LOCAL TAXATION

LOCAL TAXATION
•PHILIPPINE TAXATION
National Taxation – those covered by
NIRC, Special laws
Local Taxation – Local Government Code
of 1991

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LOCAL GOVERNMENT FUNDS

• General Fund
• Special Education Fund
• Trust Fund

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 LOCAL TAXATION
Sources of Revenues
• Local - RPT, Business Tax, Non-tax fees,
charges, receipts from government business
operations and sale of assets

• External – internal revenue allocation,

shares from special laws, grants, aids and
borrowings
 Local Government Taxes
• Taxes on Real Property
– Basic Tax
– Rates
– Assessment Levels
– Special Classifications
– Exceptions withdrawn
– RPT Exemptions
 Assessment Level Fair Market Value

BUILDINGS
Residential 0% P175,000 or less
Up to 60% >P10M

Agricultural 25% P300,000 or less

Up to 50% > P2M

Commercial/Industrial 30% P300,000 or less

Up to 80% >P10M

Timberland 45% P300,000 or less

Up to 70% >P2M
 LAND

Residential 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
Timberland 0%

MACHINERY – Fair Market Value is acquisition cost

Depreciation allowance for machinery is not greater than 5% a year
20% residual value
 RPT Exemptions
• Real Property owned by the Republic of the Philippines or any of its
political subdivisions, except when beneficial use thereof, has been
granted, for consideration or otherwise to a taxable person
• Charitable institutions, churches, parsonages or convents appurtenant
thereto mosques, non-profit or religious cemeteries and all land,
building and improvement actually, directly and exclusively used for
religious, charitable or educational purposes.
• All machinery and equipment that are actually, directly and exclusively
used by local water districts and GOCC’s engaged in the supply and
distribution of water and/or generation and transmission of electric
power
• All real property owned by duly registered cooperatives as provided for
under RA 6038
• Machinery and equipment used for pollution control and environment
protection.
 Special Classification
• Land, Building or Machinery AL
– Cultural 15%
– Scientific 15%
– Hospital 15%
– Local Water Districts 10%
– GOCC’s engaged in distribution of water and/or
generation and transmission of electric power
10%
 Local Government Taxes
• Special Levies on Real Property
– Special Education Fund – 1%
– Idle Lands Tax – 5%
• Coverage:
• Agricultural Land, exception
• Non-agricultural land, exception
• Also exempted are lands whose
improvement, utilization and cultivation are
made impossible by force majeure, civil
disturbance and natural calamity
 Local Government Taxes
• Other Impositions
– Socialized Housing Tax – ½ of 1% of
assessment level of all urban lands greater than
Php50,000.00
– Transfer Tax – on any transfer of ownership or
title as follows:
• Province – ½ of 1%
• City/Municipality within Metro Manila – ¾ of 1%
– Of total consideration if there is monetary consideration or
fair market value whichever is higher except transfers under
the Comprehensive Agrarian Reform Law of 1988 or RA
6657
 Local Government Taxes

Special Levy on lands specially benefited by Public

Works, projects and infrastructures funded by the
local government, exceptions
Exempt from special levy are lands exempt from
RPT and the remainder of the land, portions of
which have been donated to the LGU concerned
for the construction of such projects.
Appraisal and Assessment

Appraisal
VS.
Assessment
 General Revision
• Tax Mapping
– Discovery against Declaration
• Listing
• Classification
• Appraisal
• Collection of Real Property Tax
– Responsibility of the Treasure
– Discount
– Payment Periods
– Interest on Delinquent RPT – 2%
– Prescription – 5 years, 10 years
– Protest – City Treasurer, LBAA, CBAA
 LGU Powers
• Eminent Domain
• Reclassification of Land
• Local Taxation
• Distraint of Personal Property
• Levy on Real Property
• Foreclosure
 Auction
• Requirements:
– Notice of Delinquency
– Warrant of Levy
– Advertisement and Sale
– Certificate of Sale
– Final Deed to Purchaser
– Purchase of Property by LGU
 Distribution of Proceeds of Basic
RPT

• Provinces 35%, Municipalities 40%,

Barangays 25%
• Cities 70%, Barangays 30%
• Municipalities within Metro Manila 35%,
MMDA 35%, Barangays 30%
 Other Local Taxes
• Business Taxes – include business taxes which accrues
specifically to a province, municipality, city or a barangay
Provinces – service fees and charges
•Public utility charges
•Toll fees and charges for the use of any public lands like roads, pier or
wharfs, telecommunication system funded by the provincial government

Municipalities – fees and charges on business and occupation except as

reserved to the province.
•Fees for the sealing and licensing of weights and measures
•Rentals fees or charges on the use of Municipal waters

Cities – fees and charges imposed by the province or municipality

 Other Local Taxes
Barangays – fees and charges for the use of barangay
owned facilities
•Issuance of barangay clearance
•On commercial breeding of fighting cocks, cockfights
and cockpits on places of recreation which charge
admission fees
•On billboards, neon signs and outdoor ads
Stores or retailers with annual gross sales of
Php50,000 or less in case of cities, and Php30,000 or
less in case of municipalities

Community Tax – collected by city or municipal

government
 Community Tax
• Collected by city or municipal government and
deputized barangay governments
– Individual – basic of Php 5.00 plus Php 1.00/ Php
1,000.00 of income; tax not to exceed Php 5,000.00
– Corporation – basic Php 500.00, additional of Php
2.00/Php 5,000.00 worth of real property and for every
Php 5,000.00 of gross business income; tax not to
exceed Php 10,000.00
– Exemptions
• Diplomatic and Consular representatives
• Transient visitors when stay in the Philippines does not exceed 3
months