Rates on the Excise Tax on Automobiles

Are you planning of investing or buying vehicle today or in the future? Do you consider if it's subject to tax or exempt from tax? May be it is also important to consider the tax matters and other legal transactions in investing or purchasing vehicle.

Few months ago, the bureau has issued Revenue Regulations (RR) No. 5-2018 implementing the Adjustment of Rates on the Excise Tax on Automobiles pursuant to the Provisions of Republic Act No. 10963, otherwise known as the "Tax Reform for Acceleration and Inclusion (TRAIN) Law" amending for the purpose RR No. 25-2003 as follows:

SEC. 3. Section 4 of RR No. 25-2003 is hereby amended as follows:

"SEC. 4. - RATES AND BASES OF THE AD VALOREM TAX ON AUTOMOBILES. There shall be levied, assessed and collected ad valorem tax on automobiles based on the manufacturer's/assembler's or importer's selling price, net of excise tax and value-added tax, in accordance with the following schedule, EFFECTIVE JANUARY 1, 2018:

NET MANUFACTURER'S                                      TAX RATE

PRICE/ IMPORTER'S SELLING

PRICE

UP TO SIX HUNDRED                                              FOUR PERCENT (4%)

THOUSAND PESOS (P600,000.00)

OVER SIX HUNDRED                                              TEN PERCENT (10%)

THOUSAND PESOS (P600,000.00)

TO ONE MILLION PESOS

(P1,000,000.00)

OVER ONE MILLION PESOS                                  TWENTY PERCENT (20%)

(P1,000,000.00) TO FOUR

MILLION PESOS (P4,000,000.00)

OVER FOUR MILLION PESOS                                FIFTY PERCENT (50%)

(P4,000,000.00)

PROVIDED, THAT HYBRID VEHICLES SHALL BE TAXED AT FIFTY PERCENT (50%) OF THE APPLICABLE EXCISE TAX RATES ON AUTOMOBILES SUBJECT TO THE CONDITIONS IN SECTION 9(E) OF THIS REGULATIONS: PROVIDED, FURTHER, THAT IN THE CASE OF IMPORTED AUTOMOBILES NOT FOR SALE, THE TAX IMPOSED HEREIN SHALL BE BASED ON THE TOTAL LANDED VALUE, INCLUDING TRANSACTION VALUE, CUSTOMS DUTY AND ALL OTHER CHARGES."

It also stated in the regulations of vehicles exempt from the excise tax on automobiles as follows:

SEC. 4. Section 9 is hereby amended as follows:

"SEC. 9. TAX-EXEMPT REMOVALS OF AUTOMOBILES. The following removals of locally manufactured/assembled or release of imported automobiles from the place of production or from customs' custody, respectively, are exempt for the payment of the appropriate excise taxes subject to certain conditions.

a. xxx 

xxx xxx xxx 

E. PURELY ELECTRIC VEHICLES SHALL BE EXEMPT FROM THE EXCISE TAX ON AUTOMOBILES. HYBRID VEHICLES SHALL BE SUBJECT TO FIFTY PERCENT (50%) OF THE APPLICABLE EXCISE TAX RATES ON AUTOMOBILES. PRIOR TO THE REMOVAL OF THE AUTOMOBILES FROM THE MANUFACTURING PLANT OR CUSTOMS CUSTODY, THE DEPARTMENT OF ENERGY (DOE) SHALL DETERMINE WHETHER THE AUTOMOBILES ARE HYBRID VEHICLES OR

PURELY ELECTRIC VEHICLES, AND FURNISH THE COMMISSIONER OF INTERNAL REVENUE, ATTENTION: CHIEF EXCISE LARGE TAXPAYERS REGULATORY DIVISION (ELTRD), CERTIFIED COPIES OF THE RESULTS OF SUCH EXAMINATION OR ENDORSEMENT TO THAT EFFECT. 

F. PICK-UPS."

Please refer: https://www.bir.gov.ph/images/bir_files/internal_communications_1/Full%20Text%20RR%202018/RR%20No.%205-2018.pdf of the full tax of RR No. 5-2018.