REVENUE REGULATIONS NO. 25-2003 issued on September 16, 2003 amends the Revenue Regulations governing the imposition of Excise Tax on automobiles. Automobiles refer to any four (4) or more-wheeled motor vehicle regardless of seating capacity, which is propelled by gasoline, diesel, electricity or any other motive power. Buses, trucks, cargo van, jeeps/jeepneys/jeepney substitutes, single cab chassis, and special purpose vehicles, as defined in the Regulations, shall not be considered as automobiles. The Excise Tax on locally manufactured/assembled automobiles shall be paid by the manufacturer/assembler of automobiles. Should domestically manufactured/assembled automobiles be removed from the place of manufacture/assembly without the payment of the tax, the dealer/trader, owner, or person having possession thereof shall be liable for the Excise Tax due thereon. In case of transfer of locally manufactured/assembled automobiles from a tax-exempt person to a non-tax exempt individual or entity, the transferee or possessor thereof shall be the one liable for the said tax. In case of imported automobiles, the Excise Tax shall be paid by the owner or importer of the automobile or by the dealer/trader, or by any person who is found in possession of any untaxed automobiles including any person other than the one legally entitled to exemption from the ad valorem tax. In cases where automobiles are brought or imported tax free into the country by persons, entities, or agencies exempt from tax and are subsequently sold, transferred, or exchanged in the Philippines to non-exempt persons, or entities, including the introduction and re-introduction into customs territory of automobiles intended for exclusive use within the freeport zones, the purchaser or transferee, owner/possessor of the automobiles shall be considered as the importer, and shall be liable for the Excise Tax due on such importation. Should a locally manufactured/assembled or imported motor vehicle originally classified as truck, jeep/jeepney/jeepney substitute, single cab chassis and special purpose vehicle is converted anytime from its removal from the place of manufacture/assembly or release from customs custody into a type of motor vehicle subject to ad valorem tax, the owner/possessor shall be liable to the ad valorem tax on such converted motor vehicle based on acquisition price plus cost of conversion and shall be subjected to applicable penalties. The ad valorem tax on automobiles shall be levied, assessed and collected based on the manufacturer’s/assembler’s or importer’s selling price, net of Excise and ValueAdded Tax, in accordance with the following schedule: Net Manufacturer’s/Importer’s Selling Price Tax Rate Up to P 600,000.00 2% Over P 600,000.00 to P 1,100,000.00 P 12,000.00 plus 20% of the value in excess of P 600,000.00 Over P 1,100,000.00 to P 2,100,000.00 P 112,000.00 plus 40% of the value in excess of P 1,100,000.00 Over P 2,100,000.00 P 512,000.00 plus 60% of the value in excess of P 2,100,000.00 The manufacturer’s/assembler’s or importer’s selling price shall in no case be less than the cost of manufacture/assembly/importation plus the industry profit margin of 10% and other expenses incurred before the automobiles are sold to the market. The suggested retail price shall not be less than the actual selling price of the automobiles when sold to the market. The brackets reflecting the manufacturer’s/assembler’s or importer’s selling price, net of Excise and Value-Added Taxes, shall be indexed once every two (2) years if the change in the exchange rate of the Philippine Peso against the United States (U.S.) dollar is more than ten percent (10%) from the date of effectivity of the Act or from the last revision date in the case of subsequent adjustment, which shall be referred to as an ordinary indexation. Provided, that in case the change in the exchange rate of the Philippine Peso against the U.S. dollar is at least twenty percent (20%) for a continuous period of at least ten (10) days at anytime within the said two-year period, an indexation, referred to as extraordinary indexation, of the manufacturer’s/assembler’s or importer’s selling price, net of Excise and Value-Added Taxes, shall be effected. In case of automobiles that are imported for personal use and not for sale by the importer, the Excise Tax shall be computed based on the total landed value. In cases where a tax-exempt person/entity acquired an automobile, whether locally purchased or imported, without payment of the tax by reason of his/their exemption, the purchase thereof by a non-exempt person/entity shall be subjected to the ad valorem tax based on the higher of (i) actual consideration between the tax-exempt person/entity and the non-exempt person/entity; or (ii) the depreciated value of the automobile at the time of sale, transfer, or exchange which depreciation rate shall be at ten percent (10%) per year, but in no case shall the total amount of depreciation be more than fifty percent (50%) of the original cost or value. However, in case where the automobile was acquired by the