Tax Law L. Local Taxation (R.A. No. 7160, Book II, Title I)

Question 1

L. Local Taxation (R.A. No. 7160, Book II, Title I)
1. General Principles – Sections 130 and 132

Answer 1

Sure, here’s a summary of the key principles found in Section 130 of the Local Government Code:

1. Uniformity: Taxation must be uniform within each local government unit.
2. Equity: Taxes, fees, charges, and other impositions should be based on the taxpayer’s ability to pay and should be equitable.
3. Public Purpose: Revenue should be collected only for public purposes.
4. Just and Legal: Taxes should not be unjust, excessive, oppressive, or confiscatory, and they should comply with laws, public policy, and national economic policy.
5. Prohibition on Privatization: The collection of local taxes should not be outsourced to private entities.
6. Benefit to Local Government: Revenue collected should benefit the local government unit levying the tax.
7. Progressive Taxation: Local government units should strive to implement a progressive system of taxation, where those who earn more pay a higher proportion of their income in taxes.

Question 2

L. Local Taxation (R.A. No. 7160, Book II, Title I)

2. Common Limitations on the Taxing Powers of Local Government Units – Section 133

Answer 2

Certainly! Here’s a summary of the limitations on the taxing powers of local government units as outlined in Section 133 of the Local Government Code, listed numerically for easy memorization:

1. Income Tax: Generally not allowed, except when levied on banks and other financial institutions.
2. Documentary Stamp Tax: Not allowed.
3. Estate and Inheritance Taxes: Not allowed, except as otherwise provided.
4. Customs Duties and Fees: Not allowed, except for specific exemptions.
5. Taxes on Goods in Transit: Not allowed, including charges for wharfage or tolls.
6. Taxes on Agricultural and Aquatic Products: Not allowed when sold by marginal farmers or fishermen.
7. Tax Incentives for Business Enterprises: Not allowed for certain periods for BOI-certified enterprises.
8. Excise Taxes on National Products: Not allowed.
9. Value-Added Tax (VAT): Generally not allowed, except as otherwise provided.
10. Taxes on Transportation Services: Not allowed, except as specified.
11. Taxes on Insurance Premiums: Not allowed.
12. Vehicle Registration and Licensing Fees: Not allowed, except for tricycles.
13. Export Taxes: Not allowed, except as otherwise provided.
14. Taxes on Registered Countryside and Barangay Businesses: Not allowed.
15. Taxes on the National Government: Not allowed.

These limitations ensure a framework for local taxation that respects national economic policies and avoids double taxation or undue burden on certain sectors or transactions.

Question 3

L. Local Taxation (R.A. No. 7160, Book II, Title I)

3. Local Business Tax – Sections 143, 145 and 146

Section 143. Tax on Business

Answer 3

Certainly! Here’s a summary of the taxes that may be imposed on businesses as outlined in Section 143 of the Local Government Code, listed numerically for easy memorization:

1. Tax on Manufacturers, etc.: Taxes may be imposed on manufacturers, assemblers, brewers, distillers, and other similar businesses based on their gross sales or receipts.
2. Tax on Wholesalers, Distributors, etc.: Taxes may be imposed on wholesalers, distributors, or dealers in various articles of commerce based on their gross sales or receipts.
3. Tax on Exporters and Essential Commodity Businesses: Taxes may be imposed on exporters, manufacturers, and businesses dealing with essential commodities at a reduced rate compared to other businesses.
4. Tax on Retailers: Taxes may be imposed on retailers based on their gross sales or receipts, with rates depending on the amount of sales.
5. Tax on Contractors: Taxes may be imposed on contractors based on their gross sales or receipts, with rates varying according to sales.
6. Tax on Banks and Financial Institutions: Taxes may be imposed on banks and financial institutions based on their gross receipts from various financial activities.
7. Tax on Peddlers: Taxes may be imposed on peddlers engaged in the sale of merchandise or articles of commerce.
8. Miscellaneous Business Taxes: Taxes may be imposed on any other business not specified above, subject to certain limitations and regulations.

