Timber and Forest Lands Tax Classification PD 853

Presidential Decree No. 853 adopts a more systematic and just property valuation by treating timber and forest lands as a separate class of real property.
Presidential Decree No. 853 implements remedial measures to ease the realty tax burden of the wood industry.
Presidential Decree No. 853 employs new and definitive appraisal and assessment methods for timber and forest lands.
Presidential Decree No. 853 grants a descending rate of tax discount to reduce the real property tax burden in the early years.

“Operational area” means the portion of the entire concession from where the concessionaire is granted authority to cut and remove timber for a given year.
“Timber and forest lands” are treated as a distinct property class for real property taxation under Section 1.

Section 1 classifies all timber and forest lands separately from the class agricultural land for real property tax purposes.
Section 2 requires declaration and listing of timber and forest lands owned by the Republic of the Philippines or any of its political subdivisions when their beneficial use has been granted to a taxable person.
Section 2 requires that such Republic-owned timber and forest lands be declared for taxation and listed in the assessment rolls in the name of the concessionaire or licensee.
Section 2 requires that privately-owned timber and forest lands be declared and listed in the assessment rolls in the name of the private owner.

Section 3 sets the assessment level for all timber and forest lands at 40% of their market value.
Section 3 requires the market value to be determined by the Provincial/City Assessor.
Section 3 directs that determination be done using methods, procedures, or regulations that the Secretary of Finance may prescribe.

Section 4(a) requires that, for a given tax year, the taxable area for Republic-owned timber and forest lands with beneficial use granted to a taxable person be the operational area within the concession.
Section 4(a) requires the operational area for the tax year to be determined and authorized by the Bureau of Forest Development.
Section 4(a) ties the Bureau’s authorization to Presidential Decree No. 705, otherwise known as the Revised Forestry Code of the Philippines, and/or its implementing rules and regulations.
Section 4(b) provides that for privately-owned timber or forest lands, the entire area belonging to the private owner constitutes the taxable area.

Section 5 assigns responsibility for appraisal and assessment to the Provincial/City Assessor and, where applicable, the Municipal Deputy Assessor.
Section 5 provides that if timber or forest land is located in one municipality or one city, the Provincial/City Assessor shall appraise and assess it using the methods, procedures, or regulations prescribed by the Secretary of Finance.
Section 5 provides that if timber and forest lands are found in two or more municipalities, the Provincial Assessor shall appraise and assess them and shall issue separate tax declarations covering the areas corresponding to each municipality.
Section 5 provides that if timber and forest lands cover two or more provinces and/or cities, the concerned Provincial/City Assessors shall jointly appraise and assess the property in accordance with regulations issued by the Secretary of Finance.

Section 6 levies a uniform annual ad valorem tax on timber and forest lands.
Section 6 sets the tax rate at one (1%) per cent of the assessed value of timber and forest lands as determined by the Provincial/City Assessor.
Section 6 requires imposition and collection of an additional one per cent tax accruing to the Special Education Fund created under Republic Act No. 5447.
Section 7 requires that the basic and additional real property taxes on timber and forest lands be collected by the Provincial/City Treasurers where the timber and forest lands are located.

Section 8 provides that real property tax for timber and forest land begins to accrue on January 1, 1975.
Section 8 prohibits imposition of penalty on the taxpayer for periods prior to the effectivity of the decree.

Section 9 grants a discount only if the taxpayer pays in full both: (a) the basic real property tax, and (b) the additional one (1%) per cent tax accruing to the Special Educational Fund, within the prescribed payment period under Section 60 of Presidential Decree No. 464.
Section 9 provides the discount rate as follows:
- 60% on the tax due and payable during 1975;
- 40% on the tax due and payable during 1976; and
- 20% on the tax due and payable during 1977.

Section 8 establishes a transitional penalty relief by exempting penalties for periods prior to the decree’s effectivity while starting accrual on January 1, 1975.