Policy and rationale for idle-land taxation
- The Decree is enacted to promote maximum and efficient utilization of land for broad public benefit (preamble).
- Large tracts of private land remain idle and undeveloped due to non-cultivation and non-utilization by owners, and this situation is targeted for correction (preamble).
- Speculative accumulation for non-productive purposes is treated as a deterrent to socio-economic programs and is addressed through tax pressure (preamble).
- The Decree amends the Real Property Tax Code to induce utilization of idle lands (preamble).
Rate and timing of the additional tax
- Section 42 of Presidential Decree No. 464 is amended to impose an additional property tax on idle lands.
- The additional tax rate is FIVE PER CENT PER ANNUM based on the assessed value.
- The assessed value is determined by the Provincial or City Assessor of the province or city where the property is located, or by the Municipal Assessor for idle lands in the municipalities of Metropolitan Manila (Section 42 as amended).
- The additional ad valorem tax begins to accrue on July 1, 1978, notwithstanding any contrary provision of law (Section 42 as amended).
Coverage: what counts as idle lands
- Section 43 of Presidential Decree No. 464 is amended to define idle lands for purposes of the Decree.
- Idle lands include agricultural lands suitable for cultivation, dairying, inland fishery, and other agricultural uses where one half remain uncultivated or unimproved by the owner or owners (Section 43(a) as amended).
- Idle lands include lands other than agricultural located in a city or municipality with an area of more than 2,000 square meters where one half remain unutilized or unimproved by the owner or owners (Section 43(a) as amended).
- The idle-land rule applies to residential lots in duly approved subdivisions whose ownership has been transferred to individual owners, who become liable for the additional tax (Section 43(a) as amended).
- For individual subdivision lots whose ownership has not been transferred to the buyer, the lots are treated as forming part of the subdivision, and the additional tax is payable by the subdivision operator (Section 43(a) as amended).
Exemptions from the additional levy
- The additional levy does not apply to landowners unable to improve, utilize, or cultivate their lands due to enumerated causes (Section 44 as amended).
- Exemption applies where adverse peace and order conditions exist as certified by the Provincial Commander of the Philippine Constabulary; if peace and order is restored within one year and the land remains unimproved, the additional tax is imposed (Section 44 as amended).
- Exemption applies for financial losses due to fire, flood, typhoon, earthquake, and other similar causes, declared in a sworn statement to the Provincial, City, or Municipal Assessor with a certification from the proper local government agency; if the land is not improved to the required extent within two years from the loss, the additional tax is imposed (Section 44 as amended).
- Exemption applies where there are existing court litigations involving the land, certified by the Court where the case is pending; if the land is not improved within one year after final adjudication, the additional tax is imposed (Section 44 as amended).
- Exemption applies where leaving the land in fallow state is necessary and is certified by the Provincial, City or Municipal Agriculturist, or in their absence by the Secretary of Agriculture or duly authorized representatives; if the land is not improved within one year after termination of the certified production period, the additional tax is imposed (Section 44 as amended).
- Exemption applies where unfavorable physical factors render agricultural land unsuitable for cultivation, certified by the Provincial, City or Municipal Agriculturist or, in their absence, by the Secretary of Agriculture or authorized representatives (Section 44 as amended).
- Exemption applies to acquired subdivision lots that remain idle due to failure of the subdivision developer or owner to develop the subdivision plan as determined by the Assessor; if after one year from the time the subdivision is developed the lot remains unutilized or unimproved, the additional tax is imposed (Section 44 as amended).
How to apply for exemptions
- The owner, administrator, or any person with legal interest in the land who desires to avail of the exemptions must file an application for exemption (Section 45 as amended).
- The application must be filed within six months from the date of effectivity of this Decree (Section 45 as amended).
- The application must be filed with the Assessor of the Province, City or Municipality where the land is situated (Section 45 as amended).
- The application must state the ground or grounds on which the exemption is being claimed (Section 45 as amended).
Assessment, collection, and proceeds distribution
- Assessment and collection of the additional tax on idle land are governed by the provisions of Presidential Decree No. 464, as amended (Section 5).
- The proceeds of the additional real property tax on idle land accrue to the general fund of the province, city, or municipality where the taxable land is situated (Section 6).
- In provinces, Fifty percent accrues to the Municipality where the taxed property is located, and Fifty percent accrues to the province (Section 6).
- In cities, the entire proceeds accrue to the City where the land subject to tax is situated (Section 6).
- In cities and municipalities in Metropolitan Manila, Fifty percent accrues to the Metropolitan Manila Commission, and Fifty percent to the City or Municipality where the property is located (Section 6).
Implementing rules; repeal and modification
- The Secretary of Finance must promulgate the rules and regulations necessary to implement the Decree.
- The promulgated rules and regulations are to be considered as forming part of this Decree (Section 7).
- All laws, decrees, orders, rules, and regulations that are contrary to or inconsistent with the Decree are repealed or modified accordingly (Section 8).