Transaction costs in the Philippines are relatively high for real estate owners. 

According to Jones Lang Lasalle, the following taxes are imposed on the acquisition, transfer and other transactions involving real estate:

• Documentary stamp tax 
• Local government transfer taxes
• Registration fees to the Register of Deeds
• Capital gains tax (imposed on sales, transfers or exchange of real property that is a capital asset)
• Creditable withholding tax (imposed on sales, transfers of exchange of real property that is not a capital asset)
• Notarial fees (imposed on the notarisation of the sale or transfer document)
• Value added tax

What taxes and fees will the buyer need to pay?

The buyer must pay:
-    A transfer tax of between 0.5 per cent and 0.75 per cent of the sale price.
-    A notary fee of between 1-2 per cent.
-    The title registration fee varies, but is generally around 0.25-1.0 per cent of the sale price.

What taxes and fees will the seller need to pay?
The seller must pay:
-    Capital gains tax of 6 per cent of the sale price is generally paid by the seller. In some instances however, the buyer pays the capital gains tax, or it is rolled into the sale price.
-    The real estate agent's fee is usually in the range of 3.5 per cent.

Documentary stamp tax of 1.5 per cent of the sale price or fair market value, whichever is higher, must be paid to the Bureau of Internal Revenue, but may be negotiated between the buyer and the seller.

What taxes and fees are payable by owners?
Land tax rates vary from area to area, but they are generally in the range of 1-2 per cent.
A Special Education Fund Tax of 1 per cent is imposed in addition to the basic real estate tax.
"The total tax rates vary by municipality/local government unit," says Jones Lang LaSalle's Asia Property Investment Guide.

A Value Added Tax of 12 per cent applies to businesses in the Philippines. "The sale, barter or exchange of property held primarily for sale to customers or for lease in the ordinary course of trade or business and the use or lease of property are subject to Value Added Tax," says the JLL report.

The corporate tax rate for domestic and foreign companies in the Philippines is 30 per cent. Individuals are taxed on a graduated scale. Foreigners are taxed at a rate of 25 per cent of gross income earned in the Philippines.

"Non-resident aliens not engaged in trade or business are subject to a flat tax rate of 25 per cent on gross income derived from sources within the Philippines, if their stay in the country does not exceed 180 days in a calendar year. Otherwise they are taxed on the basis of graduated rates," writes JLL.

Source: Jones Lang LaSalle Asia Property Investment Guide Philippines 2015.
Bureau of Internal Revenue 

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