RR No. 27-2025: Amends Section 8 of Revenue Regulations No. 25-2003 on the Tax Treatment on Subsequent Sale, Transfer or Exchange of Tax-Exempt Automobile by a Tax-Exempt Person/Entity to a Non-Exempt Person/Entity

Key points

1. Ad valorem tax base. The purchase by a non-exempt person or entity is taxed on the higher of the actual consideration or the depreciated value at the time of sale. Depreciation is sixteen percent (16%) per year, with total depreciation of not more than eighty percent (80%) of the original cost or value.
2. Automobiles acquired before the Act. If the exempt entity acquired the automobile before the effectivity of the Act and sold it after, the computation is governed by the Act.
3. Acquisition to avoid excise tax. If the acquisition was primarily intended to avoid excise tax, the ad valorem tax is based on the original purchase price or value of importation at acquisition, with no allowance for depreciation.
4. Circumstances showing avoidance. Examples include a sale within a short period (for example, within one year) without sufficient justification, and a pattern of repeated acquisitions and quick disposals. Others are a transfer to an officer, employee, relative or affiliate without arm’s length terms, and records showing the vehicle was hardly used officially. The finding stands unless evidence shows the sale is bona fide and at arm’s length.

Who is affected

• Tax-exempt persons or entities that acquired automobiles
• Non-exempt persons or entities that buy those automobiles

Deadlines and effectivity

• Issued October 21, 2025