RMC No. 32-2003: Clarifies the implementation of RMC No. 31-2003 relative to the taxability of the sale through public auction or negotiated sale of motor vehicles imported through the Subic Freeport Zone and other freeport zones

Summary

RMC No. 32-2003 prescribes revised uniform guidelines on VAT for public auction or negotiated sales of motor vehicles imported through the Subic Freeport Zone and other freeport zones, clarifying RMC No. 31-2003.

Key points

1. 5% preferential rate. The consignee-seller’s gross income from the auction or negotiated sale is taxed at the preferential 5% rate. Two conditions must be met: it is a registered enterprise entitled to the 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.
2. Regular taxes. If the consignee-seller is not entitled to the preferential treatment, or its customs territory income exceeds 30% of its entire income, the sales or income are subject to the regular taxes of the Tax Code.
3. VAT, Percentage Tax and Excise Tax. VAT or Percentage Tax applies to every public auction or negotiated sale, inside or outside the freeport zone. Excise Tax is held in abeyance until it is verified that the importer’s selling price used by the BOC as the basis is correctly determined.
4. ATRIG for automobiles. For automobiles imported through the Subic Economic and Freeport Zone, an Authority to Release Imported Goods (ATRIG) is secured from the Regional Director, Revenue Region No. 4, San Fernando, Pampanga through the Revenue District Officer, RDO No. 19, SBMA. This is done before VAT/Excise Taxes are paid and the automobile is released from the BOC.

Who is affected

• Consignee-sellers of motor vehicles imported through the Subic Freeport Zone and other freeport zones

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.