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

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

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 provincial governor, pursuant to the ordinance of the

Sangguniang Panlalawigan.
The Sangguniang Panlalawigan upon motion of
Board Member M enacted a provincial ordinance Taxes by municipalities
imposing sand and gravel tax on stones, sand, Municipalities may levy taxes, fees and charges not
gravel, earth and other quarry resources. otherwise levied by provinces.
A municipality within the province enacted similar The municipality may impose taxes on the following
tax ordinance. Which local government unit should business:
collect the tax?
1. On manufacturers, assemblers, repackers,
Tax on sand, gravel and other quarry resources may processors, brewers, distillers, rectifiers, and
be imposed by a province or city, but not by a compounders or liquors, distilled spirits, and
municipality or barangay. wines or manufacturers of 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
2. On wholesalers, distributors, or dealers in any municipality by not more 50% except the rates of
article of commerce of whatever kind or nature; professional and amusement taxes.
3. Exporters and/or manufacturers, millers, A city may impose a maximum transfer tax of ¾ of
producers, wholesalers, distributors, dealers or 1% (0.75%) of the selling price or fair market value
retailers of essential commodities such as: of the property sold.
a. Rice and corn; The barangays may levy taxes, fees and charges
b. Wheat or cassava flour, meat, dairy products, which shall exclusively accrue to them:
locally manufactured, processed or preserved
1. Taxes – On stores or retailers with fixed business
food, sugar, salt and other agricultural,
establishments with gross sales or receipts of the
marine, and fresh water products, whether in
preceding calendar year of P50,000 or less, in the
their original state or not;
case of cities and P30,000 or less, in the case of
c. Cooking oil and cooking gas;
municipalities, at a rate of not exceeding 1% on
d. Laundry soap, detergents, and medicine;
such gross sales or receipts.
e. Agricultural implements, equipment and post-
harvest facilities, fertilizers, pesticides, 2. Service Fees or Charges – Barangays may
insecticides, herbicides, and other farm inputs; collect reasonable fees or charges for services
f. Poultry feeds and other animal feeds rendered in connection with the regulation or the
g. School supplies; and use of barangay-owned properties or service
h. Cement facilities such as palay, copra, or tobacco dryers.
3. Barangay Clearance – No city or municipality
4. Retailers may issue any license or permit for any business
5. Contractors or activity unless a clearance is first obtained from
6. Banks and other financial institutions the barangay where such business or activity is
7. Peddlers in the sale of any merchandise or article located or conducted. For such clearance, the
or commerce Sangguniang Barangay may impose a reasonable
8. Fees for sealing and licensing of weights and fee. The application for clearance shall be acted
measures. upon within seven (7) working days from the filing
9. Fishery rentals, fees and charges. thereof.
In the event that the clearance is not issued within
Payment of Business Taxes: The above taxes shall
the said period, the city or municipality may issue
be payable for every separate or distinct
the said license or permit.
establishment or place where the business subject
to the tax is conducted and one line of business does 4. Other Fees and Charges – The barangay may
not become exempt by being conducted with some levy reasonable fees and charges:
other business for which such tax has been paid. a. On commercial breeding of fighting cocks,
If a person conducts or operates two or more cockfights and cockpits;
businesses which are subject to - b. On places of recreation which charge
admission fees; and
a. the same tax rate – tax shall be computed on the c. On billboards, signboards, neon signs, and
combined total gross sales or gross receipts; outdoor advertisements.
b. different tax rates – gross sales or receipts of
each business shall be separately reported for Common revenue raising powers of the local
the purpose of computing the tax due from each government units
business. Provinces, cities, municipalities and barangays are
authorized to impose and collect the following fees
Situs of the tax and charges:
In the branch or sales outlet making the sale or
transaction, and the tax thereon shall accrue and 1. Service fees and charges for any service
shall be paid to the municipality where such branch rendered;
or sales outlet is located. In cases where there is no 2. Public utility charges for the operation of public
such branch or sales outlet in the city municipality utilities owned, operated and maintained by them
where the sale or transaction is made, the sale shall within their jurisdiction;
be duly recorded in the principal office and the taxes 3. Tool fees or charges for the use of any public road,
due shall accrue and shall be paid to such city or pier or wharf, waterway, bridge, ferry or
municipality. telecommunication system funded and
constructed by the local government unit
Illustration
concerned.
The Municipality of Sta. Purificacion enacted an The amounts, rates and terms and conditions
ordinance imposing transfer tax on any transfer of shall be fixed by the Sanggunian concerned.
ownership of real property which is located within the
The following are exempt from the payment of toll
territorial jurisdiction of said municipality.
fees and charges:
Is the ordinance valid? a. Officers and enlisted men of the Armed Forces
The ordinance is not valid. Municipalities are not of the Philippines and Philippine National Police
authorized to levy taxes on transfers of real on mission;
properties. Such tax is allowed only on cities and b. Post office personnel delivering mail;
provinces. c. Physically handicapped and disabled citizens
who are 65 years or older.
Taxes imposable by cities
When public safety and welfare so requires, the
The city may levy the taxes, fees, and charges which
Sanggunian concerned may discontinue the
the province or municipality may impose.
collection of the tolls, and thereafter the said
Provided, however, That the taxes, fees and charges facility shall be free and open for public use.
levied and collected by highly urbanized and Community tax
independent component cities shall accrue to them Cities or municipalities may levy a community tax.
and distributed in accordance with the provisions of
this Code.
END OF LOCAL TAXES
The rates of taxes that the city may levy may exceed
the maximum rates allowed for the province or