REAL PROPERTY TAX AND OTHER LOCAL TAXES, FEES AND CHARGES Page 1

PART I - REAL PROPERTY TAX and/or generation and transmission of electric

Real property tax is an ad valorem tax imposed by a power.
city, or province on real property such as land, Assessment level and assessed value
buildings, machinery and other improvements affixed 1. ASSESSMENT LEVEL- the percentage applied to
or attached to real property. the FMV to determine the assessed value of the
Exemptions from real property tax property.
1. Real property owned by the Republic of the 2. ASSESSED VALUE (taxable value)-the FMV of the
Philippines or any of its political subdivision except real property multiplied by the assessment level.
when the beneficial use thereof has been granted Limitations on assessment level(maximum rates)
to taxable person;
A. On Lands and Machineries
2. Charitable institutions, churches, and parsonages
or convents appurtenant thereto, mosques, non- Classification Assessment Levels
profit cemeteries, and all lands, buildings and Land Machineries
improvements, actually, directly, and exclusively Residential 20% 50%
used for religious, charitable, or educational Timberland 20% -
purposes. Agricultural 40% 40%
3. Non-profit or religious cemeteries or burial Commercial, industrial 50% 80%
grounds; Mineral 50% -
Special classes: cultural,
4. Machineries and equipment that are actually, hospital, scientific 15% 15%
directly and exclusively used by local water district Local water districts 10% 10%
and GOCCs engaged in the supply of water and/or Government owned or controlled
generation of electric power;
corporations engaged in the
5. All real property owned by duly registered supply and/or generation/
cooperatives as provided for under R.A. No. 9520 transmission of electric power 10% 10%
(Cooperative Code of the Philippines), and
B. On Improvements
6. Machineries and equipment used for pollution
Fair market value Commercial/
control and environmental protection. Over Not over Residential Industrial Agricultural Timberland
(+000) (+000)
Fundamental principles
P175 0% 0% 0% 0%
The appraisal, assessment, levy and collection of real
property tax shall be guided by the following: P175 300 10% 30% 25% 45%
300 500 20% 35% 30% 50%
1. Real property shall be appraised at its current and 500 750 25% 40% 35% 55%
fair market value; 750 1M 30% 50% 40% 60%
2. Real property shall be classified for assessment 1M 2M 35% 60% 45% 70%
purposes on the basis of its actual use; 2M 5M 40% 70% 50% 70%
3. Real property shall be assessed on the basis of a
5M 10 M 50% 75% 50% 70%
uniform classification within each local
10 M 60% 80% 50% 70%
government unit;
4. The appraisal, assessment, levy and collection of Tax rates on the basic tax
real property tax shall not be let to any private - Not exceeding 1% of
person; and In provinces
the assessed value
5. The appraisal and assessment of real property In cities, and munici- - Not exceeding 2% of
shall be equitable. pality of Pateros the assessed value
Fair market value
Assessment when classification conflicts with
The price at which a property may be sold by a seller
its use
who is not compelled to sell and bought by a buyer
When land is located in a commercial area but the
who is not compelled to buy.
building is residential, the classification of the land
For assessment purposes, it is also known as the conflicts with its use, the following rules shall be
“assessor’s market value.” observed:
Actual use and not ownership Classification of LAND to
Real property shall be classified, valued and assessed determine
on the basis of its actual use regardless of where L – land Fair Market Assessment
located, whoever owns it, and whoever uses B – building Value Level
R – residential
Classes of land for assessment purposes C – commercial
1. RESIDENTIAL - principally devoted to habitation
1. L in R area, B is C Residential Commercial
2. AGRICULTURAL-devoted principally to the planting 2. L in C area, B is R Commercial Residential
of trees, raising of crops, livestock and poultry
dairying, salt making, inland fishing and similar 3. L in mixed R/C area,
Commercial Commercial
aquacultural activities, and other agricultural B is C
activities, commercial or industrial. 4. L mixed R/C area, B
Residential Residential
3. COMMERCIAL- devoted principally for the object of is R
profit and is not classified as agriculture, 5. L in mixed R/C area,
industrial, mineral, timber, or residential land. Residential Residential
B is vacant
4. INDUSTRIAL - devoted principally to industrial
6. L in mixed R/C area,
activity as capital investment and is not classified Predominant Predominant
and B is used for
as agricultural, commercial, timber, mineral or Use Use
mixed R/C purpose
residential land.
5. MINERAL - mineral metallic or non-metallic, exist in Additional levy (in addition to basic RPT)
