Fostering growth and tax policy innovation with RPVARA

IN BRIEF:

• At the SGV 4^th Tax Symposium, Executive Director Consolacion Agcaoili emphasized the Bureau of Local Government Finance’s (BLGF) commitment to modernizing local fiscal management and enhancing transparency in property valuation through the implementation of the Real Property Valuation and Assessment Reform Act (RPVARA) by 2028.

• Pursuant to RPVARA, the BLGF is leading the development of a comprehensive digital roadmap, which will empower local government units (LGUs) to automate real property assessments, streamline tax collection processes, and allow electronic payments.

• The creation of a centralized property valuation system under RPVARA will grant government agencies immediate access to updated property records and market values. This innovation is expected to resolve persistent bottlenecks in infrastructure projects, especially those involving land acquisition, valuation, and compensation.

At the SGV 4^th Tax Symposium, Executive Director (ED) Consolacion Q. Agcaoili of the Bureau of Local Government Finance (BLGF) highlighted the agency’s commitment to modernize local fiscal management and promote transparency in property valuation, aligning with the symposium’s theme “From Compliance to Confidence: Trust, Transformation, and Transparency.”

As Republic Act No. 12001 or the Real Property Valuation and Assessment Reform Act (RPVARA) moves toward full implementation by 2028, its twin features of digitalization and transparency are expected to bring about consistent property valuations nationwide and enable LGUs to generate accurate property valuations, which will boost their tax collection capacity and strengthen fiscal autonomy.

Prior to the law, real property valuation was done by referring to the BIR schedule of zonal values, or the schedule of fair market value of the LGUs. As a result, there are varying and sometimes even conflicting bases for determining real property valuation.

To address this issue, RPVARA established a standard basis of valuation through the Philippine Valuation Standards (PVS) and the Schedule of Market Values (SMVs).

Ms. Agcaoili said that, after extensive consultations, the BLGF is ready to launch the 2025 edition of the PVS, which will be the basis for LGUs preparing their SMVs.

The law requires that all SMVs be developed after due consultation, making the entire process transparent and open to scrutiny. Prior to the submission of the proposed SMV to the BLGF, LGUs must conduct at least two public consultations and hearings, with the proposed values being posted on official websites and in public spaces.

These measures ensure that property owners, businesses, and the broader community can understand and participate in the preparation of the SMVs. By embedding transparency into every stage — from policy formulation to implementation — RPVARA not only reduces opportunities for political intervention, but also fosters accountability and fairness in the valuation of real properties.

This inclusive process allows property owners to actively participate in determining the SMVs, which will serve as the official benchmark for adjusting assessment levels, setting property tax rates, calculating local and national taxes, and determining fair compensation for land acquisition and public land disposition.

This article explores the implications of RPVARA, its foundational principles, and the anticipated benefits for property owners and local governments alike.

DIGITALIZATION AND LOCAL INNOVATION
Ms. Agcaoili discussed the development of the Real Property Information System (RPIS) mandated by RPVARA, which is a nationwide electronic database that will consolidate all real property transactions, valuations, and related data. As part of BLGF’s digital roadmap, the RPIS will enable LGUs to automate property assessments, streamline tax collections, and allow electronic payments.

She also added that National Government agencies will have free access to the system. However, private sector users will need to pay a minimal fee, which will help cover system maintenance costs.

The RPIS is designed to be interoperable with the electronic data required to be shared by the Registers of Deeds, BIR, notaries public, officials issuing building permits and geodetic engineers conducting surveys within a locality. The Department of Information and Communications Technology (DICT) is tasked with providing the necessary infrastructure, equipment, and training, prioritizing lower-income LGUs to ensure nationwide compliance.

RPVARA has laid out safeguards against misuse, which include penalties for non-compliance, unauthorized data access, and improper valuation practices.

Another innovation under RPVARA is the grant of a real property tax amnesty within two years from the law’s effectivity or until July 5, 2026. The amnesty covers penalties, surcharges, and interest on all unpaid real property taxes — including the Special Education Fund, Idle Land Tax, and other special levies — incurred prior to July 5, 2024.

By waiving penalties and surcharges, the amnesty gives property owners a “fresh start,” encourages voluntary compliance, and more quickly boosts local government revenues. For property owners, the amnesty provision is expected to improve real property liquidity while providing LGUs with additional resources for development projects and public services.

ACCELERATING INFRASTRUCTURE, ECONOMIC DEVELOPMENT
RPVARA’s reforms directly address long-standing barriers to infrastructure development. By establishing uniform, regularly updated benchmarks for property valuation, the law streamlines land acquisition for public projects, ensuring fair compensation and reducing disputes. The digitalization of property records and the adoption of international standards accelerate project timelines, allowing government agencies to implement real property acquisition for critical infrastructure.

RPVARA represents a pivotal shift in the valuation of real property in the Philippines. By prioritizing transparency and digitalization, RPVARA not only enhances the accuracy of property valuations, but also fosters a more equitable system for property owners and local governments.

As the law moves toward full implementation, it is expected to create a more robust framework to enhance LGU’s capacity to generate revenues from real property, ensure transparency of valuation standards and promote the use of innovative digital technology in real property tax administration. The proactive engagement of stakeholders throughout this process will be crucial in ensuring that the benefits of RPVARA are realized across all levels of society, paving the way for a more sustainable and prosperous future for the Philippines.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co.

Juan Paulo C. Santos is a tax senior manager of SGV & Co.