Philippines Business Permit Tax Calculator (Mayor's Permit a

Prior-Year Gross Receipts	Local Business Tax	Fixed Regulatory Fees	Total Permit Cost
PHP 333333	PHP 5000.00	PHP 3500.00	PHP 8500.00
PHP 666667	PHP 10000.00	PHP 3500.00	PHP 13500.00
PHP 1000000	PHP 15000.00	PHP 3500.00	PHP 18500.00
PHP 1333333	PHP 20000.00	PHP 3500.00	PHP 23500.00
PHP 1666667	PHP 25000.00	PHP 3500.00	PHP 28500.00
PHP 2000000	PHP 30000.00	PHP 3500.00	PHP 33500.00
PHP 2333333	PHP 35000.00	PHP 3500.00	PHP 38500.00
PHP 2666667	PHP 40000.00	PHP 3500.00	PHP 43500.00
PHP 3000000	PHP 45000.00	PHP 3500.00	PHP 48500.00
PHP 3333333	PHP 50000.00	PHP 3500.00	PHP 53500.00
PHP 3666667	PHP 55000.00	PHP 3500.00	PHP 58500.00
PHP 4000000	PHP 60000.00	PHP 3500.00	PHP 63500.00

Quick Answer: A business with PHP 2,000,000 of prior-year gross receipts, assessed at a 1.5% local business tax rate with a PHP 2,000 mayor's permit fee and PHP 1,500 of other regulatory fees, pays PHP 33,500.00 in total. That is 1.675% of gross receipts. The 1.5% rate is a placeholder you must replace: there is no national business permit tax rate in the Philippines, and every local government sets its own.

Overview

Renewing a Philippine business permit in January is not one payment but a bundle. The largest component is normally the local business tax, assessed as a percentage of last year's gross sales or receipts. Around it sit a set of fixed regulatory fees: the mayor's permit fee itself, sanitary and garbage fees, a fire safety inspection fee, signage fees, occupational permits and a barangay clearance.

The governing statute is Republic Act No. 7160, the Local Government Code of 1991. What that statute does, crucially, is delegate. Section 143 empowers municipalities to impose a tax on business, Section 147 lets local governments charge fees for permits and licences commensurate with the cost of regulation, and Section 151 lets cities levy at rates above the municipal maxima. But the actual rate that applies to your business is fixed by your own local government's revenue ordinance, not by national law.

That has a direct consequence for this calculator, and it is the most important thing on this page. The rate is a user input. There is no national figure to default to, and this tool does not pretend otherwise. The 1.5% default is a placeholder chosen to make the arithmetic legible, not a legal rate. The correct rate for you appears in your city or municipality's revenue code, and depends on your line of business: retailers, wholesalers, manufacturers, contractors, banks and exporters are all rated differently, and many ordinances use graduated tables keyed to gross receipts brackets rather than a single percentage.

Note also that the assessment is on the preceding calendar year's gross receipts. A business renewing in January 2027 is assessed on its 2026 receipts. A newly registered business is normally assessed a fixed initial amount instead, which this calculator does not model.

How This Is Calculated

The local business tax is the rate applied to prior-year gross receipts:

\text{Local Business Tax} = \text{Prior-Year Gross Receipts} \times \text{LGU Rate}

The fixed fees are simply summed:

\text{Total Fixed Fees} = \text{Mayor's Permit Fee} + \text{Other Regulatory Fees} + \text{Barangay Clearance}

And the total is the two together:

\text{Total Permit Cost} = \text{Local Business Tax} + \text{Total Fixed Fees}

The effective rate expresses that total back against receipts, which is a more useful number for a small business than the bare tax rate:

\text{Effective Rate} = \frac{\text{Total Permit Cost}}{\text{Prior-Year Gross Receipts}}

The calculator also divides the business tax by four, because RA 7160 permits payment in quarterly instalments rather than a single January payment:

\text{Quarterly Instalment} = \frac{\text{Local Business Tax}}{4}

No statutory maximum rate is applied anywhere in this calculation. That is deliberate rather than an oversight, and the reason is set out under the limitations below.

Worked Example

A trading business in a city recorded PHP 2,000,000 of gross receipts last year. Its city revenue ordinance rates its line of business at 1.5%. The mayor's permit fee is PHP 2,000, and sanitary, garbage and fire fees come to PHP 1,500 combined.

Step 1: Apply the LGU rate to prior-year gross receipts.

2{,}000{,}000 \times 1.5\% = 30{,}000

Local business tax: PHP 30,000.00

Step 2: Sum the fixed regulatory fees.

2{,}000 + 1{,}500 = 3{,}500

Total fixed fees: PHP 3,500.00

Step 3: Add the two components.

30{,}000 + 3{,}500 = 33{,}500

Total permit cost: PHP 33,500.00

Step 4: Express the total as a percentage of receipts.

33{,}500 \div 2{,}000{,}000 = 1.675\%

Effective rate on receipts: 1.675%

Step 5: Split the business tax into quarterly instalments.

30{,}000 \div 4 = 7{,}500

Quarterly instalment: PHP 7,500.00

Now compare a micro business in the same city with PHP 300,000 of receipts and the same fixed fees.