sufficient quantity or grade to justify the necessary Special Education Fund Tax (SEF) – 1% of assessed
expenditures to extract and utilize such mineral. value
Transfer tax on transfer of real property
6. SPECIAL - lands, buildings and other improvements ownership
thereon, actually, directly and exclusively used for Tax on the sale, donation, barter, or on any other
(a) hospitals, (b) cultural, or (c) scientific purposes, mode of transferring ownership or title of real
and (d) those owned and used by local water property at the rate of not more than
districts, and (e) GOCCs rendering essential public
services in the supply and distribution of water - 1/2% in province/municipality and
- 3/4% in cities
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Based on whichever is higher between 3. The collection of local taxes, fees, charges and
other impositions shall in no case be let to any
- the total consideration involved in the acquisition private person;
of the property and
- the FMV in case the monetary consideration 4. The revenue collected shall inure solely to the
involved in the transfer is not substantial. benefit of, and be subject to disposition by, the
local government unit levying the tax, fee, charge
Notes: or other imposition unless otherwise specifically
1. Not taxable - sale, transfer or other disposition of provided; and
real property pursuant to RA 6657 (CARL). 5. Each local government unit shall, as far as
2. Register of Deeds shall, before registering a practicable, evolve a progressive system of
deed, require the presentation of the evidence of taxation.
payment of this tax.
Common limitations on the taxing power of
3. The assessor shall make the same requirement local government units
before cancelling an old tax declaration and
issuing a new one in place thereof. LGUS cannot collect the following taxes:
4. Seller, donor, transferor, executor or 1. Income tax, except when levied on banks and
administrator shall be liable to pay this tax within other financial institutions;
60 days from the date of the execution of the 2. Documentary stamp tax;
deed or from the date of the decedent’s death.
3. Estate tax;
Collection of real property tax
4. Customs duties, registration fees of vessel and
1. Date of accrual of tax – The real property tax for
wharfage on wharves, tonnage dues, and all other
any year shall accrue on the 1st day of January
kinds of customs fees, charges and dues except
2. Payment of real property taxes in installment – the wharfage on wharves constructed and maintained
owner of the real property or the person having by the local government unit concerned;
legal interest therein may pay the basic real
5. Taxes, fees or charges and other impositions upon
property tax and the additional tax for the Special
goods carried into or out of, passing through, the
Education Fund (SEF) thereon without interest in
territorial jurisdiction of local government units in
four (4) equal installments as follows:
the guise of charges for wharfage, tools for bridges
1st installment – on or before March 31 or otherwise, or other taxes, fees or charges in any
2nd installment – on or before June 30 form whatsoever upon such goods or
3rd installment – on or before September 30 merchandise;
4th installment – on or before December 31 6. Taxes, fees or charges on agricultural and aquatic
3. Application of payment of real property taxes – products when sold by marginal farmers or
The payments shall first be applied to prior years’ fishermen;
delinquencies, interests, and penalties, if any, and
7. Taxes on business enterprises certified to by the
only after said delinquencies are settled may tax
Board of Investments (BOI) as pioneer or non-
payments be credited for the current period.
pioneer for a period of six (6) and four (4) years,
4. Tax discount for advanced prompt payment – If respectively, from the date of registration;
the basic real property tax and the SEF are paid in 8. Excise taxes on articles enumerated under the
advance, a discount of not exceeding 20% of the National Internal Revenue Code, as amended, and
annual tax due may be granted to the taxpayer. taxes, fees or charges on petroleum products;
5. Interests on unpaid real property tax –2% per 9. Percentage or VAT on sales, barters or exchanges
month on the unpaid amount or a fraction thereof, or similar transactions on goods or services except
until the delinquent tax (basic and special levies) as otherwise provided herein;
shall have been fully paid, but not to exceed 36
months. 10. Taxes on the gross receipts of transportation
contractors and persons engaged in the
Condonation or reduction of real property tax transportation of passengers or freight by for hire
and interest and common carriers by air, land or water, except
Condonation or reduction of real property tax and as provided in this Code;
interest may be done either -