tax-exempt person or entity prior to but sold after the effectivity of the Act, the computation of the ad valorem tax shall be governed by the Act. The following removals of locally manufactured/assembled or release of imported automobiles from the place of production or from customs’ custody, respectively, are exempt from the payment of Excise Taxes, subject to conditions specified in the Regulations: a. Removals for export b. Delivery to tax-exempt persons or entities c. Removals for delivery and use exclusively within the freeport zone d. Removal of automobiles for test run Any person who is liable to pay the ad valorem tax on locally produced or assembled automobiles shall file in triplicate for each place of production a separate consolidated excise tax return and pay the ad valorem tax before removal thereof from the place of production/assembly. Said person may, at his option, pay to the BIR an advance deposit, and be allowed to remove automobiles from the place of production/assembly without prior filing of the prescribed excise tax returns, provided that he has sufficient balance of deposits with the BIR to cover full payment of the ad valorem tax due on said removals. No changes, alterations, or new constructions shall be made in the establishment as per plat and plan originally approved by the Commissioner of Internal Revenue or his duly authorized representative, nor alterations of new equipment, transferring or putting up of new warehouse or storage facilities, or any other form of changes or alterations, shall be made without first securing the necessary permit from the Commissioner of Internal Revenue (CIR) or his duly authorized representative. In case any changes shall be made, the plat and plan, as amended, shall be submitted for approval. Prior to every actual removal of automobiles, the following shall be required to be complied with: a. Preparation of Withdrawal Certificate b. Alteration of prepared Withdrawal Certificates c. Withdrawal Certificate to accompany shipment The manufacturing/assembly plants of automobiles shall remain closed until the authorized internal revenue officer on duty thereat is present and no assembled units or raw materials shall be removed from their respective premises in the absence of such internal revenue officer. Unless otherwise especially allowed by the CIR, automobiles shall be removed from the place of production/assembly either between 7:00 a.m. to 4:00 or 8:00 a.m. to 5:00 p.m. Upon prior permit from the CIR, raw materials, semi-processed and/or intermediate units may be transferred under bond, filed on a case-to-case basis, by the assembler or manufacturer to any processing plant for initial assembly or further assembly into finished units. Such transfer shall only be allowed if the sub-contractor or sub-assembler is duly registered as such with the BIR and is a holder of a valid Permit to Operate as an excise taxpayer. When the ad valorem tax has been paid on the automobiles, the same shall not thereafter be stored or permitted to remain in the manufacturing/assembly plant or place of production. All automobiles subjected to ad valorem tax that are stored or allowed to remain in the place of manufacture or assembly plant after the tax thereon has been paid shall be forfeited. After every six (6) months reckoned from the date of the initial or last stocktaking, the BIR shall conduct a general or total physical inventory by actual count and/or volume of the entire stock of raw materials (including in-process or intermediate units) and finished automobiles then existing and on hand, in the presence of the representative of the manufacturer/assembler or importer concerned who shall jointly attest to the fact of witnessing and verifying the results thereof by affixing their signatures on the attestation clause in the inventory certificate. All manufacturer’s/assembler’s or importers are required to file an updated manufacturer’s/assemblers or importer’s sworn statement for each brand/model of automobiles, as well as a duly notarized list of inventory on-hand of completely built-up (CBU) automobiles, including Completely-Knocked-Down (CKD) and Semi-Knocked Down (SKD) units that are located within the manufacturing/assembly plant or warehouse or the customs’ premises for which import entries have been filed, as of the day immediately before the date of effectivity of the Regulations. Failure to submit the inventory list on the part of the manufacturers/assemblers/importers shall be construed that the said manufacturers/assemblers/importers do not have any inventory on hand of CBUs, CKDs and SKDs as of the day immediately before the date of effectivity of the Regulations. A stocktaking of the said inventories shall be conducted by the BIR for purposes of validating the said list within five (5) days from the date of submission thereof. Likewise, the BIR shall establish the price indices at the time of the effectivity of the Regulations to serve as the basis for the initial adjustment or revision of the brackets of the manufacturer’s/assembler’s or importer’s selling price.