IT-BPM industry welcomes clarity on LGU taxation
By Justine Irish D. Tabile, Senior Reporter
THE information technology and business process management (IT-BPM) said Joint Memorandum Circular (JMC) 01-2026 will help address inconsistencies in how local taxes are collected.
“The IT and Business Process Association of the Philippines (IBPAP) views the issuance of JMC 01-2026 as a necessary and long-awaited correction to persistent inconsistencies in how some LGUs (local government units) have imposed taxes, fees, and charges on RBEs (registered business enterprises),” IBPAP told BusinessWorld.
On March 23, the departments of Interior and Local Government, Finance, and Trade and Industry issued JMC 01-2026 to guide the imposition of local taxes, fees, and charges on RBEs.
“For the past year, we have raised these concerns with the government, as certain local practices, anchored on outdated or conflicting ordinances, have clearly run counter to the intent of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act,” it said.
“This JMC was the measure promised to IBPAP that can address some of the concerns we raised to the government,” it added.
According to the JMC, transitioning pre-CREATE RBEs that are only availing of income tax holidays (ITH) should be exempt from local business taxes for six years for those certified as pioneers and for four years for those certified as non-pioneers under the Omnibus Investments Code of 1987.
Pre-CREATE RBEs availing of the ITH and 5% tax on gross income earned (GIE) should be exempt from local business taxes during the remaining period of the ITH, while they will be exempt from local taxes, fees and charges until Dec. 31, 2034 during the availment of the 5% tax on GIE.
Meanwhile, pre-CREATE RBEs only availing of the 5% tax on GIE were to be exempt from all local taxes, fees and charges until Dec. 31, 2034.
CREATE RBEs availing of the ITH or enhanced deductions regime (EDR) and certified either as pioneer or non-pioneer are to be exempt from local business taxes for six or four years, respectively.
However, CREATE RBEs availing of ITH or EDR may be subject to local taxes, fees and charges unless the local government unit (LGU) has granted exemption, incentives or relief or when the transaction is expressly exempted under existing laws, rules and regulation.
Meanwhile, CREATE RBEs availing of the 5% special corporate income tax (SCIT) are to be exempt from local taxes for the duration of the period specified under their grants.
The JMC also stressed that the presentation of certificates of registration or other equivalent documents issued by the investment promotion agency should be “deemed sufficient” for the RBEs to avail of the exemption from local taxes, fees and charges.
It added that local officials are required to suspend, amend, or repeal all issuances inconsistent with the JMC within six months.
“This JMC supersedes Department of Finance (DoF) Department Order No. 033-2023 dated May 19, 2023, and all other DoF issuances and regulations insofar as they are inconsistent herewith,” it added.
The IBPAP said that the JMC sends the message that “national law must be upheld, and arbitrary or duplicative local impositions have no place in a competitive investment environment.”
“With clearer provisions on LGU taxing powers, a defined framework for RBE local tax, and explicit direction for ordinance alignment, this circular addresses the very issues on business permitting that have affected business confidence and operational predictability,” it said.
“The focus now must be on swift and consistent implementation across all LGUs. Getting this right especially well ahead of the next business permit renewal cycle will be critical to demonstrating that the Philippines can offer a stable, predictable, and investor-friendly environment,” it added.
