RMC No. 63-2022 to clarify the application of correct taxable base in the computation of excise tax for automobiles in the manufacturer’s/assembler’s or importer’s sworn declaration pursuant to Sections 4 and 5 of RR No. 25-2003, as amended.
RMC No. 63-2022 to clarify the application of correct taxable base in the computation of excise tax for automobiles in the manufacturer’s/assembler’s or importer’s sworn declaration pursuant to Sections 4 and 5 of RR No. 25-2003, as amended.
RMC No. 63-2022 to clarify the application of correct taxable base in the computation of excise tax for automobiles in the manufacturer’s/assembler’s or importer’s sworn declaration pursuant to Sections 4 and 5 of RR No. 25-2003, as amended.
RMC No. 63-2022 to clarify the application of correct taxable base in the computation of excise tax for automobiles in the manufacturer’s/assembler’s or importer’s sworn declaration pursuant to Sections 4 and 5 of RR No. 25-2003, as amended.
BUREAU OF INTERNAT REVENUE
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REPUBLIC OF THE PHILIPPINES j TW wih
DEPARTMENT OF FINANCE { \ APR 28 2022 |
BUREAU OF INTERNAL REVENUE |: BS Phy h
Quezon City ro ie
RELunvs wt uivisION
April 21, 2022
REVENUE MEMORANDUM CIRCULAR No. _ 9~ 2022
SUBJECT Clarifying the Proper Taxable Base of Excise Tax in the Manufacturer’s/
Assembler’s or Importers Sworn Statement and Integration of the
Monitoring, Supervision and Reporting of Excisable Products under
Revenue Administrative Order (RAO) No. 2-2014
To : Allinternal Revenue Officers and Others Concerned
This Circular is being issued to clarify the application of the correct taxable base in
the computation of excise tax for automobiles in the manufacturer’s/assembler’s or
importer’s sworn declaration pursuant to Sections 4 and 5 of Revenue Regulations (RR)
No. 25-2003, as amended.
The provisions of Sections 4 which was revised under RR No. 5-2018 (Sec. 3) is
herein adopted while Sec. 5 of RR No. 25-2003, is hereby amended to read as follows:
“SEC. 4. RATES AND BASES OF THE AD VALOREM TAX ON AUTOMOBILES.
There shall be levied, assessed and collected an ad valorem tax on automobiles
based on the manufacturer’s/assembler’s or importer’s selling price, net of excise
and value-added tax, in accordance with the following schedule:
‘Net Manufacturer's Price/Importer’s Selling Price Tax Rate
Up to Six Hundred Thousand Pesos (P600,000.00) | _ Four Percent (42)
Over Six Hundred Theusand Pesos (P600,000.00) to One
Million Pesos (P1,000,000.00) _
‘Over One Million Pesos (P1,000,000.00) to Four Million
Pesos (P4,000,000.00)
[ Over Four Million Pesos (P4,000,000.00)
Ten Percent (10%)
Twenty Percent (20%)
Fifty Percent (50%)
Xxx xxx Xxx
SEC. 5. MANUFACTURER’S OR IMPORTER’S SELLING PRICE. - The net
manufacturer's or importer’s selling price shall refer to the price, net of excise and
value-added taxes, at which locally manufactured/assembled or imported
automobiles are offered for sale by the manufacturer/assembler or importer to
the dealers, or to the public directly or through their sales agents, as reflected in
the manufacturer’sjassembler’s or importer’s sworn statement duly filed with the
Page 1 of 6BIR, o in their sales invoices/official receipts, whichever is higher. Provided, that in
computing the manufacturer’s/assembler’s or importer’s selling price, it shall
always include the value of car air conditioner, radio, mag wheels including the
cost of installation thereof whether or not the same were actually installed in the
automobile. It shall include other accessories deemed necessary due to
advancement on technology which were installed or for installation per sales
agreement such as but not limited to: leather seats, air bags, cruise control, safe
exit warnings, remote parking systems, live blind spot videos feeds, front back and
overhead cameras, wireless smartphone connectivity and charging, emergency
service/stolen vehicle tracking software, front and rear parking sensors, lane
departure warnings, push button start, navigation system, airbags - basic and
additional, etc. Provided, further, that in no case shall the manufacturer’s/
assembler’s or importer’s selling price be less than the amount computed as
follows:
80% x (Actual Dealer's Suggested Selling Price ~ Excise Tax ~Value-Added
Tax).
