RR No. 5-2018: Implements the adjustment of rates on Excise Tax on Automobiles pursuant to the provisions of RA No. 10963 (TRAIN Law), amending for the purpose Revenue Regulations No. 25-2003

Key points

1. Ad valorem rates. Effective January 1, 2018, the tax is based on the net manufacturer’s or importer’s selling price. It is 4% up to P600,000, 10% over P600,000 to P1,000,000, 20% over P1,000,000 to P4,000,000, and 50% over P4,000,000.
2. Hybrids and imports not for sale. Hybrid vehicles are taxed at 50% of the applicable rates, subject to the conditions in Section 9(e). For imported automobiles not for sale, the tax is based on the total landed value, including transaction value, customs duty and all other charges.
3. Exempt removals. Certain removals of automobiles are exempt, subject to conditions. Pick-ups and purely electric vehicles are newly added to the exempt list.
4. DOE determination. Before removal from the plant or customs custody, the Department of Energy determines whether a vehicle is a hybrid or purely electric. It furnishes certified results to the Commissioner of Internal Revenue, Attention: Chief, Excise Large Taxpayers Regulatory Division.
5. Price validation. Three months after the new rates start, the BIR validates the selling price of newly introduced models and sets their bracket. It revalidates one year after that validation and every year thereafter.
6. Sworn statements and inventory. Manufacturers, assemblers and importers file an updated sworn statement per brand and model, and a notarized list of on-hand CBU, CKD and SKD inventory, both as of the day before effectivity. Each is due within seven (7) working days from effectivity, and failing to submit the inventory list is treated as having no inventory on hand.

Who is affected

• Manufacturers and assemblers of automobiles
• Importers of automobiles

Deadlines and effectivity

• New rates effective: January 1, 2018
• Sworn statement and inventory list: within seven (7) working days from effectivity
• Selling price validation: three months after the new rates, then yearly