TAX COMPLIANCE

LOCAL TAX
There are two basic types of taxes in the Philippines,

namely, national and local taxes. National taxes are

what we pay to the government through the Bureau of
Internal Revenue. This includes income tax, Value
Added Tax (VAT), percentage tax, excise tax, estate
tax, donors tax, documentary stamp tax, capital gains
tax, and other taxes covered by the National Internal
Revenue Code (Republic Act No. 8424 or known as
the Tax Reform Act of 1997, as amended) the tax
code or law that governs national taxation in the
Philippines.

On the other hand, local taxes are what we pay to the

local government units, which include the provinces,

municipalities, cities, and barangays. The local
government taxation in our country is based on
Republic Act 7160 or otherwise known as the Local
Government Code of 1991, as amended.

Formula in Computing Real Property Tax

FMV x AL
AV x Rate = RPT
Where:
FMV Fair Market
Value
AL Assessment Level
AV Assessed Value

Assessment Level:
Residential
Agricultural
Commercial
Industrial

20%
40%
50%
50%

Additional Tax (Special Education Fund) = Fair

Market Value x Assessment
Level x 1.00%
Fair Market Value:

Based on the Schedule of Fair Market Values

proposed by the City Assessor and approved by the
Sangguniang Panlungsod.

Assessment Level
Fair Market Value

Residential

Agricultural

Commercial/Industrial

Timberland

175,000.00 300,000.00

10%

25%

30%

45%

300,000.00 500,000.00

20%

30%

35%

50%

500,000.00 750,000.00

25%

35%

40%

55%

750,000.00 1,000,000.00

30%

40%

50%

60%

1,000,000.00 2,000,000.00

35%

45%

60%

65%

2,000,000.00 5,000,000.00

40%

50%

70%

70%

5,000,000.00 10,000,000.00

50%

75%

10,000,000.00

60%

80%

* Residential 1.5 %
* Commercial 2.0%

TAXING POWERS OF LOCAL GOVERNMENT UNITS PROVINCES - They may

collect taxes, fees and charges on:
1) Tax on Transfer of Real Property Ownership - at rate not more than 50% of 1%
of total consideration
2) Franchise Tax - at rate not exceeding 50% of 1 % of the gross receipts for the
preceding calendar year
3) Tax on Sand, Gravel and Other Resources - at rate not more than 10% of fair
market value
4) Tax on Business of Printing and Publication -at rate not exceeding 50% of 1%
5) Professional Tax - at rate not more than P 300.00 annually
6) Amusement Tax - at rate not more than 30% of gross receipts from admission
fees
7) Annual fixed Tax for every Delivery Truck, or Van of Manufacturers or
Producers, Wholesalers of, Dealers, or Retailers in, Certain Products - at rate
not exceeding P 500.00 annually.