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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

Under Sec. 133 of the Local Government Code (Common Limitations on the Taxing Powers), a city enacts Ordinance No. 202X-07 imposing a local tax of 5% on gross receipts earned by ride-hailing platforms for trips that originate within the city boundaries, regardless of where the platform is registered or domiciled. The tax bases the receipts on the portion of trips that originate in the city, even if portions of the trips occur outside the city. A platform headquartered outside the city challenges the ordinance as invalid extraterritorial taxation. Analyze: (a) Identify the controlling doctrine under Sec. 133; (b) Is the ordinance a valid exercise of the city’s taxing power given that it taxes receipts derived from trips that originate in the city? (c) If the ordinance is valid, discuss whether the city must adopt a reasonable apportionment method and how that affects uniformity.

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Extrateritorial taxation doctrine applies: even if trips originate in the city, a platform headquartered outside the city renders the entire receipts subject to city tax; apportionment cannot cure the extraterritorial reach, making the ordinance invalid. Valid and uniform: the tax on in-city-origin trips is within the city’s territorial reach, and the platform’s domicile does not immunize it from in-city taxation; no apportionment is required so long as receipts are wholly attributable to in-city activity. Invalid: the phrase ‘receipts derived from trips originated in the city’ creates ambiguity about taxable base and could lead to double taxation with other LGUs; the city must redefine the measure to be valid under Sec. 133. Territorial nexus principle: extraterritorial taxation is impermissible; since the tax is on receipts that originate in the city, the ordinance is a valid exercise of the city’s taxing power and, when the receipts attributed to in-city trips are wholly in-city, no apportionment is required; uniform application to all platforms maintains uniformity.

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