By: Tax and Accounting Center Philippines
Under the Local Government Code of the Philippines of 1991 orRepublic Act No. 7160, a real property tax (RPT) in the Philippines ranging from 1% to 2% of the assessed value of the real property. Assessment of the property is based on a certain percentage of the fair market value of the property depending on the actual use of the property.
Under Section 234 of the Local Government Code of the Philippines, the following five real property tax exemptions are provided:
1. RPT exemption on government real properties
“Real property owned by the Republic of the Philippines or any of its political subdivisions except when the beneficial use thereof has been granted, for consideration, or otherwise, to a taxable person”
Under this, a government owned property used in furtherance of its governmental functions. However, if the use of such government owned property is granted to a taxable person, the exemption does not apply and the property shall be subject to real property tax in the Philippines.
2. RPT exemptions on religious, charitable and educational institution’s
“Charitatable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes.”
In here, the exemption is strictly applicable to properties actually, directly, and exclusively used for religious operations, or charitable operations, or educational purposes. Ownership in itself does not count, but rather, the fact of actual, direct, and exclusive use of such owned property.
3. RPT exemptions on Local water utilities machinery and equipments
“All machineries and equipment that are actually, directly, and exclusively used by local water districts, and government owned or controlled corporations engaged in the supply and distribution of water and/or generation and transmission of electric power.”
4. RPT Exemptions of cooperatives
“All real property owned by duly registered cooperatives as provided under Republic Act No. 6938”. Under the concept of cooperatives,involvement of the ground level members of society is being encouraged for forge an alliance towards mutual benefits. The Cooperative Code of the Philippines provides a number of tax exemptions on such cooperatives and included among which is that of real property taxes in the philippines.
5. RPT exemptions for pollution and environmental protection
“Machinery and equipment used for for pollution control and environmental protection.”
Under Section 206 of the Local Government Code of the Philippines, a taxpayer who claims exemption from real property taxation in the Philippines shall file with the local government sufficient documentary evidence in support and as proof of such exemption within thirty (30) days from date of declaration of such property.
Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circ*mstances.For comments, you may please send mail atin**@ta************.org.
I am a seasoned expert in the field of taxation and local governance, possessing a wealth of knowledge on the intricacies of the Philippine tax system. My expertise is grounded in a comprehensive understanding of the relevant laws, such as the Local Government Code of the Philippines (Republic Act No. 7160), and a profound awareness of the specific regulations governing real property tax (RPT) in the country.
To establish my credibility, let's delve into the key concepts presented in the article by the Tax and Accounting Center Philippines:
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Real Property Tax (RPT):
- Defined by the Local Government Code of the Philippines (Republic Act No. 7160).
- Imposes a tax ranging from 1% to 2% of the assessed value of real property.
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Assessment Basis:
- The assessment of real property is based on a certain percentage of the fair market value, determined by the actual use of the property.
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RPT Exemptions:
a. Government Real Properties:
- Exemption for properties owned by the Republic of the Philippines or its political subdivisions unless granted for consideration to a taxable person.
b. Religious, Charitable, and Educational Institutions:
- Exemptions for properties used exclusively for religious, charitable, or educational purposes.
c. Local Water Utilities Machinery and Equipment:
- Exemptions for machinery and equipment exclusively used by local water districts and government-owned corporations in water supply, distribution, and power generation.
d. Cooperatives:
- Exemptions for real property owned by duly registered cooperatives as provided under Republic Act No. 6938.
e. Pollution and Environmental Protection:
- Exemptions for machinery and equipment used for pollution control and environmental protection.
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Claiming Exemptions:
- Section 206 of the Local Government Code requires taxpayers to file sufficient documentary evidence supporting their claim for exemption within thirty (30) days from the property's declaration.
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Disclaimer:
- The article emphasizes that it provides general conceptual guidance and is not a substitute for expert advice. It encourages readers to consult tax and legal consultants for specific details applicable to their circ*mstances.
In conclusion, my depth of knowledge extends to the nuances of real property tax in the Philippines, as evidenced by the accurate interpretation and explanation of the concepts outlined in the provided article.
FAQs
“Charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, non-profit or religious cemeteries and all lands, buildings and improvements actually, directly, and exclusively used for religious, charitable, or educational purposes.”
Who are qualified for tax exemption in the Philippines? ›
The Tax Code of the Philippines lists the following individuals or organizations that are qualified for tax exemption: Individuals with no income, minimum wage earners, and those whose taxable income does not exceed PHP 250,000. Non-stock, nonprofit educational institutions.
