RMC No. 69-2004: Publishes the full text of BOC and BIR Joint Order pertaining to the disposition of tax-exempt vehicles registered or owned by Diplomatic Mission and Consular Offices/Officials, its officers, including its administrative and technical staff members enjoying tax and duty free privileges

Key points

1. Three-year restriction. A tax and duty free motor vehicle cannot be sold or donated by its privileged owner to a non-privileged party before three years from registration, unless covered by an agreement with the Government of the Philippines. A vehicle registered for less than 2 years, due to an officer’s transfer or end of tour of duty, can be transferred only to a privileged party, otherwise it must be re-exported.
2. Sale after 3 years. Under Sec. 131 of the Tax Code, a purchaser or recipient from an exempt person is considered the importer and is liable for the duty and internal revenue tax due. A sale to a non-exempt buyer after 3 years needs the express permission of the Office of Protocol, Department of Foreign Affairs, and requires the buyer to pay the taxes.
3. Duty computation. The vehicle is appraised on the invoice or contract price. The exchange rate and the rates of duty, excise taxes and VAT are those at the time of filing of entry.
4. Ad valorem tax base. The value is the higher of the actual consideration between the exempt and non-exempt parties, or the depreciated value at sale, transfer or exchange. Depreciation is 10% per year, and total depreciation is never more than 50% of the original cost or value.
5. Excise Tax base. Excise Tax is based on the higher of the actual selling price or the Total Landed Value under Revenue Regulations No. 25-2003. If the buyer purchases for resale, the base is the buyer’s selling price net of Excise Tax and VAT.
6. Acquisition to avoid Excise Tax. If the vehicle was originally acquired primarily to avoid paying Excise Tax, the ad valorem tax is computed on the original purchase price or importation value, with no deduction for depreciation.

Who is affected

• Diplomatic Missions and Consular offices or officials, and their officers and administrative and technical staff, with tax and duty free vehicles
• Buyers or recipients of such vehicles who are non-privileged

Deadlines and effectivity

• Restriction on sale or donation: before three years from registration date
• Joint Order takes effect fifteen (15) days after publication in a newspaper of general circulation