CTT REVIEWER LOCAL TAXES

PART I - REAL PROPERTY TAX as agricultural, commercial, timber, mineral or

Real property tax is an ad valorem tax collected by a residential land.
city, municipality or province on real property such 5. MINERAL - mineral metallic or non-metallic, exist
as land, buildings, machinery and other in sufficient quantity or grade to justify the
improvements affixed or attached to real property. necessary expenditures to extract and utilize such
mineral.
Nature/classification of real property taxes
1. Property 4. Revenue 6. SPECIAL-lands, buildings and other improve-
2. Direct 5. Ad valorem ments thereon, actually, directly and exclusively
3. Local 6. Proportional used for (a) hospitals, (b) cultural, or (c) scientific
purposes, and (d) those owned and used by local
Exemptions from real property tax water districts, and (e) GOCCs rendering essential
1. Real property owned by the Republic of the public services in the supply and distribution of
Philippines or any of its political subdivision water and/or generation and transmission of
except when the beneficial use thereof has been electric power.
granted to taxable person;
Assessment level and assessed value
2. Charitable institutions, churches, and parsonages 1. ASSESSMENT LEVEL- the percentage applied to
or convents appurtenant thereto, mosques, non- the FMV to determine the assessed value of the
profit cemeteries, and all lands, buildings and property.
improvements, actually, directly, and exclusively 2. ASSESSED VALUE (taxable value)-the FMV of the
used for religious, charitable, or educational real property multiplied by the assessment level.
purposes.
Limitations on assessment level (not exceeding)
3. Non-profit or religious cemeteries or burial
grounds; A. On Lands and Machineries
4. Machineries and equipment that are actually, Classification Assessment Levels
directly and exclusively used by local water Land Machineries
district and GOCCs engaged in the supply of water Residential 20% 50%
and/or generation of electric power; Timberland 20% -
5. All real property owned by duly registered Agricultural 40% 40%
cooperatives as provided for under R.A. No. 9520 Commercial, industrial 50% 80%
(Cooperative Code of the Philippines), and Mineral 50% -
Special classes: cultural, 15% 15%
6. Machineries and equipment used for pollution hospital, scientific
control and environmental protection. Local water districts 10% 10%
Government owned or controlled
Fundamental principles corporations engaged in the 10% 10%
The appraisal, assessment, levy and collection of real supply and/or generation/
property tax shall be guided by the following: transmission of electric power
1. Real property shall be appraised at its current and B. On Improvements
fair market value;
2. Real property shall be classified for assessment Fair market value Commercial/
purposes on the basis of its actual use; Over Not over Residential Industrial Agricultural Timberland
3. Real property shall be assessed on the basis of a (+000) (+000)
P175 0% 0% 0% 0%
uniform classification within each local
government unit;
P175 300 10% 30% 25% 45%
4. The appraisal, assessment, levy and collection of 300 500 20% 35% 30% 50%
real property tax shall not be let to any private 500 750 25% 40% 35% 55%
person; and 750 1M 30% 50% 40% 60%
5. The appraisal and assessment of real property 1M 2M 35% 60% 45% 70%
shall be equitable. 2M 5M 40% 70% 50% 70%
5M 10 M 50% 75% 50% 70%
Fair market value 10 M 60% 80% 50% 70%
The price at which a property may be sold by a seller
who is not compelled to sell and bought by a buyer Tax rates on the basic tax
who is not compelled to buy. - Not exceeding 1% of
In provinces
the assessed value
For assessment purposes, it is also known as the
In cities, and munici- - Not exceeding 2% of
“assessor’s value.”
pality of Pateros the assessed value
Actual use and not ownership
Real property shall be classified, valued and Assessment when classification conflicts with
assessed on the basis of its actual use regardless of its use
where located, whoever owns it, and whoever uses When land is located in a commercial area but the
building is residential, the classification of the land
Classes of land for assessment purposes conflicts with its use, the following rules shall be
1. RESIDENTIAL - principally devoted to habitation observed:
2. AGRICULTURAL-devoted principally to the Classification of LAND to
planting of trees, raising of crops, livestock and determine
poultry dairying, salt making, inland fishing and L – land Fair Market Assessment
similar aquacultural activities, and other B – building Value Level
agricultural activities, commercial or industrial. R – residential
3. COMMERCIAL- devoted principally for the object C – commercial
of profit and is not classified as agriculture,
industrial, mineral, timber, or residential land. 1. L in R area, B is C Residential Commercial

