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Philippine Auto Assemblers Assured of Tax Transition Period

MANILA - Former majority floor leader and now Trade and Industry Secretary Manuel A. Roxas II said that local motor vehicle assemblers are assured of a three to four month transition before the introduction of Revenue Regulation 4-2003 from the Bureau of Internal Revenue.

The new law places higher excise tax rates on automobiles based on engine displacement.

"I know for a fact that there is a 3-4 month transition period," said Roxas, who served as majority floor leader of the Lower House during the 11th Congress.

Domestic assemblers have been worried by the new RR, which the BIR said is going to take effect 15 days from its publication or on February 16.

The BIR, which issued the RR on January 29, has given vehicle assemblers to submit their position papers for their consideration within the 15-day period, afterwhich the RR is going to take effect.

The RR has hit Asian utility vehicles (AUVs) hardest with a tax rate of 35 per cent to 50 per cent.

Vehicle assemblers have been pushing for a 3-4 month transition period which is the normal period for importation of parts and assembly of the vehicles.

"What is important is to contain a provision for a transition period," Roxas said adding that the government and the industry are looking forward to the immediate passage of the new automobile excise tax, which seeks to lower excise tax of a minimum of 3 per cent to 15 per cent on AUVs.

Last Friday, however, Senator Ramon Magsaysay Jr. filed Resolution No. 538 calling for an investigation of the BIR's RR-4-2003 for the "usurpation" of the power of taxation which is essentially a legislative function.

Resolution No. 538 sponsored by Senator Ramon Magsaysay, Jr. has urged the Senate Committee on Ways and Means to conduct an inquiry stressing the power of taxation rests on the Philippine Congress as it is essentially a legislative function.

The resolution noted such encroachment of the Congressional turf by the BIR even as it acknowledged that the Tax Reform Code accords authority to the Department of Finance-BIR to reclassify subjects of taxation, provide new tax rates and effects new fiscal policies.

"The Bureau of Internal Revenue may have exercise an overbreadth interpretation of its functions when it issued the revenue regulation the fact the Bureau may have pre-empted the Philippine Legislature in its tax-making function," the resolution stated.

The resolution also required the BIR to submit an omnibus report on the reclassification of variable taxable items it has issued after the enactment of the Tax Reform Code to check possible fiscal leakages which may have contributed to the drained financial coffers of the national government and unparalleled deficit ever experienced by the country.

Magsaysay's resolution singled out the reclassification of the CR-V model of the Honda Cars Phils. Inc. from the Category II of the Commercial Vehicle Development Program to Category I or the Asian utility vehicle, which is exempted from excise tax.

The BIR has approved the specifications of the new CR-V model to accommodate 10 passengers.

"An inquiry is significant to check the regularity of implementation of the BIR of the National Internal Revenue Code," the resolution said.

[ BUZZ MAIN ]