The Philippines has also adopted this rule of lex rei sitae for personal property such that personal property is also subject to the law of the country where it is situated”. Tangible personal property- The modern rule is that it is taxable in the state where it is physically located notwithstanding that the owner resides in another jurisdiction. Income from sale or lease of real property is, likewise, generally taxable in the jurisdiction where the property is located.Ģ. The Local Government Code and its implementing regulations provide for a definition of “real property”, such as lands, buildings, machinery and other improvements affixed or attached to real property that are subject to the tax, notwithstanding the definitions under the Civil Code. This is the rule of lex rei sitae ( the law of the situation of the thing) which enunciated in Article 16 of the Civil Code. The real estate is subject to taxation in the state in which it is located whether or not the owner is a resident of the said jurisdiction. Real Property- In the Philippines, real property taxes are imposed only by the Local Governments on real property situated within their jurisdiction. In the Philippines, we may find the situs rules of taxation of various taxes applied as follows:ġ. The basic rule is that the state where the subject to be taxed has a situs may rightfully levy and collect the tax and the situs is necessarily in the state which has jurisdiction or which exercises dominion over the subject in question. The general rule is that the taxing power cannot go beyond the territorial limits of the taxing authority. Situs of taxation literally means place of taxation. Can the Philippine government tax all the income of persons from sources within or without the Philippines? Are all the properties of persons whether real or personal, tangible or intangible, taxable in the Philippines? The answer to these questions lies with the basic knowledge of the situs of taxation.
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