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18 October 2022

Tax Updates September 2022 (SyCipLaw Tax Issues And Practical Solutions (T.I.P.S.) International Edition Vol. 7)

SS
SyCip Salazar Hernandez & Gatmaitan

Contributor

SyCip Salazar Hernandez & Gatmaitan was founded in 1945 and is a leading full-service law firm in the Philippines. Its principal office is in Makati City, with branch offices in Cebu City, Davao City and the Subic Bay Freeport Zone. The firm offers a broad and integrated range of legal services, with departments in the following fields: banking, finance and securities; special projects; corporate services; litigation and dispute resolution; employment law and immigration; intellectual property; and tax.
Generally, no. In City of Davao v. ARC Investors, Inc., (G.R. No. 249668 (Resolution), July 13, 2022), the Supreme Court noted that while local government units ("LGU") have the power to impose local
Philippines Tax

1. Is a holding company considered a non-bank financial intermediary ("NBFI") liable for local business taxes imposed by a city?

Generally, no. In City of Davao v. ARC Investors, Inc., (G.R. No. 249668 (Resolution), July 13, 2022), the Supreme Court noted that while local government units ("LGU") have the power to impose local business taxes ("LBT") on the privilege of doing business within their territorial jurisdictions, this is limited to those engaged in the businesses set out in the Local Government Code ("LGC"). LGUs may impose business taxes, on banks or other financial institutions under Section 143(f) of the LGC. LBT are imposed on their gross receipts from "interest, commissions and discounts from lending activities, income from financial leasing, dividends, rentals on property and profit from exchange or sale of property, insurance premium." The Supreme Court held that in order for an entity to be considered a non-banking financial institution ("NBFI") under the LGC, applying the National Internal Revenue Code of 1997, as amended ("Tax Code") and pertinent banking laws and regulations, the following requisites must concur:

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