REVENUE MEMORANDUM CIRCULAR NO. 69-2004   issued on November 22, 2004 publishes the full text of the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR) Joint Order pertaining to the disposition/transfer of tax-exempt vehicles registered in the name of or owned by Diplomatic Mission and Consular offices/officials, its officers, including its administrative and technical staff members enjoying tax and duty free privileges under Section 105 of the Tariff and Customs Code of the Philippines (TCCP) by way of sale or donation to non-privileged persons or entities.
           Said forms were cancelled since the first two had missing duplicate copies while the last one had unnumbered original copy as per report given by Ms. Nanette M. Canillada of RR No. 9, San Pablo City. All official transactions involving the use of said forms are considered invalid.
           The transfer (sale of donation) of a vehicle registered for less than 2 years due to an officer’s transfer or termination of his tour of duty can be effected only to a privileged party otherwise, the vehicle must be re-exported.
           Sec. 131 of the Tax Code specifies that in case of tax free articles brought or imported into the Philippines by person, entity or agency exempt from tax which are subsequently sold transferred or exchanged in the Philippines to non-exempt person or entities, the purchaser or recipient shall be considered the importer thereof and shall be liable for the duty and internal revenue tax due on said importation.
           The sale of vehicles to a non-tax exempt individual or entity after 3 years may be effected only with the express permission of the Office of Protocol, Department of Foreign Affairs and only when taxes on vehicles are paid by the buyer.
           To compute the duty, appraisal of the vehicle shall be based on the invoice/contract price. The rate of the exchange and the rate of duty, ad valorem, Excise Taxes and Value Added Tax (VAT) shall be the rate of exchange and the rate of duty, excise taxes and VAT at the time of filing of entry.
           For purposes of computing the ad valorem tax, the value shall be based on the higher of (i) actual consideration between the tax-exempt person/entity and the nonexempt person/entity; or (ii) the depreciated value of the automobile at the sale, transfer, or exchange which depreciation rate shall be at 10% per year, but in no case shall the total amount of depreciation be more than 50% of the original cost or value.
           Excise Tax shall be based on the higher of the actual selling price or the Total Landed Value as defined in Revenue Regulations No. 25-2003 provided that in case the buyer purchases the motor vehicles for resale, the tax base shall be the selling price of such buyer net of the Excise Tax and the VAT.
           Where a tax-exempt automobile subsequently sold, transferred or exchanged by a tax-exempt person or entity was determined to be originally acquired by such person or entity primarily for the purpose of avoiding the payment of the Excise Tax, the ad valorem tax shall be computed based on the original purchase price or value of importation of such motor vehicle at the time of its original purchase or importation by such tax-exempt person or entity without the benefit of any deduction for depreciation otherwise allowed under existing rules and regulations.
           The Joint Order takes effect fifteen (15) days after its publication in a newspaper of general circulation.