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CAMPI urges standards on tax exempt e-vehicles

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By Bernie Cahiles-Magkilat

The domestic vehicle industry has called on government to grant excise tax exemption to “strong hybrid” and “plug-in hybrid” types of vehicles only, but not to the so-called “mild” or “micro” e-vehicle hybrids.

 Rommel Gutierrez

Rommel Gutierrez

Atty. Rommel Gutierrez, president of the Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), cited the need to impose benchmarks on electric vehicles to ensure that only those qualified are granted the tax exemption.
Gutierrez said this as the Bureau of Internal Revenue is implementing Revenue Regulations No. 24-2018 further amending Section 9 of Revenue Regulations No.
25-2003 relative to the determination by the Department of Energy whether the automobiles subject to excise tax exemption are hybrid or purely electric vehicles pursuant to the Provisions of Republic Act No. 10963, otherwise known as the “Tax Reform for Acceleration and Inclusion (TRAIN) Law.”

According to Gutierrez, CAMPI would like some specific rules to be incorporated in the amended provisions of the Revenue Regulations as to which e-vehicle types can be granted tax rate preferences.

In saying this, Gutierrez noted of the proliferation of the so-called e-vehicles in the market that could be taking advantage of the exemption under the new Revenue Regulations if there are no benchmarks set.
CAMPI has identified four vehicle types: micro hybrid, mild hybrid, strong hybrid and plug-in hybrid.

The micro and mild hybrid vehicles do not have functionalities for EV driving mode, no changing while driving or even connection from the grid. The micro-hybrid type of vehicle does not even have engine assist function.

As such, CAMPI strongly advocates that these two vehicle types cannot be granted the excise tax exemption.

Only the strong and plug-in hybrids can be granted the tax exemption because they have the real functionalities of hybrid vehicles from stop/start, engine assist, EV driving mode, and charging while driving and charging from the grid. These standards have not been considered in the new RR.

“The benchmark should be that the car can run 30 kilometers on pure electric,” Gutierrez stressed.

During the inter-agency consultation called by the Department of Energy (DOE) with representatives from the BIR, Department of Finance and Bureau of Customs, the DOE proposed that the BIR could use as a basis the current Department of Environment and Natural Resources (DENR) system of issuing a Certificate of Conformity (COC) for new motor vehicles in determining with high level of confidence the vehicle classification as hybrid or purely electric vehicles (HEV/EV) as defined under RA No. 10963.

Under the RA, purely electric vehicles shall be exempt from the excise tax on automobiles, while the hybrid vehicles are subject to 50 percent of the applicable excise tax rates on automobiles.

The BIR shall also make a determination whether the EV or HEV is exempt from excise tax or subject to 50 percent exemption based on the certificate of non-coverage or certificate of conformity issued by the DENR-Environment Management Bureau.

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