unable to provide proof of its gross sales or receipts. “It is important to note that the use of PILAA must be in the LGU’s local ordinance and has undergone public hearings and publications. Absent such ordinance, the assessment using PILAA is illegal and the taxpayer may properly claim the refund of the excess business taxes collected”, explained Director General Jeremiah Belgica
Aside from its observations during the surprise inspections of Business One-Stop Shops (BOSS) in the National Capital Region, the Authority also received a number of complaints and reports on the seemingly high assessment of business taxes or sometimes the none compliance with the procedure for proving gross sales or receipts as laid down by the BLGF MC. 01-2020. “Unfortunately, this high assessment becomes an opening for corruption to fester”, the ARTA chief said.
Furthermore, ARTA is calling upon LGUs who still require a Public Liability Insurance (or General Liability Policy Insurance) for the issuance of a business permit or renewal thereof to consider the immediate repeal of the ordinances requiring the same. Securing such insurance is optional to businesses and mandatorily requiring it serves as an undue additional requirement, especially for micro-small-medium enterprises.
ARTA will be working with DILG-BLGD and with DOF-BLGF to ensure full compliance of LGUs with BLGF MC. 01-2020. It will also be inviting the LGUs for a meeting to formally discuss these matters. Any supposed violations of the RA 11032 or any legal orders without justifiable cause may be subjected to administrative investigation.