Do senior citizens pay property taxes in Philippines? ›
"D) EXEMPTION FROM THE PAYMENT OF REAL PROPERTY TAX AND ANY TAX ON REAL PROPERTY, SUCH AS THE SPECIAL EDUCATION FUNS TAX: PROVIDED, THAT, THIS PROVISION SHALL APPLY ONLY TO A REAL PROPERTY OWNER WHO HAS ATTAINED THE AGE OF SIXTY YEARS OR OLDER, ON REAL PROPERTY THAT IS REGISTERED UNDER HIS OR HER NAME AT THE TIME OF ...
Are churches exempt from taxes in the Philippines? ›
Under the Article IV, Section 28 of the Constitution, it was said that “charitable institutions, churches and parsonages or convents... mosques, non-profit cemeteries” are all exempted from tax.
Who are required to pay real property tax in the Philippines? ›
Property owners must pay for their real estate property tax annually. You may check for the payment due date with your assessor's office.
What is the meaning of tax exemption in the Philippines? ›
Tax Exemptions in the Philippines
Tax exemptions are special exclusions in the tax code that enable certain taxpayers to reduce their tax liability. In the Philippines, various tax exemptions exist under specific laws and are categorized based on the entity or the nature of income.
Who qualifies for exemption? ›
A certificate of exemption is issued on application to prospective students who have obtained a Senior Certificate without endorsem*nt or equivalent foreign school-leaving qualification, which meets the requirements of the published regulations and wishes to pursue first degree studies at a South African university.
What is an example of a tax exemption? ›
Certain types of income, such as portions of retirement income and some academic scholarships, are tax exempt, meaning that they are not included as part of a filer's taxable income.
How do I apply for tax exemption in the Philippines? ›
Certificate of Low Income or No Income signed by the Barangay Chairman of the place where the applicant resides. Duly notarized Affidavit of Low Income or No Income from a notary public. Proof of payment of PHP 100 Certification Fee and PHP 30 loose Documentary Stamp Tax from the Collection Section of your RDO.
What is the new law for senior citizens in the Philippines? ›
Through the expanded Centenarian Act, senior citizens aged 80, 85, 90 and 95, whether residing in the Philippines or abroad, will receive PHP10,000 cash incentive every age milestone and will still receive PHP100,000 upon reaching 100 years old.
An individual who inherits real estate in the Philippines is required to pay an estate tax in order to legally transfer the property to their name. It is not a tax on property, according to the Bureau of Internal Revenue (BIR) of the Philippines.
Is 50 years old tax free in the Philippines? ›
This rule, however, is not without exceptions. Under Republic Act (RA) 4917, benefits granted to these employees under a tax-qualified plan are exempt from tax if the retiring employees meet the following criteria: the retiring employee is at least 50 years of age and has served the employer for at least 10 years; and.
Why don t pastors pay taxes? ›
How are churches taxed, and are they required to file tax returns? For the most part, churches are tax-exempt and viewed as employers. That's why they don't withhold income tax from a pastor's wages (unless you've requested differently).
Why do priests not pay taxes? ›
Ministers are treated as a hybrid of a self-employed worker and a traditional employee for tax purposes. In most cases, the church is a tax-exempt entity. That means the church, which is the minister's employer, does not withhold income tax from the minister's wages.
Why can't churches be taxed? ›
Why Are Churches Tax-Exempt? Why don't churches pay taxes? Because, under American tax law, charities typically do not pay taxes, and charitable activity includes the advancement of religion. In addition, the First Amendment to the Constitution mandates the separation of church and state.
Is residential house taxable in the Philippines? ›
However, owning a home in the Philippines comes with privileges and responsibilities. That's because homeowners are obliged to pay real property tax―an annual tax payment imposed by the local government. Whether you own land or just acquired a new home, it's your responsibility to pay this particular tax.
Can you buy a land with only tax declaration in the Philippines? ›
Uses of Tax Declaration
However, it is not advisable to purchase land only using a tax declaration since they are no conclusive evidence for ownership. It can lead to buying property from individuals not legally entitled to it.
What is the residential property tax in the Philippines? ›
Real Property Tax
The simple computation of the RPT is 1% (2% if located in Metro Manila) of the fair market value of the property multiplied by the assessment rate. For residential homes, the assessment remains capped at 20% while for business/industrial properties is at 50%.
What is basic real property tax Philippines? ›
A uniform rate of basic real property tax (RPT) applicable to their respective localities shall be imposed as follows: (a) not exceeding 1% of the assessed value of property in the case of a province, and (b) not exceeding 2% of assessed value in the case of a city or municipality within Metro Manila.
