THE Mandaue City Government has begun implementing a business tax increase this year following the passage of a city ordinance mandating an adjustment in local tax rates, officials said.
Lawyer August Lizer Malate, head of the Business Permit and Licensing Office (BPLO), said the increase in business tax rates, fees, and charges is a regular policy in the city and is allowed under the Local Government Code.
“This is not the first time Mandaue City has increased its business taxes. The law allows local government units to adjust tax rates every five years, provided that the increase does not exceed 10 percent,” Malate said.
He said similar increases were implemented in 2006, 2011, 2016, and 2021, all following the same five-year cycle.
According to Malate, the increase applies to tax rates and not to a fixed amount directly imposed on businesses.
“For example, if a business tax rate is one percent of gross sales, a 10 percent increase means the rate becomes 1.1 percent. If a fee is 100 pesos, a 10 percent increase means it will now be 110 pesos,” he said.
Malate added that due to recent calamities, Mayor Thadeo Jovito “Jonkie” Ouano recommended through the Local Finance Committee that the increase be implemented gradually.
“Instead of imposing the full 10 percent increase in 2026, the city decided to apply only five percent this year, with the remaining five percent to be implemented in 2027,” he said.
He said the staggered implementation aims to strike a balance between supporting the city’s revenue needs and easing the burden on the business sector.
“This is a win-win situation. The increase was inevitable because it is mandated by law, but dividing the implementation over two years makes it more manageable for business owners,” Malate said.
Malate also emphasized that the actual tax payment will still depend on a business’s declared gross sales.
Businesses that experienced a decline in sales may pay less, provided they submit proper documentation.
“If business owners claim that their sales went down, they must support their declaration with documents such as Bureau of Internal Revenue reports, audited financial statements, and income tax returns,” he said.
According to Malate, the additional revenue will help strengthen the city’s coffers and fund public services and infrastructure projects, especially as inflation continues to drive up the cost of materials, labor, and equipment.
“The prices of service vehicles, construction materials like cement and steel, and other operational expenses have increased. These revenue policies help ensure that we can continue delivering services to the public,” he said.
Meanwhile, Mandaue City Councilor Attorney Joel Seno, chairperson of the Committee on Appropriation, Budget, and Finance, confirmed that the ordinance was approved late last year.
“The ordinance was passed on the second week of December and it took effect on January 1, 2026,” Seno said.
He reiterated that the five-year tax increase is mandated by local laws but noted that the city government opted for a staggered approach in consideration of current conditions.
“In light of recent events that affected not only Mandaue City but also other parts of Cebu Province, we decided to give our business sector some relief,” Seno said. “Instead of implementing the full increase at once, we applied only five percent this year and another five percent next year.”
Seno said the decision was meant to lessen the impact on businesses and prevent a ripple effect on prices and employment.
“This approach ensures that our businessmen are not overly burdened while still allowing the city to comply with the law and generate funds for essential services,” he said. (ABC)