These provisions allow local governments to levy taxes on various types of businesses operating within their jurisdiction, with rates and conditions specified by the local sanggunian.

Question 4

L. Local Taxation (R.A. No. 7160, Book II, Title I)

4. Validity of a Local Tax Ordinance – Section 187

Answer 4

Here are the requirements for the validity of local tax ordinances, summarized and listed numerically for easy memorization:

1. Procedure for Approval: Local tax ordinances and revenue measures must follow the procedure outlined in the Local Government Code for approval.
2. Mandatory Public Hearings: Public hearings must be conducted prior to the enactment of tax ordinances or revenue measures to ensure transparency and gather input from the community.
3. Appeal to Secretary of Justice: Any question regarding the constitutionality or legality of tax ordinances or revenue measures may be appealed to the Secretary of Justice within thirty (30) days from the date of effectivity.
4. Decision by Secretary of Justice: The Secretary of Justice shall render a decision within sixty (60) days from the date of receipt of the appeal.
5. Effectivity of Ordinance: The appeal does not suspend the effectivity of the ordinance or the accrual and payment of the tax, fee, or charge levied therein.
6. Court Proceedings: If aggrieved by the decision of the Secretary of Justice or the lapse of the sixty-day period without action, the party may file appropriate proceedings with a court of competent jurisdiction within thirty (30) days.

These requirements ensure that local tax ordinances are enacted through a transparent process and provide avenues for addressing legal concerns or grievances regarding their validity.

Question 5

L. Local Taxation (R.A. No. 7160, Book II, Title I)

5. Taxpayer’s Remedies
   a. Administrative – Section 195
   b. Judicial - SEC195
   c. Refund or Credit – Section 196

RULE ON 195

Answer 5

To summarize and list down numerically the taxpayers’ remedies under Section 195 of the Local Government Code:

1. Protest of Assessment:
   
   • The taxpayer has 60 days from receiving the notice of assessment to file a written protest with the local treasurer contesting the assessment.
   • If no protest is filed within 60 days, the assessment becomes final and executory.
2. Decision on Protest:
   
   • The local treasurer must decide on the protest within 60 days of its filing.
   • If the protest is wholly or partly meritorious, the local treasurer cancels wholly or partially the assessment.
   • If the assessment is found to be wholly or partly correct, the protest is denied wholly or partly with notice to the taxpayer.
3. Appeal:
   
   • If the protest is denied or partially denied, the taxpayer has 30 days from receiving the denial or from the lapse of the 60-day period to appeal to the court of competent jurisdiction.
   • Failure to appeal within the specified period makes the assessment conclusive and unappealable.

Question 6

L. Local Taxation (R.A. No. 7160, Book II, Title I)

6. Assessment and Collection of Local Taxes – Section 194
   a. Remedies of Local Government Units

Answer 6

To summarize and list down numerically the tax remedies of local government units under Section 194:

1. Periods of Assessment:
   
   • Local taxes, fees, or charges shall be assessed within five (5) years from the date they became due.
   • Taxes, fees, or charges accrued before the effectivity of the Code may be assessed within three (3) years from the date they became due.
2. Fraud or Intent to Evade Payment:
   
   • In cases of fraud or intent to evade payment of taxes, fees, or charges, assessment may be made within ten (10) years from the discovery of the fraud or intent.
3. Periods of Collection:
   
   • Local taxes, fees, or charges may be collected within five (5) years from the date of assessment by administrative or judicial action.
   • Taxes, fees, or charges assessed before the effectivity of the Code may be collected within three (3) years from the date of assessment.
4. Suspension of Prescriptive Period:
   
   • The running of the periods of prescription may be suspended under the following circumstances:
     
     • The treasurer is legally prevented from making the assessment or collection.
     • The taxpayer requests a reinvestigation and executes a written waiver before the expiration of the assessment or collection period.
     • The taxpayer is out of the country or cannot be located.