11. Taxes on premiums paid by way of reinsurance or
a. Condonation/reduction thru an ordinance. retrocession;
b. Condonation/reduction by the President.
12. Taxes, fees and charges for the registration of
Person or office tasked to collect the tax motor vehicles and for the issuance of all kinds of
1. Collection and enforcement of the remedies - licenses or permits for the driving thereof, except
responsibility of the city or municipal treasurer tricycles;
concerned.
13. Taxes, fees, or other charges on Philippine
2. The treasurer may deputize the barangay
products actually exported, except as otherwise
treasurer to collect all taxes on real property
provided herein;
located in the barangay, provided, the barangay
treasurer is properly bonded. 14. Taxes, fees, or charges on Countryside and
Barangay Business Enterprises and cooperatives
OTHER LOCAL TAXES, FEES AND CHARGES duly registered under R.A. No. 6810 and Republic
Act 9520 otherwise known as the “Cooperatives
Fundamental principles Code of the Philippines” respectively; and
The following fundamental principles shall govern the
exercise of the taxing and other revenue-raising 15. Taxes, fees or charges of any kind on the National
powers of local government units: Government, its agencies and instrumentalities,
and local government units.
1. Taxation shall be uniform in each local
government unit; Taxes imposable by the province
The following taxes may be imposed by the province:
2. Taxes, fees, charges and other impositions shall:
a. be equitable and based as far as practicable on 1. Transfer tax on transfer of real property
the taxpayer’s ability to pay; ownership
b. be levied and collected only for public Subject: Sale, donation, barter, or on any other
purposes; mode of transferring ownership or title of real
c. not be unjust, excessive, oppressive, or property. Exemption: Sale, transfer or other
confiscatory; disposition of real property pursuant to R.A.
d. not be contrary to law, public policy, national 6657(Comprehensive Agrarian Reform Law).
economic policy, or in restraint of trade; Time of payment: Seller, donor, transferor,
executor or administrator shall pay this tax within
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60 days from the date of the execution of the deed Time of payment: Annually, on or before January
or from the date of the decedent’s death. 31.
2. Tax on business of printing and publications A line of profession does not become exempt even
Subject: Persons engaged in the printing and/or if conducted with some other profession for which
publication of books, cards, posters, leaflets, the tax has been paid.
handbills, certificates, receipts, pamphlet, and
Exemption: Professionals exclusively employed in
other of similar nature. Exemption: Receipts from
the government.
the printing and/or publishing of books or other
reading materials prescribed by the DepEd as 6. Amusement tax
school references shall be exempt from this tax. Subject: Proprietors, lessees, or operators of
theaters, cinemas, concert halls, circuses, boxing
3. Franchise tax
stadia, and other places of amusement.
Subject: Businesses enjoying a franchise.
Exemption: Holding of operas, concerts, dramas,
4. Tax on sand, gravel and other quarry
recitals, painting and art exhibitions, flower shows,
resources
musical programs, literary and oratorical
Subject: Ordinary stones, sand, gravel, earth and
presentations, except pop, rock, or similar
other quarry resources, as defined under the NlRC,
concerts.
as amended, extracted from public lands or from
the beds of seas, lakes, rivers, streams, creeks, 7. Annual fixed tax for every delivery truck or
and other public waters within its territorial van of manufacturers or producers,
jurisdiction. wholesalers of, dealers, or retailers in,
certain products.
5. Professional tax
Subject: Every truck, van or any vehicle used by
Subject: Each person engaged in the exercise or
manufacturers, producers, wholesalers, dealers or
practice of his profession requiring government
retailers in the delivery or distribution of distilled
examination.
spirits, fermented liquors, soft drinks, cigars and
Place of payment: Province or city where he cigarettes, and other products as may be
practices his profession or where he maintains his determined by the Sangguniang Panlalawigan, to
principal office in case he practices his profession sales outlets, or consumers, whether directly or
in several places. indirectly, within the province.
Such person who has paid the corresponding The manufacturers, producers, wholesalers,
Professional Tax shall be entitled to practice his dealers, and retailers referred to in the
profession in any part of the Philippines without immediately foregoing paragraph shall be exempt
being subjected to any other national or local tax, from the tax on peddlers.
license, or fee for the practice of such profession.

