BARMM Local Taxation: LGU Revenue Powers Under the Bangsamoro Local Governance Code

Local government units in the Bangsamoro Autonomous Region in Muslim Mindanao (BARMM) may create their own sources of revenue, levy taxes, fees, and charges, and retain the proceeds for their own use. Section 21 of the Bangsamoro Local Governance Code (Bangsamoro Autonomy Act No. 49) grants this power, and Section 3(d) treats it as an operative principle of decentralization: devolved duties must come with reasonably adequate resources. LGUs also hold a just share in national taxes and an equitable share in proceeds from the utilization and development of national wealth within their jurisdictions.

What the Code Says About LGU Revenue Powers

Section 21 of the Code is the core provision. It gives constituent LGUs the power and authority to:

• Establish an organization responsible for implementing their development plans, program objectives, and priorities;
• Create their own sources of revenue and levy taxes, fees, and charges, which accrue exclusively for their use and disposition and are retained by them;
• Receive a just share in national taxes, released automatically and directly without need of further action;
• Receive an equitable share in proceeds from the utilization and development of national wealth and resources within their territorial jurisdictions, including sharing the same with inhabitants through direct benefits; and
• Acquire, develop, lease, encumber, alienate, or otherwise dispose of real or personal property held in their proprietary capacity, and apply resources and assets for productive, developmental, or welfare purposes.

The same principle appears in Section 3(d) of the Code and (5) of the Implementing Rules and Regulations (IRR): the vesting of duty, responsibility, and accountability in LGUs must be accompanied by reasonably adequate resources.

The Bangsamoro Government Sets the Revenue Regime

Local revenue powers do not operate in a vacuum. Section 28 of the Code recognizes the authority of the Bangsamoro Government to regulate the affairs of its constituent LGUs. This includes setting up the revenue generation and wealth distribution and sharing regimes of the LGUs — covering applicable fund sharing and transfers, and technical and financial assistance or augmentation from the Bangsamoro Government to LGUs, and between and among LGUs themselves.

(5) of the IRR restates this: the Bangsamoro Parliament exercises legislative authority over constituent LGUs, including the power to set revenue generation and wealth distribution and sharing regimes. Local tax measures must therefore fit within the framework the Code and regional law establish.

Fees and Charges for Devolved Services

Section 18(d) of the Code allows LGUs to levy fees or charges to fund the exercise of devolved powers and functions and the delivery of devolved services and facilities, consistent with Book II of the Code. Section 18(c) adds that basic services and facilities are funded primarily from the LGU's share in national tax proceeds and other local revenues, with Bangsamoro Government funding support serving as a supplement when necessary. Any fund or resource available to an LGU must first be allocated to devolved functions and services before being applied to other purposes, unless the Code provides otherwise.

How Tax Ordinances Are Interpreted

Section 5(b) of the Code sets a taxpayer-friendly rule. In case of doubt, any tax ordinance or revenue measure is construed strictly against the LGU enacting it and liberally in favor of the taxpayer. Any tax exemption, incentive, or relief granted by an LGU is construed strictly against the person claiming it.

This sits alongside Section 5(a), which provides that any provision on a power of a constituent LGU is liberally interpreted in its favor, with doubts resolved in favor of devolution of powers and of the lower LGU. The two rules work together: the LGU's authority to tax is read broadly, but the actual tax measure is read narrowly against the LGU.

Conflict of Laws: Which Rule Prevails

Article 9 of the IRR lays out the hierarchy. Regional laws enacted by the Parliament prevail over ordinances of constituent LGUs. Executive Orders and Rules issued by the Chief Minister and BARMM ministries under regional laws prevail over ordinances, executive orders, and rules adopted by constituent LGUs. Provincial ordinances prevail over ordinances of component cities and municipalities, and city and municipal ordinances prevail over barangay ordinances.

Frequently asked questions

Can a BARMM LGU create its own taxes? Yes. Under Section 21 of the Bangsamoro Local Governance Code, constituent LGUs may create their own sources of revenue and levy taxes, fees, and charges, which accrue exclusively for their use and are retained by them.

Do BARMM LGUs get a share of national taxes? Yes. Section 21 provides that LGUs have a just share in national taxes, automatically and directly released to them without need of further action. The Code also refers to the National Tax Allotment (NTA) in provisions on newly created or altered LGUs.

What happens if a local tax ordinance is unclear? Under Section 5(b), doubt is resolved strictly against the LGU that enacted the tax measure and liberally in favor of the taxpayer.

Practical takeaways

• Section 21 of the Bangsamoro Local Governance Code is the primary source of LGU power to create revenue sources, levy taxes, fees, and charges, and retain the proceeds.
• Local revenue powers operate within the revenue generation and wealth distribution regime that the Bangsamoro Government sets under Section 28.
• Fees and charges may fund devolved functions and services under Section 18(d), and devolved services are funded first from national tax shares and local revenues.
• Ambiguities in a tax ordinance are resolved against the LGU and in favor of the taxpayer under Section 5(b).
• Regional laws and BARMM executive issuances prevail over local ordinances under Article 9 of the IRR.

Primary sources

The rules discussed above are drawn from the following issuances, embedded here in full for your reference.

IRR OF BAA NO. 49Open in Law LibraryDownload PDF

Bangsamoro Autonomy Act No. 49Open in Law LibraryDownload PDF

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.