OCTAVIANO, Leslie Anne O.

2006-33060

The Law on Local Governments Prof. Gisella D. Reyes

A. LOCAL GOVERNMENT TAXATION

Fundamental Principles of Local Taxation (Section 130) - Uniform - Equitable and based on the taxpayers ability to pay - Only for public purpose - Not unjust, excessive, oppressive or confiscatory - Not be contrary to law, public policy, national economic policy - No case be let to any private person - Inure solely to the benefit of the LGU levying the tax - Progressive system of taxation
Common limitations on the taxing powers of LGU (Section 133) LGU cant levy on the following: - Income tax (except banks and other financial institution) - Documentary stamp tax - Estate tax (except when provided by the Code) - Customs, duties, registration fees of vessels and wharfage on wharves, teenage dues (except those maintained by the LGU) - Taxes, fees, charges, and other imposition upon goods - Taxes, fees, or charges on agricultural and other imposition of goods - Taxes on business enterprises certified by the BOI as pioneer or non-pioneer - Excise taxes on articles enumerated under the NIRC - Percentage of VAT on sales, barter or exchanges of similar transactions on goods and services - Taxes on gross receipts of transportation contractors, persons engaged in the transportaion of passengers or freight for hire, common carriers by land, water or air - Taxes on premiums paid by way of reinsurance or retrocession - Taxes, fees, or charges for the registration of motor vehicles and issuance of all kinds of licenses or permits for driving (except tricycles) - Taxes, fees or other charges on Philippine products actually exported - Taxes, fees or charges on countryside and barangay business enterprises and cooperatives registered under RA 6810 - Taxes, fees or charges of any kind on the National Government, its agencies and instrumentalities, and LGU

COMMON REVENUE-RAISING POWERS - Reasonable fees and charges for services rendered (Section 153) - Public utility charges for the operation of public ultilities owens and operated by the LGUS within their jurisdiction (Section 154) - Toll fees or charges for the use of any public road, pier or wharf, waterway,, or telecommunication system funded the LGU concerned
PROVINCES - Tax on transfer of real property (Section 135) MUNICIPALITIES *A Municipality may levy on those taxes, fees and charges NOT otherwise levied by the province. - Tax on Business (Section 143) - The Municipalities in Metro Manila may levy taxes at rates which shall not exceed 50% the maximum rates prescribed in Section 143. - Payment of the Business Taxes (Section 146) - Situs of Municipal Taxation (Section 150) CITIES *Except as otherwise provided by the LGC, the city may levy the taxesm fees and charges which theprovince OR municipality may impose. (Section 151) - The taxes, fees, and charges levied and collectted by highly urbanized and independent component cities shall accrue to them and distributed in accordance with the provisions of the Code. - The rates of taxes that the city may levy may exceed the maximum rates allowed for the province or municipality by not more than 50%. (except professional and amusement tax - Section 151) BARANGAYS *Barangays may levy the following, taxes, fees, and charges which shall accrue EXCLUSIVELY to them: - Taxes on stores and retailers with fixed establishments with gross sales/receipts nexceeding P50,000 or less (for barangays in cities) and P30,000 or less (for barangays in municipalities) - Servic fees for services rendered in connection with barangay-owned properties - Barangay clearance - Other fees and charges (commercial breeding of fighting cocks, places of recreation, billboards and other signboards)

- Tax on business of printing and publication (Section 136)

- Franchise tax (Section 137) - Tax on sand gravel and other quarry (Section 138) - Professional tax (Section 139) - Amusement tax (Section 140) - Annual fixed tax for every delivery truck or van of manufacturers or producers, wholesalers of, dealers or retainers in, certain products (Section 141)

OCTAVIANO, Leslie Anne O. 2006-33060

The Law on Local Governments Prof. Gisella D. Reyes

B. REAL PROPERTY TAXATION

Fundamental Principles of Real Property Taxation (Section 198) (a) Real property shall be appraised at its current and fair market value; (b) Real property shall be classified for assessment purposes on the basis of its actual use; (c) Real property shall be assessed on the basis of a uniform classification within each local government unit; (d) The appraisal, assessment, levy and collection of real property tax shall not be let to any private person; and (e) The appraisal and assessment of real property shall be equitable. Exemptions from Real Property Tax (Section 234) - 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; - 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; - 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; - All real property owned by duly registered cooperatives as provided for under R.A. No. 6938; and - Machinery and equipment used for pollution control and environmental protection. Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code.

TAX BASE
- Appraisal of the Real Property (Section 201) - Classes of Real Property for Assessment Purposes (Section 215) a. Residential b. Agricultural c. Commercial d. Industrial e. Mineral f. Timberland g. Special - Assesment Levels (Section 218) = This is applied to the FMV to determined the assessed value. It is fixed by an ordinance. FMV x Assessment level = Assessed value Assessed Value is the Tax Base! `

TAX RATE
Power to Levy Real Property Tax (Section 232) A province or city or a municipality within the Metropolitan Manila Area my levy an annual ad valorem tax on real property such as land, building, machinery, and other improvement not hereinafter specifically exempted. Rates of Levy (Section 233) A province or city or a municipality within the Metropolitan Manila Area shall fix a uniform rate of basic real property tax applicable to their respective localities as follows: a. PROVINCE not exceeding 1% of the assessed value of real property; b. CITY/MUNICIPALITY - not exceeding 2% of the assessed value of real property.

TAX

OCTAVIANO, Leslie Anne O. 2006-33060

The Law on Local Governments Prof. Gisella D. Reyes

COMMUNITY TAX
Who are authorized to levy? Who are liable? Who are individuals liable? (Section 157) Cities or municipalities (Section 156) Individuals and juridical persons 1. Every inhabitant of the Philippines 2. Under the following circumstances - 18 years of age or over, who has been regularly employed on a wage or salary basis for at least 30 working days during any calendar year - who is engaged in business or occupation, or - who owns real property with an aggregate assessed value of P1,000 or more - who is required by law to file an income tax return Every corporation no matter how created or organized, whether domestic or resident foreign engaged in, or doing business in the Philippines 1. Diplomatic and consular representatives 2. Transient visitors when their stay in the Philippines does not exceed 3 months P5.00 plus P1.00 for every P1,000 income regardless of whether from business, exercise of profession or from property which, in no case shall exceed P5,000. NOTE: In case of husband and wife, the additional tax shall be based on the total property; gross receipts or earnings owned or derived by them. P500 plus annual additional tax (not to exceed P10,000) Annual additional tax: in accordance with the following schedule: 1. For every P5,000 worth of real property owned by it during the preceding year based on the valuation used for the payment of the real property tax P2.00 2. For every P5,000 of gross receipts or earnings derived by it from its business in the Philippines during the preceding year P2.00 Residence of the individual, or in the place where the principal office of the juridical entity is located Accrues on the 1st day of January of each year which shall be paid not later than the last day of February each year An interest of 24% per annum from the due date until it is paid shall be added to the amount due

Who are juridical persons liable? (Section 158) Who are exempted from paying the tax? (Section 159) What is the tax rate for individuals? (Section 157)

What is the tax rate for juridical persons? (Section 158)

What is the place of payment? (Section 160) What is the time of payment? (Section 161) What is the penalty for delinquency? (Section 161)

COMMUNITY TAX CERTIFICATE It is issued to every person or corporation upon payment of the community tax.