Question 7

L. Local Taxation (R.A. No. 7160, Book II, Title I)

6. Assessment and Collection of Local Taxes – Section 194

b. Prescriptive Period

Answer 7

To summarize and list down numerically the prescriptive period and injunction under Section 194:

1. Prescriptive Period for Assessment:
   
   • Local taxes, fees, or charges must be assessed within five (5) years from the date they became due.
   • Taxes, fees, or charges accrued before the effectivity of the Code may be assessed within three (3) years from the date they became due.
2. Prescriptive Period for Fraud or Evasion:
   
   • In cases of fraud or intent to evade payment, assessment may be made within ten (10) years from the discovery of the fraud or intent.
3. Prescriptive Period for Collection:
   
   • Local taxes, fees, or charges may be collected within five (5) years from the date of assessment by administrative or judicial action.
   • Taxes, fees, or charges assessed before the effectivity of the Code may be collected within three (3) years from the date of assessment.
4. Suspension of Prescriptive Period:
   
   • The prescriptive periods provided may be suspended under certain circumstances:
     
     • When the treasurer is legally prevented from making the assessment or collection.
     • If the taxpayer requests a reinvestigation and executes a written waiver before the expiration of the assessment or collection period.
     • When the taxpayer is out of the country or cannot be located.

Question 8

L. Local Taxation (R.A. No. 7160, Book II, Title I)

6. Assessment and Collection of Local Taxes – Section 194

c. Injunction

Answer 8

The injunction mentioned under Section 194 of the Local Government Code limits the ability to halt the assessment or collection of local taxes, fees, or charges through legal action. Here’s a breakdown:

1. Who: This applies to taxpayers who wish to challenge the assessment or collection of local taxes, fees, or charges imposed by local government units.
2. Does What: Taxpayers are restricted from obtaining an injunction to stop the local government from assessing or collecting taxes unless they pay the assessed amount under protest.
3. Where: This restriction applies within the jurisdiction of the local government unit imposing the taxes, fees, or charges.
4. When: The restriction applies when taxpayers seek legal recourse to halt the assessment or collection process.
5. How: Taxpayers must pay the assessed amount under protest before seeking an injunction through legal channels.
6. Why: This provision aims to ensure the continuous flow of revenue for local government operations and projects by preventing undue delay in the assessment and collection process. It encourages taxpayers to fulfill their obligations while providing a mechanism to challenge assessments through proper channels.

Question 9

L. Local Taxation (R.A. No. 7160, Book II, Title I)
1. General Principles – Sections 130 and 132

Answer 9

Certainly! Here’s a summary of the key principles found in Section 132 of the Local Government Code:

1. Authority: The power to impose taxes, fees, charges, or generate revenue is vested in the sanggunian (local legislative body) of the concerned local government unit.
2. Exercise through Ordinance: This authority is exercised through the enactment of an appropriate ordinance by the sanggunian.
3. Legislative Process: The process of passing such ordinances follows the procedures and requirements set forth in the Local Government Code.
4. Local Governance: This provision ensures that local taxing authority is exercised within the framework of local governance and under the oversight of the local legislative body.

Question 10

L. Local Taxation (R.A. No. 7160, Book II, Title I)

3. Local Business Tax – Sections 143, 145 and 146

Section 145. Retirement of Business.

Answer 10

Certainly! Here’s a summary of the key principles found in Section 145 of the Local Government Code, listed numerically for easy memorization:

1. Submission of Sworn Statement: Upon termination of a business subject to tax, the business must submit a sworn statement of its gross sales or receipts for the current year.
2. Payment of Tax Difference: If the tax paid during the year is less than the tax due on the gross sales or receipts of the current year, the difference must be paid before the business is considered officially retired.

These principles ensure that businesses fulfill their tax obligations upon retirement and settle any outstanding tax liabilities before ceasing operations.