Step 6: Apply the same rate to the smaller receipts figure.

300{,}000 \times 1.5\% = 4{,}500

Local business tax: PHP 4,500.00

Step 7: Add the same fixed fees and re-express as an effective rate.

4{,}500 + 3{,}500 = 8{,}000, \qquad 8{,}000 \div 300{,}000 = 2.6667\%

Effective rate on receipts: 2.6667%

The fixed fees do not scale, so the smaller business pays a materially higher effective rate on the same nominal schedule. That regressivity is the practical reality of local business taxation for micro enterprises, and it is why the calculator surfaces the effective rate rather than only the tax.

What This Does Not Account For

The rate itself, which is entirely your input. No national business permit tax rate exists. Look it up in your LGU's revenue code or ask the Business Permits and Licensing Office. The default is a placeholder.
Any statutory ceiling on the rate. RA 7160 does set maximum rates that municipalities may impose, with cities permitted to exceed them by a stated margin under Section 151. This calculator asserts and enforces no ceiling, because a clean primary text of Section 143(h) could not be retrieved when the page was built: lawphil returned a truncated section and the Official Gazette returned an HTTP 403. Rather than hard-code a number read from a secondary source, no cap is applied. Verify any figure you enter against the statute and your LGU ordinance yourself.
Graduated rate tables. Many LGU ordinances rate business tax through a bracketed schedule of gross receipts, with fixed peso amounts at low turnover and a percentage only above a threshold. This calculator applies a single flat percentage.
Different rates by line of business. Retailers, wholesalers, manufacturers, contractors, banks, exporters and essential commodity dealers are rated differently in the same ordinance. Enter the rate for your own classification.
Newly started businesses. A business in its first year has no prior-year receipts and is normally assessed a fixed initial amount rather than a percentage. That is not modelled.
Businesses operating in multiple LGUs. RA 7160 has rules for allocating gross receipts between the location of the principal office and the location of factories or branches. This calculator assumes a single location.
Real property tax. A business occupying property it owns also pays real property tax, which is a separate annual assessment and not part of the business permit bundle.
Penalties and surcharges. Late renewal attracts surcharges and interest under the LGU ordinance, which are not computed.

Common Pitfalls

Looking for a national rate. There is not one. Any source quoting "the Philippine business permit tax rate" as a single national figure is wrong.
Using the current year's receipts. The assessment is on the preceding calendar year. Using this year's figures produces the wrong tax.
Forgetting the barangay clearance. Most LGUs will not act on a permit application without it, and it is charged separately by the barangay.
Assuming the rate for one line of business applies to another. Ordinances rate manufacturers, wholesalers, retailers and contractors quite differently, and misclassification is a common source of assessment disputes.
Missing the January deadline. Business permit renewal is generally due in the first month of the year, with penalties for late filing. Quarterly payment of the business tax is an option, but it does not extend the renewal deadline.
Assuming the fixed fees are trivial. For a micro business they can exceed the business tax itself, as the worked example shows.

Frequently Asked Questions

How much is a business permit in the Philippines?

There is no single answer, because every city and municipality sets its own rates and fees by ordinance under the Local Government Code. The cost is a percentage of your prior-year gross receipts plus a bundle of fixed regulatory fees, both of which vary by LGU and by line of business.

What is local business tax based on?

Gross sales or receipts of the preceding calendar year, at the rate fixed in your LGU's revenue ordinance for your line of business.

Is there a national rate for the mayor's permit?

No. Section 147 of RA 7160 only requires that fees for permits and licences be reasonable and commensurate with the cost of issuing and regulating them. The amounts are set locally.

Can I pay the local business tax in instalments?

The Local Government Code allows the business tax to be paid in quarterly instalments rather than in a single annual payment. Confirm the arrangement with your LGU, since administration varies.

What other fees come with a business permit?

Commonly a sanitary permit fee, garbage or environmental fee, fire safety inspection fee, signage or advertising fee, occupational permits for employees, and a barangay clearance. Which apply, and how much, is set locally.

Why is my effective rate higher than the tax rate?

Because the fixed regulatory fees do not scale with your receipts. The smaller your business, the more those fixed amounts weigh in the total, which is why this calculator reports the total as a percentage of receipts alongside the bare tax.

Sources

Republic Act No. 7160, Local Government Code of 1991. Section 143 empowers municipalities to impose a tax on business; Section 147 permits reasonable fees and charges for permits and licences commensurate with the cost of issuance and regulation; Section 151 authorises cities to levy at rates above the municipal maxima. Rates and fee amounts are fixed by each local government's own revenue ordinance, not by national law. https://lawphil.net/statutes/repacts/ra1991/ra_7160_1991.html (read 31 August 2026; the retrieved text of Section 143(h) was truncated, which is why no rate ceiling is asserted or enforced by this calculator)
Your own local government unit's revenue code, obtainable from the Business Permits and Licensing Office. This is the only authoritative source for the rate and fees that apply to your business.

Philippines Business Permit Tax Calculator (Mayor's Permit and Local Business Tax)

Assumptions

Preset scenarios

Payoff trajectory

Permit Cost Across a Band of Gross Receipts