I'm curious if anyone who is NOT a citizen or permanent resident of the Philippines has filed taxes in the Philippines. Unless you have a business, I don't see how they could know what is going on from an investment or income standpoint, other than potentially interest earned on Philippine banking accounts. I'm also curious how the sale of a house/land is handled since it's typically owned by the wife who is a Philippines citizen. Everyone seem to claim a value less than the actually selling price to reduce transfer taxes and property taxes. Typically you would pay taxes on the capital gain, I'm not sure how something like that is calculated with all the hanky panky that goes on. I'm curious if you just pay transfer taxes or if there is also a capital gains tax in the Philippines.
Generally the seller will decide & agree the "taxable" value of the land/property. This is mostly due to the fact that the seller hasn't paid the taxes in full since he/she bought the land and is therefore "owed" to the government. The land tax currently runs at 1% (provinces) of the value per annum (2% for cities). Also the CGT on the sale runs at 6% so if the buyer grees to the lower "value" with the seller then the seller has a lower debt and, in general, the buyer's lawyer fees could also be lower as these are also often a percentage of the property value. Everyone saves and the government miss out.
As i have said before in a previous post CGT capital gain tax is another phrase from the English language that has been hijacked by filipino's and is used completely wrong. It is actually a tax 6% on the selling price, you could sell at a lower price than you bought the property for hence no gain and yet you still have to pay this nonsense. Also be aware of zonal value, CGT is charged on whichever is the higher, the selling price or the zonal value.
It's been a while since I looked, but my recollection of the zonal values is that they are so low, that I can't imagine them being used on any sale. Zonal value can be less the 100 php per sqm on land the owner is asking for 1000+ sqm. I'm surprise the government doesn't have an assessment bureau.
Many do - but it is illegal (tax evasion, not avoidance). I read of a Court case between two people arguing over a land deal and it was shown that the declared sale price was not the same as the declared value (i.e. under valuing). The Court stated they were bound to inform the BIR of the facts. If this is ever tightened up on then the costs of property transfers will be astronomical because of the fact, as my Learned Friend Mr. C. Brown, Esq. often points out, CGT is NOT CGT at all but a Land Transfer Tax. Lawyers here (everywhere in fact) are not THAT generous - they charge fees based on the actual price paid by the buyer and not the price declared.
I never tried to outsmart the system. Hence I am clean and cannot be blackmailed and or sued. That's more important to me than saving a few thousand Pesos. Even if everybody is doing that, I don't.
Each Municipality has an Assessors Dept who assess the property for annual property taxes. They also, I believe, set the zonal values.
Here is an interesting (but ad laden with shoes) article on this. Market value versus zonal value. It seems like there is the value you pay in your yearly property taxes to the BIR and then there is the price paid when you bought the land for the transfer tax, which is more of a market based tax. Tracking that market value can be tricky. They aren't directly related. https://www.foreclosurephilippines.com/what-you-need-to-know-about-bir-zonal-values/ Here are the zonal values, published in 2019. A major change from what I remember back in the day, but I wasn't looking at Dumaguete proper. Some of the zonal values in the city are 20,000+ php/sqm....ouch. https://www.bir.gov.ph/index.php/zonal-values.html#rdo079 I've tried to attach the excel, but it's not allowed.
On this issue of property taxes you might be correct - but try telling the many people who served (and some still serving) life sentences for murders they never committed and where the evidence pointed to the fact they were innocent. Some even had the 'honour' of a posthumous pardon! So often the system outsmarts us all.