Question 11

L. Local Taxation (R.A. No. 7160, Book II, Title I)

3. Local Business Tax – Sections 143, 145 and 146

Section 146. Payment of Business Taxes. -

Answer 11

Here are the key principles from Section 146 of the Local Government Code, summarized and listed numerically for easy memorization:

1. Payment for Every Establishment: Taxes imposed under Section 143 must be paid for each separate or distinct establishment or place where the business subject to tax is conducted. No exemption is granted for conducting multiple businesses together, and each line of business must pay its respective tax.
2. Responsibility of the Person Conducting the Business: The tax on a business must be paid by the individual or entity conducting the business.
3. Combined Total Gross Sales for Related Businesses: If a person operates multiple businesses subject to the same tax rate, the tax shall be computed based on the combined total gross sales or receipts of these related businesses.
4. Separate Reporting for Different Tax Rates: If a person operates multiple businesses subject to different tax rates, the gross sales or receipts of each business shall be separately reported to compute the tax due for each business.

These principles ensure clarity and fairness in the payment of business taxes, preventing evasion and ensuring that each business pays its appropriate share of taxes based on its activities and revenues.

Question 12

L. Local Taxation (R.A. No. 7160, Book II, Title I)

5. Taxpayer’s Remedies

c. Refund or Credit – Section 196

Section 196. Claim for Refund of Tax Credit.

Answer 12

To summarize and list down numerically the key points as to the claim for refund of tax credit under Section 196:

1. Written Claim for Refund or Credit:
   
   • A written claim for refund or credit must be filed with the local treasurer before initiating any case or proceeding for the recovery of any tax, fee, or charge that was erroneously or illegally collected.
2. Time Limit for Filing Claim:
   
   • No case or proceeding can be entertained in any court after the expiration of two (2) years from:
     
     • The date of payment of the tax, fee, or charge, or
     • The date the taxpayer is entitled to a refund or credit.
3. Statute of Limitations:
   
   • The two-year period serves as a statute of limitations, beyond which no claim for refund or credit can be pursued in court.

Question 13

Based on the key points summarized from the search results, here are three challenging MCQ questions on the claim for refund of tax credit under Section 196 of Philippine tax law:

Question 1:
A taxpayer made an erroneous payment of taxes to the local government in January 2022. In December 2023, the taxpayer discovered the error and wanted to file a claim for refund.

According to the rules on claim for refund or credit under Section 196, which of the following statements is CORRECT?

A. The taxpayer can still file a claim for refund with the local treasurer, as the two-year time limit has not yet expired.
B. The taxpayer’s only option is to file a case directly in court, as the two-year time limit for filing a claim with the local treasurer has already passed.
C. The taxpayer cannot file a claim for refund or initiate any case or proceeding, as the two-year time limit has expired.
D. The taxpayer can file a claim for refund with the local treasurer, but the court has the discretion to entertain the case even if the two-year time limit has passed.

Answer 13

Correct Answer: C. The taxpayer cannot file a claim for refund or initiate any case or proceeding, as the two-year time limit has expired.

Explanation:
According to the key points summarized from the search results, Section 196 establishes a two-year time limit for filing a claim for refund or credit. This two-year period serves as a statute of limitations, beyond which no claim for refund or credit can be pursued in court.

In the given scenario, the taxpayer made the erroneous payment in January 2022 and wanted to file a claim for refund in December 2023. Since the two-year time limit has already expired, the taxpayer cannot file a claim for refund with the local treasurer or initiate any case or proceeding in court for the recovery of the erroneously paid taxes.

Option A is incorrect because the two-year time limit has already passed, and the taxpayer can no longer file a claim for refund.

Option B is incorrect because the taxpayer cannot file a case directly in court, as the two-year time limit has expired.

Option D is incorrect because the court does not have the discretion to entertain the case if the two-year time limit has passed, as per the provisions of Section 196.

Question 14

Question 2:
A taxpayer filed a claim for refund of erroneously paid taxes with the local treasurer in January 2022. The local treasurer did not act on the claim, and the taxpayer decided to file a case in court in March 2024.

Based on the rules on claim for refund or credit under Section 196, which of the following statements is CORRECT?

