Under the Local Government Code, local taxes, fees and charges are paid within the first 20 days of January, or of each quarter if you pay in installments. The sanggunian may extend that for up to six months without penalty. If you pay late, your city may add a surcharge of up to 25% of the unpaid amount and interest of up to 2% a month on the unpaid amount including the surcharge.[1]
What RA 7160 allows a city to do
| Rule | What the law says | Section |
|---|---|---|
| Tax period | Calendar year; may be paid in quarterly installments | 165 |
| Accrual | 1 January each year | 166 |
| Deadline | Within the first 20 days of January, or of each subsequent quarter | 167 |
| Extension | Sanggunian may extend, without surcharge or penalty, for up to 6 months | 167 |
| Surcharge | Up to 25% of the amount not paid on time | 168 |
| Interest | Up to 2% per month on the unpaid amount including surcharge, for at most 36 months | 168 |
The deadline: first 20 days of January
RA 7160 makes the calendar year the tax period for all local taxes, fees and charges, and lets them be paid in quarterly installments. They accrue on 1 January and are paid within the first 20 days of January or of each following quarter.[1]
This is why business permit renewal season is January. The local business tax and regulatory fees you settle at renewal are what the law times. The permit document itself is renewed under your city's own ordinance, so check your city's announced deadline on deadlines by city.
Extensions: up to six months
Section 167 lets the sanggunian, for a justifiable reason, extend the time to pay without surcharges or penalties, but only for up to six months. Cities often announce extensions in January. Only an extension your own city council approved counts; another city's extension does not cover you.[1]
How much is the penalty?
Section 168 lets the sanggunian impose a surcharge of not more than 25% of the taxes, fees or charges not paid on time, and interest of not more than 2% per month on the unpaid amount including surcharges, until fully paid, but for no more than 36 months (36% in total). These are maximums. Your city's revenue code sets the rates it uses, which may be lower.[1]
Ask the treasurer for a computed assessment before you pay. It should show the basic tax and fees, the surcharge, and the interest by month as separate lines.
Worked example, with round numbers
Example only. Assume a city charges the maximums, and your local business tax and fees for the year total ₱10,000. You pay three months after the deadline. Surcharge: 25% of ₱10,000 = ₱2,500. Interest base, including the surcharge: ₱12,500. Interest: 2% × 3 months × ₱12,500 = ₱750. Total: ₱10,000 + ₱2,500 + ₱750 = ₱13,250.[1]
The surcharge is the big hit, and it lands as soon as you are late. Paying in February instead of April saves only some interest. Paying by 20 January, or within an approved extension, avoids both.[1]
If you are already late
Practical steps. See late renewal and closing instead.
- Go to the BPLO or treasurer now; interest keeps running until you pay
- Ask if your city approved an extension this year
- Ask for a written assessment that separates tax, surcharge and interest
- Ask if the city allows quarterly installments for the rest of the year
- If you closed the business, ask about retirement instead of renewal
Avoid the penalty next January
- Mark 1 to 20 January in your calendar now
- Prepare last year's gross sales figure in December
- Renew your barangay clearance and cedula early in January
- Watch your city's page for extension announcements
- Set aside money for the local business tax ahead of time
- Keep the official receipts from the treasurer
Questions people ask
- What is the deadline to renew a business permit?
- Local taxes, fees and charges are due within the first 20 days of January under RA 7160, unless your sanggunian extends it. Your city's ordinance sets the permit renewal date itself.
- Is the 25% surcharge automatic?
- The law sets 25% as the most a sanggunian may impose. Your city's revenue code decides the actual rate.
- Does interest apply to the surcharge too?
- Yes. Section 168 allows interest of up to 2% a month on the unpaid taxes, fees or charges including surcharges.
- Can I pay my business tax quarterly?
- RA 7160 allows local taxes, fees and charges to be paid in quarterly installments, each due within the first 20 days of the quarter. Ask your treasurer how your city applies it.
Sources
Checked 13 November 2026. We link the agency's own page for every requirement. Rules change; confirm with the office before you pay.
- Republic Act No. 7160 (Local Government Code of 1991) · Congress of the Philippines (via Lawphil) · 10 October 1991