PERTIINENT PROVISIONS OF THE LOCAL GOVERNMENT CODE

SECTION 168. Surcharges and Penalties on unpaid Taxes, fees, or Charges. - The
Sanggunian may impose a surcharge not exceeding twenty-five percent (25%) of the
amount of taxes, fees or charges not paid on time and an interest at the rate not
exceeding two percent (2%) per month of the unpaid taxes, fees or charges including
surcharges, until such amount is fully paid but in no case shall the total interest on
the unpaid amount or portion thereof exceed thirty-six (36) months.

Section 192. Authority to Grant Tax Exemption Privileges. - Local government units
may, through ordinances duly approved, grant tax exemptions, incentives or reliefs
under such terms and conditions as they may deem necessary.

RULE ON SURCHARGES AND PENALTIES:

 Surcharge: 25% of the amount of taxes, fees, or charges NOT paid on time
o With interest of: 2% per month on amount including surcharges
o However, in no case shall the total interest on the unpaid amount
or portion exceed 36 months

COMPROMISE OF LOCAL BUSINESS TAX LIABILITY

o Unlike under the Tax Code where the Commissioner of Internal Revenue is
given the authority to abate taxes, surcharge, compromise penalties and
interest, the Local Government Code and its Implementing Rules does not
expressly provide for a similar power to the LGUs. ( Revenue Regulations
No. 13-2001)
o However, LGUs1 usually issues a tax amnesty providing for the waiver of
penalties, interest and surcharges on delinquent business taxes, mayor’s
permits, market stall rentals, building permits and even occupancy and
electrical permits pursuant to Article 192 and 447 (2) (ii) of the Local
Government Code subject to the conditions provided for under Article 282 of
its Implementing Rules, to wit:
o The grant of exemption and reliefs must be through an ordinance
o They may be granted in cases of natural calamities, civil disturbances,
general failure of crops, or adverse economic conditions.
o Any exemption or relief granted to a type or kind of business shall apply
to all business similarly situated.
o The exemption or reliefs are only to last for a period not exceeding 12
months.
o They do not cover regulatory fees
o Based on the foregoing, it goes without saying that the approval of any
compromise and abatement of local business tax together with its
corresponding penalties and surcharges is within the judgment and discretion
of the LGU.

1
ORDINANCE NO. 13-006 AN ORDINANCE GRANTING TAX RELIEF/AMNESTY FOR DELINQUENT
BUSINESS TAXPAYERS IN THE CITY OF MUNTINLUPA WITH RESPECT TO INTERESTS AND PENALTIES; ORDINANCE
NO. 2001-22 AN ORDINANCE GRANTING TAX RELIEF/AMNESTY FOR DELINQUENT BUSINESS TAXPAYERS IN THE
CITY OF PASIG WITH RESPECT TO INTERESTS AND PENALTIES;