30 October 2026 · Local government units, Republic Act No. 7160

Why nobody can quote a Mayor's Permit fee in advance

There is no national Mayor's Permit fee because Congress did not set one. It set ceilings. Each city or municipality then fixes the rate by ordinance, and the assessor applies it to your address and your declared gross sales. Any figure quoted before those two facts are known is a guess.

The permit is the last step in a chain: barangay clearance, fire safety inspection certificate, assessment at the city hall, payment at the treasurer, then release after inspection. Each step has its own payee and its own rule.

What the Local Government Code fixes, and what it leaves open

Republic Act No. 7160 gives municipalities the power to tax business and prints ceilings, not prices. For retailers, Section 143(d) sets the ceiling at two percent (2%) of gross sales or receipts where those are P400,000.00 or less for the preceding calendar year, and one percent (1%) where they are more than that. For manufacturers and similar businesses, Section 143(b) runs a graduated schedule in pesos: a business with gross sales of 1,000,000.00 or more but less than 2,000,000.00 sits at 10,000.00 per annum, and above 2,000,000.00 the ceiling becomes a rate not exceeding fifty percent (50%) of one percent (1%).

Section 151 then widens the range. A city may levy the taxes the municipality may impose, and its rates may exceed the maximum rates allowed for the province or municipality by not more than fifty percent (50%), with professional and amusement taxes excluded. Two addresses a few kilometres apart can therefore carry different ceilings for the same activity, and the ordinance in force decides where inside that band your rate lands.

The fire certificate is a separate charge

The fire safety inspection certificate is not part of the city tax. Under Section 5(g) of Republic Act No. 9514, no occupancy permit, business or permit to operate shall be issued without securing a Fire Safety Inspection Certification from the Bureau of Fire Protection. Section 12(b)(2) charges one-tenth of one per centum (0.1%) of the verified estimated value of buildings or structures to be erected, not to exceed P50,000.00, half before the building permit and the balance before the occupancy permit. Section 12(b)(3) adds one-hundredth of one per centum (0.10%) of the assessed value of the building, payable annually with the real estate tax, except on single family dwellings.

The clock, and what late payment adds

Local taxes accrue on the first day of January under Section 166, and Section 167 requires payment within the first twenty (20) days of January or of each subsequent quarter. The sanggunian may extend the time for payment for a justifiable reason, but not exceeding six (6) months, and only without surcharges if the extension is granted. Section 168 allows a surcharge not exceeding twenty-five (25%) of the amount unpaid, and interest not exceeding two percent (2%) per month, capped at thirty-six months.

The one moment the cost is still avoidable

Everything above is computed from two facts: the address and the activity. Both are fixed when the lease is signed. Before signature, a cheaper unit in the same city, or an address zoned for the activity, changes the assessment. After signature, the only remaining lever is negotiation with a landlord you already owe.

The barangay step is the first hard gate. Section 152(c) provides that no city or municipality may issue any license or permit for any business unless a clearance is first obtained from the barangay where the business is located, and that the application shall be acted upon within seven (7) working days. Where the clearance is not issued in that period, the city or municipality may issue the licence or permit.

What to send for a number you can rely on

• The exact address, including floor and building, and the barangay.
• The activity as it will appear in the SEC or DTI registration, not a description of what you plan to do later.
• Gross sales or receipts for the preceding calendar year, or the capital investment for a new business.
• The lease or title, and whether the space was previously occupied by another business.
• Floor area and the building's assessed value, for the fire charges.

With those five items, the assessment can be read from the ordinance in force for that city and checked line by line. Without them, any quote is an average of cities that do not share a schedule.