Tax 3 Community Tax

COMMUNITY TAX
Cities or Municipalities may levy a community tax in accordance with the provisions of
Sections 156 to 164 of the LGC (Sec. 156, LGC)

Community Tax of Individuals

A. Individuals Liable to the Payment of Community Tax

1. Every inhabitant of the Philippines eighteen (18) years of age or over who
has been regularly employed on a wage or salary basis for at least (30)
consecutive working days during any calendar year; or
2. An individual who is engaged in business or occupation; or
3. An individual who owns real property with an aggregate assessed value of
One Thousand Pesos (P1,000.00) or more; or
4. An individual who is required by law to file an income tax return (Sec. 157, LGC)
B. Rate of Community Tax Payable by Individuals
1. The rate of community tax that may be levied and collected from said individuals
shall be:
a. an annual (basic) community tax of Five Pesos (P5.00);plus
b. an additional tax of One Peso (P1.00) for every One Thousand Pesos
(P1,000) of income regardless of whether from business, exercise of
profession or from property, which in no case shall exceed Five
Thousand Pesos (P5,000).
2. In the case of husband and wife, each of them shall be liable to pay the basic
tax of P5.00, but additional tax imposable on husband and wife shall be
P1.00 for every P1,000 of income from the total property owned by them
and/or the total gross receipts or earnings derived by them (Sec. 157,
LGC; Art. 246(a) and (b), LGC IRR)

Community Tax of Juridical Persons

A. Juridical Persons Liable to the Payment of Community Tax

1. Every corporation no matter how created or organized, whether domestic or
resident foreign, engaged in or doing business in the Philippines shall be
liable to pay the community tax (Sec. 158, LGC)
2. A cooperative enjoying exemption from local taxes, including the real property
tax, is still required to secure a Mayor’s permit and the Community Tax
Certificate (BLGF Opinion No. 26-2016, September 16, 2016)

B. Rate of Community Tax Payable by Juridical Persons

1. An annual community tax of Five Hundred Pesos (P500); plus

2. An additional tax, which, in no case, shall exceed Ten Thousand Pesos
(P10,000) in accordance with the following schedule:
a. For every five Thousand Pesos (P5,000) worth of real property
in the Philippines owned by it during the preceding year based
on the valuation used for the payment of real property tax under existing
Tax 3 Community Tax

laws, found in the assessment rolls of the city or municipality

where the real property is situated –Two Pesos (P2.00); and
b. For every Five Thousand Pesos (P5,000)of gross receipts
derived by it from its business in the Philippines during the preceding
year –Two Pesos (P2.00).

Exemptions from Payment of Community Tax

1. Diplomatic and consular representatives; and

2. Transient visitors when their stay in the Philippines does not exceed three
(3) months (Sec. 159, LGC)

Place of Payment

The community tax shall be paid in the place of residence of the individual, or
in the place where the principal office of the juridical entity is located (Sec. 160,
LGC)

Community Tax Certificate

A community tax certificate shall be issued to every person or corporation

upon payment of the community tax. A community tax certificate may also be
issued to any person or corporation not subject to the community tax upon payment
of One Peso (P1.00) (Sec. 162, LGC)

Time for Payment; Penalties for Delinquency. -

a. The community tax shall accrue on the first (1st) day of January of each year which shall
be paid not later than the last day of February of each year.

If a person reaches the age of eighteen (18) years or otherwise loses the benefit of
exemption on or before the last day of June, he shall be liable for the community tax on
the day he reaches such age or upon the day the exemption ends.

However, if a person reaches the age of eighteen (18) years or loses the benefit of
exemption on or before the last day of March, he shall have twenty (20) days to pay the
community tax without becoming delinquent.

Persons who come to reside in the Philippines or reach the age of eighteen (18) years
on or after the first (1st) day of July of any year, or who cease to belong to an exempt
class or after the same date, shall not be subject to the community tax for that year.

b. Corporations established and organized on or before the last day of June shall be liable
for the community tax for that year. But corporations established and organized on or
before the last day of March shall have twenty (20) days within which to pay the
community tax without becoming delinquent. Corporations established and organized on
or after the first day of July shall not be subject to the community tax for that year.
Tax 3 Community Tax

If the tax is not paid within the time prescribed above, there shall be added to the unpaid
amount an interest of twenty-four percent (24%) per annum from the due date until it is
paid.

Illustration: Ariel Roque Corporation is a domestic corporation which has the following
income and properties.

Gross receipts in the Philippines P10,000,000

Total fair market value of properties owned and located in the Philippines is
P50,000,000. Under its tax declaration, its properties’ assessed value is equivalent to
P20,000,000.

The amount of community tax would be

Basic 500
Additional community tax
(10M+20M)/5000xP2 12,000
Limit 10,000

Total community tax

500+10,000 10,500