A. The court can entertain the case, as the taxpayer filed the claim with the local treasurer within the two-year time limit.
B. The court cannot entertain the case, as the taxpayer filed the case in court after the expiration of the two-year time limit.
C. The court can entertain the case, as the two-year time limit only applies to the filing of the claim with the local treasurer, not the filing of the case in court.
D. The court can entertain the case, as the local treasurer’s inaction on the claim should be considered an implicit denial, allowing the taxpayer to file the case in court.

Correct Answer: B. The court cannot entertain the case, as the taxpayer filed the case in court after the expiration of the two-year time limit.

Explanation:
According to the key points summarized from the search results, Section 196 establishes a two-year time limit for filing a claim for refund or credit, and this two-year period serves as a statute of limitations, beyond which no claim for refund or credit can be pursued in court.

In the given scenario, the taxpayer filed the claim for refund with the local treasurer in January 2022, which was within the two-year time limit. However, the taxpayer then filed the case in court in March 2024, which was after the expiration of the two-year time limit.

The search results clearly state that “no case or proceeding can be entertained in any court after the expiration of two (2) years from the date of payment of the tax, fee, or charge, or the date the taxpayer is entitled to a refund or credit.”

Therefore, the court cannot entertain the case, as the taxpayer filed the case in court after the expiration of the two-year time limit.

Option A is incorrect because the filing of the claim with the local treasurer within the two-year time limit does not automatically allow the court to entertain the case if it is filed after the expiration of the time limit.

Option C is incorrect because the two-year time limit applies to both the filing of the claim with the local treasurer and the filing of the case in court.

Option D is incorrect because the local treasurer’s inaction does not override the statutory two-year time limit for filing the case in court.

Question 15

Based on the key principles summarized from Section 146 of the Local Government Code, here are two challenging MCQ questions:

Question 1:
A business owner named Juan operates a restaurant, a convenience store, and a small manufacturing plant all under the same roof. According to the principles outlined in Section 146, how should Juan’s business taxes be calculated?

A. Juan should pay a single business tax based on the combined total gross sales or receipts of all three of his business operations.
B. Juan should pay separate business taxes for each of his three business operations, based on their individual gross sales or receipts.
C. Juan should only pay business taxes for the restaurant and convenience store, as the manufacturing plant is exempt from local business taxes.
D. Juan can choose to either pay a single business tax based on the combined total gross sales or pay separate taxes for each business operation.

Correct Answer: B. Juan should pay separate business taxes for each of his three business operations, based on their individual gross sales or receipts.

Explanation:
According to the key principles summarized from Section 146 of the Local Government Code:

1. Taxes imposed must be paid for each separate or distinct establishment or place where the business subject to tax is conducted. No exemption is granted for conducting multiple businesses together.
2. The tax on a business must be paid by the individual or entity conducting the business.
3. If a person operates multiple businesses subject to different tax rates, the gross sales or receipts of each business shall be separately reported to compute the tax due for each business.

In the given scenario, Juan operates three distinct business operations (a restaurant, a convenience store, and a manufacturing plant) under the same roof. Based on the principles outlined in Section 146, Juan must pay separate business taxes for each of these three operations, based on their individual gross sales or receipts.

Option A is incorrect because the taxes cannot be calculated based on the combined total gross sales or receipts of all three businesses, as they are separate and distinct operations.

Option C is incorrect because there is no exemption for the manufacturing plant, and all three businesses must be taxed separately.

Option D is incorrect because the taxpayer does not have the option to choose between a single combined tax or separate taxes for each business. The law requires separate taxation for each distinct business operation.

Question 16

Question 2:
A business owner named Maria operates a chain of clothing stores across several municipalities in the Philippines. According to the principles outlined in Section 146, how should Maria’s business taxes be calculated?

A. Maria should pay a single business tax to the municipality where her main store is located, and this tax will cover all her stores across the different municipalities.
B. Maria should pay separate business taxes to each municipality where she has a store, based on the gross sales or receipts of the individual store in that municipality.
C. Maria should pay a single business tax to the national government, which will then be distributed to the different municipalities where her stores are located.
D. Maria can choose to either pay a single business tax to the municipality of her main store or pay separate taxes to each municipality where she has a store.

