Today, may be most of the business establishments have renewed their business permits for the year 2011 with their respective local government units (LGUs) in the country.
In the first week of January 2011, me and my associates in the office had been busy preparing the requirements for the renewal of business permits of businesses with different LGUs.
The LGUs are granted the power to tax, including the right to impose local business taxes (LBT) on all business operating within its jurisdiction with reference to the law, Republic Act No. 7160 which is known as the Local Government Code of 1991 (LGC).
LBT is imposed on the amount of gross sales or receipts of a business establishment for the preceding calendar year using the rates of taxes provided under Section 143 of the LGC, or a specific ordinance issued by the LGU, for each type of business.
Business establishments are required by LGUs to submit Declaration/ Certification of Gross Sales/Receipts for the preceding calendar year for basis in computation of LBT and the latest Income Tax Returns and Financial Statements for purposes of verifying the accuracy of the declarations that have been made for the previous year.
In my worse actual experience for almost two years in securing renewal of business permits is that one of the LGUs is not following the Section 143 of the LGC. Upon presentation of the accomplished tax assessment form providing the 2009 gross sales which is higher compared to 2010 gross sales in securing business permit for year 2011, I was dismayed when their government employee decided to make an assessment of the same amount as declared in 2009 gross sales with their invalid reason that the 2010 gross sales/receipts should be higher even though I have provided their requirements which was resulted to over-assessment and over-payment of business taxes.
Through research, I have learned that the method used by this LGUs is known as the Presumptive Income Level Assessment Approach (PILLA) that it is commonly practiced in most LGUs throughout the country as a tool for the efficient and effective collection of taxes.
Again, the LGUs in the country should based the local business taxes stated in Section 143 of the LGC and should not based on presumptive income.
Local taxation must always be uniform, fair and just despite of the local autonomy granted by the Constitution.