Cities with fully automated business permits and licensing systems (BPLS) posted stronger local business tax (LBT) revenue growth, with only 54 of the 138 Philippine cities studied having fully automated their BPLS, according to state-run policy think tank Philippine Institute for Development Studies (PIDS).

The findings were published in the May 2026 study “Relevance of e-Governance in Revenue Generation among Philippine Cities,” authored by PIDS supervising research specialist Tatum Ramos and vice president Marife Ballesteros, the think tank noted in a statement on Wednesday, July 29.

“The impact of fully-automated BPLS on LGU [local government unit] revenue generation is becoming apparent. Fully automated BPLS is positively associated with LBT revenue growth and business registrations,” the study said.

It found that cities with fully automated BPLS were associated with an 18.16-percentage-point (ppt) increase in LBT revenue growth compared with cities that had not fully automated their permitting processes.

The authors analyzed data from 138 cities to determine whether the digitalization of business permitting contributes to stronger local revenue generation and economic activity. Of these, 54 cities had fully automated BPLS, while 67 had partially automated systems.

Cities with fully automated BPLS also recorded higher levels of active business establishments, suggesting that streamlined digital services can encourage business formation and expansion.

Digital permitting allows businesses to apply for permits online, pay through banks and e-wallets, receive electronic official receipts (ORs), and, in some cases, obtain permits electronically or through courier delivery.

The study cited Caloocan City, Makati City, Quezon City, and Valenzuela City as examples of cities that have adopted these features, reducing the need for business owners to make repeated trips to city halls.

According to PIDS, these systems improve tax administration through faster processing, better data management, and more efficient revenue collection while making compliance easier for businesses.

However, the study identified several obstacles to digital transformation, including inadequate information and communications technology (ICT) infrastructure, funding constraints, shortages of personnel with advanced technical expertise, resistance to organizational change, and the continued preference of some taxpayers for face-to-face transactions.

“The lack of ICT infrastructure is a key problem since this impedes the use of digital technologies at the organizational level and the general public,” the authors said.

The study also found that stronger internet capability significantly increases the likelihood that a city will have a fully automated BPLS.

Despite widespread computer ownership and internet access among formal-sector establishments, the use of online government services remains limited.

In 2021, 90.83 percent of establishments used computers and communication equipment and 80.96 percent had internet access, but only 38.39 percent used the internet to make payments to government agencies.

“Not overcoming these obstacles can prevent the realization of e-Governance benefits,” the authors stressed.

“LGUs with fully and partially automated BPLS have realized the value of digitalization in terms of ease of monitoring and increased transparency, but challenges in the regulatory environment, human resource capacity, infrastructure, and service integration limit the effectiveness and efficiency of ICT use for establishments and for public services, in general,” the report said.

To maximize the benefits of digital business permitting, the researchers recommended expanding ICT infrastructure, strengthening technical capacity within LGUs, integrating local systems with the Department of Information and Communications Technology’s (DICT) eLGU platform, improving interoperability across agencies, encouraging wider use of online government services by businesses, establishing digital payment frameworks, providing online help desks, and conducting regular vulnerability assessments against cybersecurity threats.

The study identified Republic Act (RA) No. 12254, or the E-Governance Act, as an opportunity to accelerate digital transformation and improve coordination across national and local government systems. Signed in September 2025, the law institutionalized the government’s transition to e-governance, strengthened the ICT Academy, and mandated the integration of digital public services.

The law defines e-governance as “the use of ICT by the government to provide public services in a more friendly, convenient, affordable, efficient, and transparent manner.”

By investing in integrated digital systems and addressing implementation challenges, PIDS said LGUs could strengthen revenue generation while making it easier for businesses to comply with regulations and access public services. - Danielle T. Bayani