Provided, furthermore, that the manufacturerlassembler’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 ten percent (10%) and other
expenses incurred before the automobiles are sold to the market, provided, finally
that the suggested retail price shall not be less than the actual selling price of the
automobiles when sold to the market. The value of other factory-installed
accessory or optional equipment such as wheel covers, or any other attachment
installed on the unit removed or sold, or previously removed and returned for
Purposes of installation thereof, as well as the costs of installation of the
accessory, shall likewise form part of the manufacturer’s/assembler’s or importer’s
selling price. In cases where accessories are installed outside the production]
assembly plant or after the release from the customs custody but before the
actual sale of the imported automobile, as the case may be, the costs of such
accessories and the cost of the installations shall form part of the expenses of the
manufacturer/assembler or importer, all subsequent billings therefor by the
manufacturer/assembler or importer to the dealer or customer shall form part of
the selling price.”
Based on the above provisions, there are three (3) primary taxable bases in
applying the excise tax rates for automobiles, namely:
Declared manufacturer's or importer’s selling price, net of excise and value-
added taxes;
2. Based on the 80% actual dealer’s price, net of excise and value-added taxes;
and
3. Based on the total cost of importation and expenses divided by 90%.
The taxable bases are reflected in the Manufacturer’s/Assembler’s and Importer’s
‘Sworn Statement prescribed in Annex “A” of Revenue Memorandum Circular (RMC) No.
) i N
I
ap 2022 |
Ree >58-2003 where the excise tax shall be computed using the highest identified taxable
bases integrating the value of car air conditioner, radio and mag wheels including the cost
of installation, as well as the value of other factory-installed accessory or optional
equipment such as wheel covers, or any other attachment installed on the unit removed
or sold, as the case may be.
Inline with the aforementioned Sworn Statement format, the following scenarios
were provided to illustrate the required procedure in determining the tax base for excise
and VAT computation.
SCENARIO 1: BSM Corp. is an importer of Brand X, CBU automobile which submitted an
Importer’s Sworn Statement reflecting the data provided hereunder:
‘A. Cost of Importation and Expenses
Cost of Importation (For CBU’s based on value used by BOC) P2,500,00.00
Cost of Accessories 100,000.00
Cost of Accessory Installation 50,000.00
Selling and Administrative Expense 150,000.00
Total Cost of importation and Expenses P2,800,000.00
B. Net importer's Selling Price per Sworn Statement P2,950,000.00
‘Add: Excise Tax 590,000.00
vat 424,800.00 014,800.00
Gross Importer’s Selling Price P3,964,800.00
G Actual Dealers Suggested Selling Price (inclusive of VAT and Exci
) P4,400,000.00
Importer’s Selling Price shall consider the following minimum value:
1. Based on 80% of actual dealer's suggested selling price, net of excise and VAT;
2. Based on the total cost of importation and expenses divided by 90%;
> The computation of the minimum value are as follows:
1) Actual Dealer’s Suggested Selling Price P4,400,000.00
Less: Excise and VAT _1,014,800.00
Net of Excise and VAT P3,385,200.00
80% of Suggested Selling Price Net of ExciseVAT P2,708,16
2) Total Cost of importation and Expenses P2,800,000.00
Divided by 90% P3,111,111.00
E. The Tax Base shall be whichever is higher of the following:
1) _Importer’s Selling Price per Sworn Statement of Excise and VAT P2,950,000.00
2) 80% of Actual Dealer’s Suggested Selling Price P2,708,160.00
3) Total Cost of importation and expenses divided by 90% P3,111,000.00
In this scenario, the tax base is the highest value of P3,111,111 which will result into
the following recomputation of excise and VAT:
Bue PNT aNT AVENUE
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Reon, S10N
Page 3 0f 6Tax Base (90% of total cost/expenses)
Excise Tax (3,111,111 x 20%)
VAT (3,111,111 + 622,222.20 x 12%
Total Adjusted Excise and VAT
Less: Excise and VAT per Sworn Statement
Discrepancy
P3,111,111.00
P 622,222.20
447,999,98
P1,070,222.18
1,014,000.00
P 56,222.18
SCENARIO 2: CDR Co. is a manufacturer of Brand Y automobile which submitted a Sworn
A
Statement reflecting the data provided hereunder:
Cost of Production and Expenses
Direct Costs Comprising of Raw Materials, Labor and Overhead
Cost of Accessories
Cost of Accessory installation
Selling and Administrative Expense
Total Cost of Production Expenses
Net Manufacturer's Selling Price
‘Add: Excise Tax
VAT
Gross Manufacturer's Selling Price
600,000.00
Actual Dealer’s Suggested Selling Price (inclusive of VAT and Excise)
432,000.00
P2,300,000.00
150,000.00
50,000.00
_P2,700,000.00_
3,000,000.00
1,032,000.00__
P4,032,000.00
P4,600,000.00
Manufacturer’s Selling Price shall consider the following minimum value:
1. 80% of actual dealer’s suggested selling price net of excise and VAT
Actual Dealer's Suggested Selling Price
Less: Excise and VAT
Net of Excise and VAT
80% thereof
P4,600,000.00
1,032,000.00
P3,568,000.00
P2,854,400.00
2. Based on the total cost of production and expenses divided by 90%
Total Cost of Production and Expenses
Divided by 90%
P2,700,000.00
P3,000,000.00
The Tax Base, shall be whichever is higher of the following:
Manufacturer's Selling Price per Sworn Statement
80% of SSP
Total Cost of Production and Expenses Divided by 90%
P3,000,000.00
P2,854,400.00
P3,000,000.00
The tax base in this scenario is the highest value of P3,000,000 which is the same
amount reflected in the Sworn Statement as Manufacturer’s Selling Price and the
total cost of production and expenses divided by 90%. Hence, no tax
this case.