4. INDUSTRIAL - devoted principally to industrial 2. L in C area, B is R Commercial Residential

activity as capital investment and is not classified
Commercial Commercial
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3. L in mixed R/C a. Condonation/reduction thru an ordinance.
area, B is C b. Condonation/reduction by the President.
4. L mixed R/C area, Person or office tasked to collect the tax
Residential Residential 1. Collection and enforcement of the remedies -
B is R
responsibility of the city or municipal treasurer
5. L in mixed R/C concerned.
Residential Residential
area, B is vacant 2. The treasurer may deputize the barangay
6. L in mixed R/C treasurer to collect all taxes on real property
Predominant Predominant located in the barangay, provided, the barangay
area, and B is used
Use Use treasurer is properly bonded.
for mixed R/C
purpose
OTHER LOCAL TAXES, FEES AND CHARGES
Additional levy (in addition to basic RPT)
Special Education Fund Tax (SEF) – 1% of AV Fundamental principles
The following fundamental principles shall govern the
Transfer tax on transfer of real property exercise of the taxing and other revenue-raising
ownership powers of local government units:
Tax on the sale, donation, barter, or on any other
1. Taxation shall be uniform in each local
mode of transferring ownership or title of real
government unit;
property at the rate of not more than
2. Taxes, fees, charges and other impositions shall:
- 1/2% in province/municipality and
a. be equitable and based as far as practicable on
- 3/4% in cities
the taxpayer’s ability to pay;
Based on whichever is higher between b. be levied and collected only for public
- the total consideration involved in the acquisition purposes;
of the property and c. not be unjust, excessive, oppressive, or
- the FMV in case the monetary consideration confiscatory;
involved in the transfer is not substantial. d. not be contrary to law, public policy, national
economic policy, or in restraint of trade;
Notes:
3. The collection of local taxes, fees, charges and
1. Not taxable - sale, transfer or other disposition
other impositions shall in no case be let to any
of real property pursuant to RA 6657 (CARL).
private person;
2. Register of Deeds shall, before registering a
4. The revenue collected shall inure solely to the
deed, require the presentation of the evidence of
benefit of, and be subject to disposition by, the
payment of this tax.
local government unit levying the tax, fee, charge
3. The assessor shall make the same requirement or other imposition unless otherwise specifically
before cancelling an old tax declaration and provided; and
issuing a new one in place thereof.
5. Each local government unit shall, as far as
4. Seller, donor, transferor, executor or practicable, evolve a progressive system of
administrator shall be liable to pay this tax within taxation.
60 days from the date of the execution of the
deed or from the date of the decedent’s death. Common limitations on the taxing power of
local government units
Collection of real property tax
1. Date of accrual of tax – The real property tax for LGUS cannot collect the following taxes:
any year shall accrue on the 1st day of January 1. Income tax, except when levied on banks and
2. Payment of real property taxes in installment –the other financial institutions;
owner of the real property or the person having 2. Documentary stamp tax;
legal interest therein may pay the basic real
property tax and the additional tax for the Special 3. Estate tax;
Education Fund (SEF) thereon without interest in 4. Customs duties, registration fees of vessel and
four (4) equal installments as follows: wharfage on wharves, tonnage dues, and all other
kinds of customs fees, charges and dues except
1st installment – on or before March 31
wharfage on wharves constructed and maintained
2nd installment – on or before June 30
by the local government unit concerned;
3rd installment – on or before September 30
4th installment – on or before December 31 5. Taxes, fees or charges and other impositions upon
3. Application of payment of real property taxes – goods carried into or out of, passing through, the
The payments shall first be applied to prior years’ territorial jurisdiction of local government units in
delinquencies, interests, and penalties, if any, and the guise of charges for wharfage, tools for
only after said delinquencies are settled may tax bridges or otherwise, or other taxes, fees or
payments be credited for the current period. charges in any form whatsoever upon such goods
or merchandise;
4. Tax discount for advanced prompt payment – If
6. Taxes, fees or charges on agricultural and aquatic
the basic real property tax and the SEF are paid
products when sold by marginal farmers or
in advance, a discount of not exceeding 20% of
fishermen;
the annual tax due may be granted to the
taxpayer. 7. Taxes on business enterprises certified to by the
5. Interests on unpaid real property tax –2% per Board of Investments (BOI) as pioneer or non-
month on the unpaid amount or a fraction thereof, pioneer for a period of six (6) and four (4) years,
respectively, from the date of registration;
until the delinquent tax (basic and special levies)
shall have been fully paid, but not to exceed 36 8. Excise taxes on articles enumerated under the
months. National Internal Revenue Code, as amended,
Condonation or reduction of real property tax and taxes, fees or charges on petroleum
and interest products;
Condonation or reduction of real property tax and 9. Percentage or VAT on sales, barters or
interest may be done either thru an ordinance, or by exchanges or similar transactions on goods or
the President of the Philippines. services except as otherwise provided herein;
