HOW TO COMPUTE COMMUNITY TAX OR CEDULA

A community tax, also called a residence tax or poll tax, is imposed on all the inhabitants of the
community who are eighteen years old and above as well as to juridical persons, like corporations, doing
business in the community or whose office or establishment is located in the community. The term
inhabitant of the Philippines means a person who stayed in the Philippines for more than three months.
Therefore the community taxpayers are classified into individuals and corporations.
1. Individuals – the following individuals are required by the law to pay community tax:
 Eighteen years old (18) and above;
 Regularly employed on a on a wage or salary basis for at least thirty consecutive working
days during any calendar year; or
 Engaged in trade, business or occupation; or
 Owner of property with an aggregate assessed value of one thousand pesos (P1,000.00) or
more; or
 Required by law to file an income tax return (ITR)
2. Corporations – every corporation, no matter how it was created or organized, domestic or
foreign, engaged or doing business in the Philippines.

Exempt from Community Tax – Persons exempt from the payment of community tax:
1. Diplomatic and consular representatives
2. Transient visitors when their stay in the Philippines does not exceed three month.

COMMUNITY TAX RATES

TAX TYPE INDIVIDUALS CORPORATIONS

Basic Community Five Hundred Pesos

Tax (Minimum) Five Pesos (P5.00) (P500.00)

Two (P2.00) pesos for

every P5,000 of:

1. Assessed value of real

property in the Philippines
owned by a corporation

2. Gross receipts or
earnings from business in
the Philippines by a
One (P1.00) peso for
corporation
every P1,000 of income
from business, exercise
of profession or from Maximum additional
property which in no community tax for a
Additional case shall exceed corporation shall not
Community Tax P5,000 exceed P10,000.00
 Ten Thousand Five
Maximum Five Thousand Five Hundred Pesos
Community Tax Pesos (Php5,005.00) (Php10,500.00)

Illustrations:

1. Individual Earning Pure Compensation Income: Mr. Pol Tak, a resident citizen of the Philippines,
earned pure compensation income from his employer amounting to 10,000.00 a month with an
aggregate earnings for the preceding year of 130,000 which includes his 13th month pay. The
community tax due for Mr. Pol Tak would be as follows:

5.00
Basic Community Tax

130.00
Additional Community Tax
(130,000/1,000.00)*P1.00))

135.00
Total Community Tax

2. Individual Earning Mixed Income and Owns Real Properties: Mr. Ty Cun is a businessman and resident
citizen of the Philippines. In the preceding year his gross receipts includes business income earned in
China amounting to 300,000, business income earned in the Philippines amounting to 200,000. He also
acquired a real property in China with a value of P3,000,000 and a land here in the Philippines
amounting to 2,500,000.00. He also earned a compensation income from part-time teaching in a
university amounting to 100,000. The community tax due would be computed as follows:

5.00
Basic Community Tax

2,800.00
Additional Community Tax
(200,000+2,500,000+100,000)/1,000.00)*P1.00))) *

Total Community Tax 2,805.00

Note: Only income earned in the Philippines and the assessed value of the real property located in the
Philippines are used as basis for the computation of additional community tax.
3. CTC of a Domestic Corporation: ABC Corporation is a domestic corporation in the Philippines and
earned a gross receipts of 100,000,000.00. ABC Corporation’s community tax will be computed as
follows:

500.00
Basic Community Tax

10,000
Additional Community Tax (100M/5000)*P2) OR
10,000 whichever is lower

10,500
Total Community Tax

Note: Community tax has a threshold. For a corporation, additional community tax must not exceed
10,000.00

Legal Basis Collect Community Tax

Commonwealth Act No. 465 is the law that imposes the payment of residence tax for individual and
corporations. The community tax shall be paid in the place of residence of the individual; or the place
where the principal office of the corporation (or other juridical entity) is located. The liability to pay the
community tax is due on the last day of February. Payments of community tax later than February is
subject to interest.