Correct Answer: B. Maria should pay separate business taxes to each municipality where she has a store, based on the gross sales or receipts of the individual store in that municipality.

Explanation:
According to the key principles summarized from Section 146 of the Local Government Code:

1. Taxes imposed must be paid for each separate or distinct establishment or place where the business subject to tax is conducted. No exemption is granted for conducting multiple businesses together.
2. The tax on a business must be paid by the individual or entity conducting the business.
3. If a person operates multiple businesses subject to the same tax rate, the tax shall be computed based on the combined total gross sales or receipts of these related businesses.

In the given scenario, Maria operates a chain of clothing stores across several municipalities. Based on the principles outlined in Section 146, Maria should pay separate business taxes to each municipality where she has a store, and the tax for each store should be calculated based on the gross sales or receipts of that individual store.

Option A is incorrect because a single business tax paid to the municipality of the main store does not cover the other stores located in different municipalities.

Option C is incorrect because the business taxes must be paid directly to the local government units (municipalities) where the stores are located, not to the national government.

Option D is incorrect because the taxpayer does not have the option to choose between a single tax or separate taxes for each municipality. The law requires separate taxation for each distinct business establishment.

Question 17

Question 1:
A local government unit imposes a 2% tax on the gross sales of all retailers within its jurisdiction, regardless of the amount of their sales. According to Section 143 of the Local Government Code, which of the following statements is CORRECT?

A. The local government unit’s tax on retailers is valid, as Section 143 allows for the imposition of taxes on retailers based on their gross sales or receipts.
B. The local government unit’s tax on retailers is invalid, as Section 143 requires the tax rate to vary according to the amount of the retailer’s sales.
C. The local government unit’s tax on retailers is valid, as Section 143 allows for a uniform tax rate to be applied to all retailers.
D. The local government unit’s tax on retailers is invalid, as Section 143 does not permit the imposition of a flat tax rate on retailers.

Correct Answer: B. The local government unit’s tax on retailers is invalid, as Section 143 requires the tax rate to vary according to the amount of the retailer’s sales.

Explanation:
According to Section 143 of the Local Government Code, taxes may be imposed on retailers “based on their gross sales or receipts, with the rates to vary according to the amount of sales.”

The key phrase here is “with the rates to vary according to the amount of sales.” This means that the tax rate imposed on retailers must be different for businesses with different levels of gross sales or receipts, and not a flat rate applied uniformly to all retailers.

Option A is incorrect because the tax rate must vary based on the amount of sales, not be a flat rate.

Option C is incorrect because the tax rate must vary according to the amount of sales, as per the provisions of Section 143.

Option D is incorrect because Section 143 does allow for the imposition of taxes on retailers, but the rates must vary based on the amount of sales.

Therefore, the local government unit’s tax on retailers, which imposes a flat 2% rate regardless of the amount of sales, is invalid under Section 143 of the Local Government Code.

Question 18

Question 2:
A local government unit imposes a 5% tax on the gross sales of all exporters and businesses dealing with essential commodities within its jurisdiction. According to Section 143 of the Local Government Code, which of the following statements is CORRECT?

A. The local government unit’s tax on exporters and essential commodity businesses is invalid, as Section 143 does not allow for the imposition of such taxes.
B. The local government unit’s tax on exporters and essential commodity businesses is valid, as Section 143 permits the imposition of taxes on these businesses at a reduced rate compared to other businesses.
C. The local government unit’s tax on exporters and essential commodity businesses is invalid, as Section 143 requires the tax rate to be higher for these businesses compared to other businesses.
D. The local government unit’s tax on exporters and essential commodity businesses is valid, as Section 143 allows for the imposition of a uniform tax rate on all businesses, regardless of their nature.

Correct Answer: B. The local government unit’s tax on exporters and essential commodity businesses is valid, as Section 143 permits the imposition of taxes on these businesses at a reduced rate compared to other businesses.