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10. Taxes on the gross receipts of transportation from the beds of seas, lakes, rivers, streams,
contractors and persons engaged in the creeks, and other public waters within its
transportation of passengers or freight by for territorial jurisdiction.
hire and common carriers by air, land or water, 5. Professional tax
except as provided in this Code; Subject: Each person engaged in the exercise or
11. Taxes on premiums paid by way of reinsurance practice of his profession requiring government
or retrocession; examination.
12. Taxes, fees and charges for the registration of Place of payment: Province or city where he
motor vehicles and for the issuance of all kinds practices his profession or where he maintains his
of licenses or permits for the driving thereof, principal office in case he practices his profession
except tricycles; in several places.
13. Taxes, fees, or other charges on Philippine Such person who has paid the corresponding
products actually exported, except as otherwise professional tax shall be entitled to practice his
provided herein; profession in any part of the Philippines without
being subjected to any other national or local tax,
14. Taxes, fees, or charges on Countryside and
license, or fee for the practice of such profession.
Barangay Business Enterprises and cooperatives
duly registered under R.A. No. 6810 and Time of payment: Annually, on or before January
Republic Act 9520 otherwise known as the 31.
“Cooperatives Code of the Philippines” A line of profession does not become exempt even
respectively; and if conducted with some other profession for which
15. Taxes, fees or charges of any kind on the the tax has been paid.
National Government, its agencies and Exemption: Professionals exclusively employed in
instrumentalities, and local government units. the government.
Taxes imposable by the province 6. Amusement tax
The following taxes may be imposed by the province: Subject: Proprietors, lessees, or operators of
1. Transfer tax on transfer of real property theaters, cinemas, concert halls, circuses, boxing
ownership stadia, and other places of amusement.
Subject: Sale, donation, barter, or on any other Exemption: Holding of operas, concerts, dramas,
mode of transferring ownership or title of real recitals, painting and art exhibitions, flower
property. Exemption: Sale, transfer or other shows, musical programs, literary and oratorical
disposition of real property pursuant to R.A. presentations, except pop, rock, or similar
6657(Comprehensive Agrarian Reform Law). concerts.
Time of payment: Seller, donor, transferor, 7. Annual fixed tax for every delivery truck or
executor or administrator shall pay this tax within van of manufacturers or producers,
60 days from the date of the execution of the deed wholesalers of, dealers, or retailers in,
or from the date of the decedent’s death. certain products.
Subject: Every truck, van or any vehicle used by
2. Tax on business of printing and publications
manufacturers, producers, wholesalers, dealers
Subject: Persons engaged in the printing and/or
or retailers in the delivery or distribution of
publication of books, cards, posters, leaflets,
distilled spirits, fermented liquors, soft drinks,
handbills, certificates, receipts, pamphlet, and
cigars and cigarettes, and other products as may
other of similar nature. Exemption: Receipts from
be determined by the Sangguniang Panlalawigan,
the printing and/or publishing of books or other
to sales outlets, or consumers, whether directly
reading materials prescribed by the DepEd as
or indirectly, within the province.
school references shall be exempt from this tax.
The manufacturers, producers, wholesalers,
3. Franchise tax
dealers, and retailers referred to in the
Subject: Businesses enjoying a franchise.
immediately foregoing paragraph shall be exempt
4. Tax on sand, gravel and other quarry from the tax on peddlers.
resources
Subject: Ordinary stones, sand, gravel, earth and
other quarry resources, as defined under the
NlRC, as amended, extracted from public lands or

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

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6. Amusement tax on admission Gross receipts from admission
Not more than 30%
fees

7. Fixed tax on delivery vehicles of

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

Illustration b. different tax rates – gross sales or receipts of

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

Common revenue raising powers of the local

government units
Provinces, cities, municipalities and barangays are
authorized to impose and collect the following fees
and charges:
1. Service fees and charges for any service
rendered;
2. Public utility charges for the operation of public
utilities owned, operated and maintained by them
within their jurisdiction;
3. Tool fees or charges for the use of any public road,
pier or wharf, waterway, bridge, ferry or
telecommunication system funded and
constructed by the local government unit
concerned.
The amounts, rates and terms and conditions
shall be fixed by the Sanggunian concerned.
The following are exempt from the payment of toll
fees and charges:
a. Officers and enlisted men of the Armed Forces
of the Philippines and Philippine National Police
on mission;
b. Post office personnel delivering mail;
c. Physically handicapped and disabled citizens
who are 65 years or older.
When public safety and welfare so requires, the
Sanggunian concerned may discontinue the
collection of the tolls, and thereafter the said
facility shall be free and open for public use.
Community tax
Cities or municipalities may levy a community tax.

END OF LOCAL TAXES