TEVENUE
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discrepancy in
Page 4 of 6SCENARIO 3: GTR is a company that assembles Brand Z automobile combining
importation and locally available parts and accessories. Records verified
reflected the following:
A. Cost of Assembly and Expenses
Direct Costs Comprising of Raw, Materials, Labor and Overhead 600,000.00
Cost of Accessories 100,000.00
Cost of Accessory Installation 50,000.00
Selling and Administrative Expense ___150,000.00
Total Cost of Assembly and Expenses 900,000.00
B. Assembler’ Selling Price 975,000.00
Add: Excise Tax 97,500.00
vaT 128,700.00
Gross Assembler’s Selling Price P1,201,200.00
But Sales Invoice issued by the company shows 1,225,000 as total price of the
automobile with VAT amounting to P131,250.
Actual Dealer's Suggested Selling Price (inclusive of VAT and Excise)
P1,700,000.00
D. Tax Base shall be whichever is higher of the following:
1. Assembler’s Selling Price per Sworn Statement Net of Excise and VAT P975,000.00
2. Assembler’s Selling Price per Sales Invoice Net of Excise and VAT P99q,318.00
3. 80% of SSP
P1,700,000.00
Actual Dealer's Suggested Selling Price (Inclusive of
Excise and VAT)
Less: Excise 137,987.00
VAT 182,142.85 320,129.85,
Actual Dealer’s SSP Net of Excise and VAT P1,379,870.50_
80% thereof P1,103,896.12
4. Based on the total cost of assembly and expenses divided by 90%
Total Cost of Assembly and expenses P- 900,000.00
Divided by 90% P 1,000,000.00
The tax base shall be P1,103,896.12 which is the highest of the above
computations. In this case, discrepancy shall be determined as follows:
Tax Base (80% of SSP) P1,103,896.12
Excise Tax (1,103,896.12 x 10%) 110,389.61
{i} Ny Page 5 of 6
" ! Bs
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eeLess: Excise and VAT per Sworn Statement
Discrepancy
The different tax base was reflected in the above scenarios depending on the
circumstances of the case where computation must be made to arrive at the required
values for selection of the highest value as the tax base for taxation purposes. No
Authority to Release Imported Goods (ATRIG) shall be issued for importation of
automobiles without computing the three (3) tax base to clearly show that the excise tax
was based on whichever is higher of the three (3) values mandated under existing
issuances. All issued ATRIGs shall be reconciled by Excise Large Taxpayer Field Operations
Division (ELTFOD) with the removal per Excise Taxpayer’s Removal Declaration (ETRD)
and stock inventory per Official Register Book (ORB). Said office shall also conduct
product validation of the manufactured/ importedlassembled automobiles registered
with the Land Transportation Office (LTO) which mandatorily issues conduction sticker
for automobiles. This is in accordance with the Monitoring, Supervision and Reporting of
Excisable Products under Revenue Administrative Order (RAO) No. 2-2014, Large
Taxpayer Service !l.C.1-6.
Al internal revenue officials and employees are enjoined to give this Circular as
wide a publicity as possible.
This Circular shall take effect immediately.
CAESAR R. DULAY
Commissioner of Internal Revenue
D
JMREA, LTS-EXCISE/osmigtr
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