RMC No. 31-2003: Prescribes the uniform guidelines on the taxation of imported motor vehicles through the Subic Free Port Zone and other freeport zones that are sold at public auction.

Key points

1. General exemption and its limits. Vehicles imported into freeport zones for exclusive use there are exempt from customs duties, taxes and charges if the importer-consignee is a registered enterprise in the zone. If they enter the customs territory without returning to the zone, the duties and taxes are paid to the BOC before release. Tourist buses and cars, service vehicles and company service cars used outside the zones for more than fourteen (14) days per month also pay.
2. VAT and Excise Tax on auction vehicles. For vehicles imported by non-registered persons, or intended for public auction in the zone, the importer-consignee/auctioneer pays VAT and Excise Tax to the BOC before LTO registration or the auction.
3. Auctioneer income. A consignee-auctioneer’s gross income from an auction in the zone is taxed at the preferential 5% rate. This applies if it is a registered enterprise entitled to that rate and a BIR registered taxpayer, and its income from sources within the customs territory does not exceed 30% of total income from all sources.
4. Non-registered importers. Income of non-registered persons from auction sales through a registered auctioneer is ordinary income under regular taxation. Natural persons who do this 5 or more times in a taxable period must register with the BIR, pay the appropriate taxes, and withhold the creditable expanded withholding tax on the commission paid.
5. Winning bidder. A winning bidder who brings the vehicle into the customs territory is deemed the importer and pays VAT and Excise Tax, if applicable, on the winning bid price. If the consignee-auctioneer already paid these taxes, the winning bidder pays the additional VAT and Excise Tax to the BIR before LTO registration.
6. Professional auctioneers and ATRIG. The consignee-auctioneer withholds 25% final withholding tax (non-resident alien) or 20% expanded withholding tax (resident citizen or alien) from payments to a professional auctioneer. For automobiles, an Authority to Release Imported Goods (ATRIG) must be secured from the LT Assistance Division of the BIR Large Taxpayers Service before VAT/Excise Taxes are paid and the automobile is released from the BOC.

Who is affected

• Importers and consignee-auctioneers of motor vehicles in the Subic Free Port Zone and other freeport zones
• Winning bidders
• Professional auctioneers

Deadlines and effectivity

• Use outside the zones for more than fourteen (14) days per month triggers customs duties, taxes and charges
• Registration with the BIR required at 5 or more transactions in a taxable period