Tax base and tax rates:

Taxes imposable
Tax Base Tax Rate
by province

Selling price or fair market value,

1. Transfer tax Not more than ½%
whichever is higher

2. Tax on business of printing and Annual gross receipts for the Not more than ½%; on newly started
publication preceding calendar year business, not exceeding 1/20 of 1% of
capital investment

Annual gross receipts for the

3. Franchise tax Same with #2 above
preceding calendar year within its
territorial jurisdiction

4. Sand and gravel tax FMV per cubic meter Not more than 10%

5. Professional tax - Not exceeding P300

6. Amusement tax on admission Gross receipts from admission

Not more than 10%
fees

7. Fixed tax on delivery vehicles of

producers, manufacturers, Not exceeding P500 per delivery vehicle
wholesalers, dealers or retailers
in certain products -

Illustration Taxes by municipalities

Municipalities may levy taxes, fees and charges not
The Sangguniang Panlalawigan upon motion of Board otherwise levied by provinces.
Member M enacted a provincial ordinance imposing
sand and gravel tax on stones, sand, gravel, earth The municipality may impose taxes on the following
and other quarry resources. business:
A municipality within the province enacted similar tax 1. On manufacturers, assemblers, repackers,
ordinance. Which local government unit should processors, brewers, distillers, rectifiers, and
collect the tax? compounders or liquors, distilled spirits, and wines
or manufacturers of any article of commerce of
Tax on sand, gravel and other quarry resources may
whatever kind or nature;
be imposed by a province or city, but not by a
municipality or barangay. 2. On wholesalers, distributors, or dealers in any
article of commerce of whatever kind or nature;
The permit to extract sand, gravel and other quarry
resources shall be issued exclusively by the 3. Exporters and/or manufacturers, millers,
provincial governor, pursuant to the ordinance of the producers, wholesalers, distributors, dealers or
Sangguniang Panlalawigan. retailers of essential commodities such as:
a. Rice and corn;
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b. Wheat or cassava flour, meat, dairy products, case of cities and P30,000 or less, in the case of
locally manufactured, processed or preserved municipalities, at a rate of not exceeding 1% on
food, sugar, salt and other agricultural, marine, such gross sales or receipts.
and fresh water products, whether in their 2. Service Fees or Charges – Barangays may
original state or not; collect reasonable fees or charges for services
c. Cooking oil and cooking gas; rendered in connection with the regulation or the
d. Laundry soap, detergents, and medicine; use of barangay-owned properties or service
e. Agricultural implements, equipment and post- facilities such as palay, copra, or tobacco dryers.
harvest facilities, fertilizers, pesticides,
3. Barangay Clearance – No city or municipality
insecticides, herbicides, and other farm inputs;
may issue any license or permit for any business
f. Poultry feeds and other animal feeds
or activity unless a clearance is first obtained from
g. School supplies; and
the barangay where such business or activity is
h. Cement
located or conducted.
4. Retailers For such clearance, the Sangguniang Barangay
5. Contractors may impose a reasonable fee. The application for
6. Banks and other financial institutions clearance shall be acted upon within seven (7)
working days from the filing thereof.
7. Peddlers in the sale of any merchandise or article
or commerce In the event that the clearance is not issued within
the said period, the city or municipality may issue
8. Fees for sealing and licensing of weights and
the said license or permit.
measures.
9. Fishery rentals, fees and charges. 4. Other Fees and Charges – The barangay may
levy reasonable fees and charges:
Payment of Business Taxes: The above taxes shall a. On commercial breeding of fighting cocks,
be payable for every separate or distinct cockfights and cockpits;
establishment or place where the business subject b. On places of recreation which charge admission
to the tax is conducted and one line of business fees; and
does not become exempt by being conducted with c. On billboards, signboards, neon signs, and
some other business for which such tax has been outdoor advertisements.
paid.
Common revenue raising powers of the local
If a person conducts or operates two or more
government units
businesses which are subject to -
Provinces, cities, municipalities and barangays are
a. the same tax rate – tax shall be computed on the authorized to impose and collect the following fees
combined total gross sales or gross receipts; and charges:
b. different tax rates – gross sales or receipts of 1. Service fees and charges for any service rendered;
each business shall be separately reported for the
2. Public utility charges for the operation of public
purpose of computing the tax due from each
utilities owned, operated and maintained by them
business.
within their jurisdiction;
Situs of the tax 3. Tool fees or charges for the use of any public road,
In the branch or sales outlet making the sale or pier or wharf, waterway, bridge, ferry or
transaction, and the tax thereon shall accrue and telecommunication system funded and
shall be paid to the municipality where such branch constructed by the local government unit
or sales outlet is located. concerned.
In cases where there is no such branch or sales outlet The amounts, rates and terms and conditions shall
in the city municipality where the sale or transaction be fixed by the Sanggunian concerned.
is made, the sale shall be duly recorded in the The following are exempt from the payment of toll
principal office and the taxes due shall accrue and fees and charges:
shall be paid to such city or municipality. a. Officers and enlisted men of the Armed Forces
Illustration of the Philippines and Philippine National Police
on mission;
The Municipality of Sta. Purificacion enacted an b. Post office personnel delivering mail;
ordinance imposing transfer tax on any transfer of c. Physically handicapped and disabled citizens
ownership of real property which is located within the who are 65 years or older.
territorial jurisdiction of said municipality.
When public safety and welfare so requires, the
Is the ordinance valid? Sanggunian concerned may discontinue the
collection of the tolls, and thereafter the said
The ordinance is not valid. Municipalities are not
facility shall be free and open for public use.
authorized to levy taxes on transfers of real
properties. Such tax is allowed only on cities and Community tax
provinces. Cities or municipalities may levy a community tax.

Taxes imposable by cities END OF LOCAL TAXES

The city may levy the taxes, fees, and charges which
the province or municipality may impose.
Provided, however, That the taxes, fees and charges
levied and collected by highly urbanized and
independent component cities shall accrue to them
and distributed in accordance with the provisions of
this Code.
The rates of taxes that the city may levy may exceed
the maximum rates allowed for the province or
municipality by not more 50% except the rates of
professional and amusement taxes.
A city may impose a maximum transfer tax of ¾ of
1% (0.75%) of the selling price or fair market value of
the property sold.
The barangays may levy taxes, fees and charges
which shall exclusively accrue to them:
1. Taxes – On stores or retailers with fixed business
establishments with gross sales or receipts of the
preceding calendar year of P50,000 or less, in the