LAST issue in this column, topics presented were on where to pay sales transaction through branch or sales office. In cases of warehouses, if there are no sales transactions made (i.e., the warehouse does not accept orders or issue sales invoices independent of a branch or sales office), the warehouse will not be considered as a branch or sales office and the taxpayer will not be subject to or be liable to pay any local business tax to the city or municipality where the warehouse is located.

However, a mayor's permit must still to be secured by the taxpayer and pay all applicable regulatory fees and service charges for the operation of the warehouse in the city or municipality.

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In the same manner, if an office situated in a locality is used only as a display area and no stock or items are stored for sale and the office does not issue invoices or receipts or record sales transactions, the office will not be considered an area branch or sales office and the taxpayer will not be subject to or be liable to pay any local business tax to the city or municipality.

In the case of business enterprises that sell their products through brokers, the cities or municipalities where brokers conduct their businesses may attribute sales generated in their respective localities by the brokers to say business enterprises and the latter may be required by the local government units concerned to pay the local business taxes payable on said sales transactions.

For local business tax purposes, a broker is considered as a mere agent of the business enterprise that engages its services. Hence, the proceeds of its sales transactions for and on behalf of the business enterprise may be properly attributed to that business enterprise by the concerned local government unit.

The situation would be different, however, if, instead of a broker, the business enterprise engages the services of an independent dealer. Unlike a broker, an independent dealer is considered a separate taxable entity and thus, the proceeds of its sales transactions in a locality may not be attributed by the city or municipality concerned to the business enterprise that engaged the services of the independent dealer.

In cases where there is no branch, sales office or warehouses in the locality where the sales are made, the sales must be recorded in the principal office along with the sales made by the principal office and the local business tax shall accrue and must be paid to the city or municipality where the principal office is located. This assumes, however, that the factory project office, plant or plantation of the taxpayer, if any is located in the same place.

If the factory, project office, plant or plantation is located in another locality only 30% of all sales recorded in the principal office shall be taxable by the city or municipality where the factory, project office, plant or plantation is locate.

In case the plantation is situated in a locality other than that where the factory is located, the 70% sales allocation must be divided as follows; 60% to the local government where the factory is located, and 40% to the city or municipality where the plantation is located.

If there are two or more factories, project offices, plants or plantations situated in different localities, the 70% sales allocation must be prorated or apportioned among the cities or municipalities where the factories, project offices, plants or plantations are located on the basis of their respective volumes of production during the period for which the taxes are due.

The allocation of sales must be applied regardless of whether or not sales are made in the locality where the factory, project office, plant or plantation is located.

Well for the MSMEs, knowing where the local business tax or taxes should be paid has its many benefits. For the taxpayer, it means being able to pay on time the local business tax due to the proper local taxing authority, avoiding the risk of unnecessary exposure to surcharges and interest penalties.

For the concerned local government units, it means getting the necessary resources to support its existence and carry out its legitimate objectives.