Idle Land Taxation – What you Need to Know

here’s vital information on Idle Land Taxation as promised taken from jmc.blgv.gov.ph for your reference, as mentioned this is one issue that was recently encountered on a commercial property in Metro Manila wherein they had already paid their taxes and got their tax clearance then suddenly was charged by the Local Government of that municipality, Idle Land Tax.  as per some friends and clients affected by this issue, the solution was to put a structure or plant something on the land, point is not to leave the the “idle”.  hope this article will shed light on this matter most aren’t aware of.  as mentioned, it’s always the burden of the property owner to know the law !

What is DILG-DOF JMC No. 2010-2

Reinforces the imposition of “additional ad valorem tax on idle lands,” as provided under the Local Government Code ( LGC ) of 1991, by provinces, cities and municipality within the Metro Manila Area.

Objectives :

• To generate more revenues for the local government units
• To enhance local economic development at the local levels through maximization of  the idle lands for productive use
• To clarify the roles and responsibilities of the National Government Agencies involved in the implementation of this Circular

What is an Idle Land Tax ?

It is an ad valorem tax on edle land that is levied annually on the assessed value of a real property that remains uncultivated or unimproved by a property owner.

Why do we need to impose additional taxes on idle land ?

• It is a land regulatory measure that discourages the proliferation of undeveloped real properties
• Ensures that the utilization of real property is according to its highest and best use
• Also serves as a disincentive to excessive land speculation

What are the benefits of Idle Land Tax ?

• Helps ensure that lands are utilized based on the principle of highest and best use
• Encourages landowners to continuously develop and maintain real properties
• Reduces the possibility of urban blight and decay
• Means additional revenues for the local government units
• Sustains the delivery of basic government services in the locality

Are the LGU’s which implemented implemented Idle Land Tax ?

• There are a total of 14 LGUs ( 5 provinces, 8 cities, and the Municipality of Pateros in the Metropolitan Manila Area ) which have implemented the imposition of idle land tax.
• Notably, Marikina City posted a total collection of Php 243.1M from year 2002 to 2009 from idle land tax.

What are the Legal Bases of Idle Land Tax ?

• A province of city or a municipality within the Metropolitan Manila area, may levy an annual tax on idle lands at the rate not exceeding five percent ( 5% ) of the assessed value of the property which shall be in addition to the basic real property tax. ( Section 236, RA 7160 )

What are the Legal Bases of Idle Land Tax ?

• The provincial, city or municipal assessor shall make or keep an updated record of all idle lands located within his / her area of jurisdiction.  For purposes of collection, the provincial, city or municipal assessor shall furnish a copy thereof to the provincial or city treasurer who shall notify, on the basis of such record, the owner of the property or person having legal interest therein of the imposition of the additional tax. ( Section 239, RA 7160 )

What are the conditions of classifying land as idle ?

• Lands other than an agricultural, located in a city or municipality with more than 1000 square meter in area, one half (1/2) of which remain uncultivated or unimproved by the property or person or person having legal interest therein.
• The description does not include lands planted to permanent or perennial crops with at least 50 trees / hectares and grazing lands

How is Idle Land determined for taxation purposes ?

Idle Land is determined for taxation purposes when the provincial, city or municipal assessor has completed an inventory of all idle lands within his / her area of jurisdiction.

Is the tax on Idle Land automatic upon enactment of the Local Government Code  ( LGC ) ?

The local Sanggunian must enact an ordinance for the imposition of the idle land tax and in accordance with the pertinent provisions of Sections 187, 188, and 189 of the Local Government Code.

Is there a need to publish the enabling ordinance on Idle Land taxation issued by the LGU ?

YES

Within ten ( 10 ) days after the approval of the ordinance imposing idle land tax, all provincial, city and municipal tax ordinances or revenue measures must be published for three ( 3 ) consecutive days in a newspaper of local circulation, the same may be posted in at least two ( 2 ) conspicuous and publicly accessible places.

Are the exemptions from the imposition of tax on Idle Lands ?

YES

A province of city or a municipality within the Metropolitan Manila Area may exempt idle lands from additional levy by reason of force majeure, civil disturbance, natural calamity or any cause or circumstance which physically or legally prevents the owner of the property or person having legal interest therein from improving, utilizing or cultivating the same.

Where the the Tax on Idle Land go ?

• The proceeds of the additional real property tax on idle lands accrue to the respective general funds of the provinceor city where the land is located.
• In the case of a municipality within the Metropolitan Manila Area, the proceeds accrue equally to the Metropolitan Manila Authority and the municipality where the land is located

For further details on this issue, it’s best that you approach the local government body where your property is located.

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robert
Robert G. Sarmiento Properties
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