Explanation:
According to Section 143 of the Local Government Code, local government units may “impose taxes on exporters, manufacturers, and businesses dealing in essential commodities at a rate lower than the rates prescribed for other businesses.”

The key phrase here is “at a rate lower than the rates prescribed for other businesses.” This means that the local government unit is allowed to impose a reduced tax rate on exporters and businesses dealing with essential commodities, compared to the tax rates imposed on other types of businesses.

Option A is incorrect because Section 143 does allow for the imposition of taxes on exporters and essential commodity businesses, albeit at a reduced rate.

Option C is incorrect because Section 143 specifically permits a lower tax rate for exporters and essential commodity businesses, not a higher rate.

Option D is incorrect because Section 143 requires the tax rate for exporters and essential commodity businesses to be lower than the rates for other businesses, not a uniform rate.

Therefore, the local government unit’s tax on exporters and essential commodity businesses at a 5% rate, which is lower than the rate imposed on other businesses, is valid under Section 143 of the Local Government Code.

Question 19

Question 3:
A local government unit imposes a 3% tax on the gross sales or receipts of all banks and financial institutions within its jurisdiction, including commercial banks, savings and loan associations, and credit unions. According to Section 143 of the Local Government Code, which of the following statements is CORRECT?

A. The local government unit’s tax on banks and financial institutions is invalid, as Section 143 does not allow for the imposition of such taxes.
B. The local government unit’s tax on banks and financial institutions is valid, as Section 143 permits the imposition of taxes on these entities based on their gross receipts from various financial activities.
C. The local government unit’s tax on banks and financial institutions is invalid, as Section 143 requires the tax rate to be higher for these entities compared to other businesses.
D. The local government unit’s tax on banks and financial institutions is valid, as Section 143 allows for the imposition of a uniform tax rate on all businesses, regardless of their nature.

Correct Answer: B. The local government unit’s tax on banks and financial institutions is valid, as Section 143 permits the imposition of taxes on these entities based on their gross receipts from various financial activities.

Explanation:
According to Section 143 of the Local Government Code, local government units may “impose taxes on banks and other financial institutions based on their gross receipts from all sources within the city or municipality.”

The key phrase here is “based on their gross receipts from all sources within the city or municipality.” This means that the local government unit is allowed to impose taxes on banks and financial institutions based on their total gross receipts, which can include various financial activities such as lending, deposits, and investments.

Option A is incorrect because Section 143 does allow for the imposition of taxes on banks and financial institutions.

Option C is incorrect because Section 143 does not require a higher tax rate for banks and financial institutions compared to other businesses.

Option D is incorrect because Section 143 does not mandate a uniform tax rate for all businesses, as it allows for different tax rates based on the nature of the business.

Therefore, the local government unit’s tax on banks and financial institutions at a 3% rate on their gross sales or receipts is valid under Section 143 of the Local Government Code.

Question 20

Question 1:
A business owner named Juan received a notice of assessment from the local treasurer for an alleged deficiency in his local business tax (LBT) payment. According to Section 195 of the Local Government Code, which of the following statements correctly describes Juan’s remedies?

A. Juan must pay the assessed deficiency first before he can file a written protest with the local treasurer.
B. Juan has 60 days from receiving the notice of assessment to file a written protest with the local treasurer.
C. If Juan’s protest is denied, he has 30 days to appeal the decision to the court of competent jurisdiction.
D. All of the above.

Correct Answer: D. All of the above.

Explanation:
Based on the information provided in the search results, Section 195 of the Local Government Code outlines the following remedies for taxpayers regarding a local tax assessment:

1. Protest of Assessment:
   
   • The taxpayer has 60 days from receiving the notice of assessment to file a written protest with the local treasurer contesting the assessment.
2. Decision on Protest:
   
   • The local treasurer must decide on the protest within 60 days of its filing.
3. Appeal:
   
   • If the protest is denied or partially denied, the taxpayer has 30 days from receiving the denial or from the lapse of the 60-day period to appeal to the court of competent jurisdiction.

