THE Mandaue City Government has implemented only half of the business tax increase in 2026, providing relief to thousands of business owners affected by recent calamities, city officials said.
Instead of imposing the full 10 percent adjustment allowed under a national law, the City applied only a five percent increase this year, with the remaining five percent scheduled for implementation next year, following a recommendation from Mayor Thadeo Jovito “Jonkie” Ouano through the Local Finance Committee.
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 and is allowed under Republic Act 7160, or the Local Government Code of 1991.
“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 five-year cycle.
Malate clarified that the increase applies to tax rates, not to a fixed amount directly imposed on businesses.
Around 16,000 to 17,000 businesses will be affected by the increase.
The sectors most affected include wholesale and retail trade, transportation and storage, real estate activities, manufacturing, accommodation, food service activities, and others.
“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,” Malate said.
He added that due to recent calamities, Mayor 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,” Malate said.
He said the staggered implementation aims to balance the City’s revenue needs with 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.
Business sector response
The business community in Mandaue City said it supports the City Government’s decision to stagger the implementation of higher business taxes, calling it a workable compromise as firms continue to recover from the impact of recent calamities.
Mandaue Chamber of Commerce and Industry (MCCI) President Mark Ynoc said the private sector recognizes the need for revenue measures even as companies remain under strain following what he described as two of the deadliest disasters to hit the City in recent history.
“Although the business sector in Mandaue City needs heavy recovery assistance after the onslaught of two major calamities, we also recognize the importance of implementing business taxes as the City’s revenue stream to finance public services, build infrastructure, and stabilize the economy,” Ynoc said.
He said tax compliance is critical to ensuring the sustainability and long-term growth of the local business sector.
Ynoc welcomed the City Government’s decision to impose only a five percent increase in business taxes in 2026, with the remaining five percent to be implemented in 2027, instead of enforcing the full 10 percent hike in a single year.
“This staggered and gradual implementation is already quite helpful and helps strike a balance in the economy,” he said.
“We all definitely need to compromise.”
MCCI said the phased increase provides firms with breathing room to rebuild operations and cash flow, while allowing the City Government to secure funding for essential services and development programs.
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.
Business owner Jera Marie Reponoya said the additional increase remains difficult.
“This additional increase this year is really slow. It’s different from previous years when sales were strong. Maybe it’s because of the recent calamities. It’s really difficult, especially since we have a child studying,” she said.
“Yes, it’s gradual, but even a five percent increase is still heavy, especially since we just went through the holiday season and had to give bonuses to our staff for Christmas. Then in January 2026, we have renewals to pay again. Gradual is better because if it were full, it would be too much. Renewals are really expensive,” she added.
Strengthening City's coffers
Malate said the additional revenue will help strengthen the City’s coffers and fund public services and infrastructure projects as inflation continues to drive up costs.
“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 Joel Seno, chairperson of the Committee on Appropriation, Budget and Finance, confirmed that the ordinance was approved late last year.
“The ordinance was passed in the second week of December and took effect on January 1, 2026,” Seno said.
He reiterated that the five-year tax increase is mandated by local laws but said 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 aims 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)