There are three taxes payable on the purchase of a property in the Philippines.

• A documentary stamp Tax – 1.5% of the selling price or fair market value, whichever is higher
• Transfer Tax – 0.5% of the selling price or fair market value, whichever is higher
• Registration Fee – 0.25% of the selling price or fair market value, whichever is higher.

These are substantially lower than most countries.

On sale, a transaction tax (which is known as a capital gains tax) of 6% of the sale price or fair market value is levied on the seller. This tax does not apply to contracts which are assigned (sold on) prior to completion.

An annual real estate tax is levied quarterly.  It varies from 1 to 2% (depending on the location of the property) of the “assessed value” (which depends on the property’s value) which can be from 0 to 60% depending on the value of the property. So for example a property worth ₱ 5,000,000 in Metro Manila would have an assessed value of 40% of its value. This is then assessed at 1% meaning a quarterly payment of ₱ 5,000 (US$108, GB£76).

Tax for foreigners is payable on rental income in the Philippines at a fixed 25%.

VAT (currently 12%) is also levied on the rent but it is usual for the tenant to pay for the same.

At Investing in the Philippines we have accountants on hand to assist you with filing returns and dealing with the administrative matters on your behalf.