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Manila Bulletin devider Business devider Banking & Finance devider LGUs can opt out of new business tax despite alignment mandate—FIRB

LGUs can opt out of new business tax despite alignment mandate—FIRB

Published Aug 24, 2026 12:00 am  |  Updated Aug 22, 2026 03:09 pm

At A Glance

  • Local government units (LGUs) have the discretion to adopt or reject the registered business enterprise local tax (RBELT), even as the Fiscal Incentives Review Board (FIRB) has mandated them to review and align local rules to the national policies.

Local government units (LGUs) have the discretion to adopt or not adopt the registered business enterprise local tax (RBELT), even as the interagency Fiscal Incentives Review Board (FIRB) has required them to review and align local rules with national policies.

In FIRB’s latest advisory dated Aug. 20, Department of Finance (DOF) Assistant Secretary and FIRB Secretariat Head Juvy C. Danofrata reminded LGUs that they have six months from the March 30 effectivity of Joint Memorandum Circular (JMC) No. 1, series of 2026, to review their existing revenue laws and local policies and align them with national tax measures.

The DOF, the Department of the Interior and Local Government (DILG), and the Department of Trade and Industry (DTI) issued JMC 1 last March 23 to standardize the imposition of local taxes, fees, and charges on registered business enterprises (RBEs).

FIRB clarified in its latest advisory that the national Tax Code always takes precedence over local ordinances. “In the event of any inconsistency or conflict, the provisions of the Tax Code, as amended, and other applicable national laws shall prevail.”

Aligning local government policies with national laws allows LGUs to trim operational red tape.

Notably, the advisory does not mandate all cities and municipalities to adopt RBELT, even as the new local tax was introduced by the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act as a consolidated tax to improve the ease of doing business.

FIRB said concerned cities or municipalities can decide whether to adopt RBELT. “Where an LGU decides to impose an RBELT, it shall be implemented through an ordinance enacted by the appropriate Sanggunian,” FIRB said.

Once an LGU adopts RBELT through a specific local ordinance, RBELT is imposed in place of all other local taxes, fees, and charges normally required under the Local Government Code (LGC) of 1991.

For RBEs’ qualified projects, RBELT replaces only the taxes, fees, and charges governed directly by the LGC, including local business tax (LBT), mayor’s permit fees, and real property taxes (RPT).

It also bears noting that while the standard five-percent gross income earned (GIE) and five-percent special corporate income tax (SCIT) incentive schemes do not exempt Philippine Economic Zone Authority (PEZA) developers from paying RPT on land they own, RBELT covers such RPT.

Further, RBELT applies strictly to RBEs’ registered project or activity. Any of RBEs’ non-registered activities remain subject to standard local taxes, fees, and charges.

Registered projects and activities located within Philippine Veterans Investment Development Corp. (PHIVIDEC) industrial areas are not subject to the RBELT, as they are governed by special provisions of PHIVIDEC’s charter.

Related Tags

Fiscal Incentives Review Board (FIRB) Department of Finance (DOF) Department of Interior and Local Government (DILG) Department of Trade and Industry (DTI) CREATE MORE Act LGU
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