Law Summary
Imposition of Additional Tax on Idle Lands
- An additional ad valorem tax of 5% per annum is imposed on idle lands based on assessed value by local Assessor (Provincial, City, or Municipal).
- The tax accrual begins on July 1, 1978, overriding any contrary legal provisions.
Definition and Coverage of Idle Lands
- Idle lands include:
- Agricultural lands suitable for cultivation, dairying, inland fishery, and other uses, with at least half uncultivated or unimproved by the owner.
- Non-agricultural lands in cities/municipalities exceeding 2,000 square meters with half or more unutilized or unimproved.
- Residential subdivision lots under transferred ownership to individuals are liable for tax.
- Lots in subdivisions not yet transferred remain aggregated under the subdivision operator, who is liable for the tax.
Exemptions from Additional Tax on Idle Lands
- Exemptions apply only under specific conditions, including:
- Adverse peace and order conditions certified by the Provincial Commander, with the tax imposed if land remains idle one year after restoration.
- Financial losses due to natural calamities (fire, flood, typhoon, earthquake), with a two-year window before tax imposition if unimproved.
- Existing court litigations involving the land; tax applies if not improved one year after case resolution.
- Necessity for fallow periods certified by Agriculturist or Secretary of Agriculture, with one-year grace post-period.
- Unfavorable physical conditions (rocky ground, uneven topography) rendering agricultural land unsuitable.
- Subdivision lots idle due to developer failure to develop per approved plans; tax applies if idle one year after developer completes the subdivision.
Application Procedure for Exemptions
- Landowners or interested persons must file an exemption application within six months from the Decree's effectivity date.
- The application must state the grounds for exemption.
- Applications are submitted to the appropriate Provincial, City, or Municipal Assessor.
Assessment and Collection
- The additional tax on idle lands shall be assessed and collected following the provisions of Presidential Decree No. 464 as amended.
Distribution of Additional Tax Proceeds
- The proceeds accrue to the local government units where the land is located, distributed as follows:
- In provinces: 50% to the municipality and 50% to the province.
- In cities: 100% accrues to the city.
- In Metropolitan Manila cities and municipalities: 50% to the Metropolitan Manila Commission and 50% to the respective city or municipality.
Rule-Making Authority
- The Secretary of Finance is tasked with promulgating implementing rules and regulations necessary for enforcement.
Repealing Clause
- All existing laws, decrees, orders, and regulations conflicting with this Decree are repealed or modified accordingly.
Effectivity
- The Decree takes effect immediately upon its signing date.