The search results also indicate that the requirement of “payment under protest” before filing a protest is invalid, as it contradicts the provisions of Section 195.

Therefore, all the statements in the question correctly describe the taxpayer’s remedies under Section 195 of the Local Government Code.

Question 21

Question 2:
A business owner named Maria received a notice of assessment from the local treasurer for an alleged deficiency in her local business tax (LBT) payment. Maria filed a written protest with the local treasurer within the 60-day period, but the local treasurer did not decide on the protest within the 60-day period provided in Section 195.

Based on the information provided, which of the following statements is CORRECT?

A. Maria’s protest is deemed denied, and she has 30 days to appeal the decision to the court of competent jurisdiction.
B. The local treasurer’s failure to decide on the protest within 60 days means the assessment is automatically canceled.
C. Maria must wait for the local treasurer to issue a decision on her protest before she can take any further action.
D. Maria can file a mandamus action with the court to compel the local treasurer to decide on her protest.

Correct Answer: A. Maria’s protest is deemed denied, and she has 30 days to appeal the decision to the court of competent jurisdiction.

Explanation:
According to the information provided in the search results, Section 195 of the Local Government Code states that the local treasurer must decide on the protest within 60 days of its filing.

The search results further indicate that if the protest is denied or partially denied, the taxpayer has 30 days from receiving the denial or from the lapse of the 60-day period to appeal to the court of competent jurisdiction.

In the given scenario, Maria filed the written protest within the 60-day period, but the local treasurer did not decide on the protest within the 60-day period provided in Section 195. Based on the provisions of Section 195, this means that Maria’s protest is deemed denied, and she has 30 days to appeal the decision to the court of competent jurisdiction.

Option B is incorrect because the law does not automatically cancel the assessment if the local treasurer fails to decide on the protest within the 60-day period.

Option C is incorrect because Maria is not required to wait for the local treasurer’s decision if it is not issued within the 60-day period.

Option D is correct because Maria can file a mandamus action with the court to compel the local treasurer to decide on her protest, but this is not the only option available to her under Section 195.

Question 22

Question 3:
A business owner named Juan received a notice of assessment from the local treasurer for an alleged deficiency in his local business tax (LBT) payment. Juan filed a written protest with the local treasurer within the 60-day period, and the local treasurer denied the protest.

According to Section 195 of the Local Government Code, which of the following statements correctly describes Juan’s next course of action?

A. Juan must pay the assessed deficiency first before he can appeal the local treasurer’s decision to the court of competent jurisdiction.
B. Juan has 30 days from receiving the denial of his protest to appeal the decision to the court of competent jurisdiction.
C. Juan can choose to either pay the assessed deficiency under protest or directly file a case in court to challenge the assessment.
D. Juan has no further recourse and must accept the local treasurer’s decision, as the assessment has become final and executory.

Correct Answer: B. Juan has 30 days from receiving the denial of his protest to appeal the decision to the court of competent jurisdiction.

Explanation:
Based on the information provided in the search results, Section 195 of the Local Government Code outlines the following steps for taxpayers regarding a local tax assessment:

1. Protest of Assessment:
   
   • The taxpayer has 60 days from receiving the notice of assessment to file a written protest with the local treasurer contesting the assessment.
2. Decision on Protest:
   
   • If the protest is denied or partially denied, the taxpayer has 30 days from receiving the denial or from the lapse of the 60-day period to appeal to the court of competent jurisdiction.

The search results also indicate that the requirement of “payment under protest” before filing an appeal is invalid, as it contradicts the provisions of Section 195.

Therefore, the correct statement is that Juan has 30 days from receiving the denial of his protest to appeal the decision to the court of competent jurisdiction, without the need to pay the assessed deficiency first.

Option A is incorrect because the requirement of “payment under protest” is invalid under Section 195.

Option C is incorrect because the taxpayer does not have the option to choose between paying under protest or directly filing a case in court.

Option D is incorrect because the taxpayer has the right to appeal the local treasurer’s decision within the specified 30-day period.