MALACAÑANG
M a n i l aPRESIDENTIAL DECREE No. 1357
AMENDING SECTION 195 OF THE NATIONAL INTERNAL REVENUE CODE OF 1977 TO PROVIDE FOR A MORE REALISTIC AND EQUITABLE SALES TAX SYSTEM FOR AUTOMOBILES.
WHEREAS, it is recognized that the car manufacturing industry is contributing a vital role in the economic development of the country;
WHEREAS, there is a need to revise the tax system in order to provide for a more realistic and equitable sales taxation for automobiles;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and decree the following:
Section 1. The National Internal Revenue Code of 1977 is hereby amended to read as follows:
"Sec. 195. Percentage Tax on Sales of Automobiles. There shall be levied, assessed, and collected once only on every original sale, barter, exchange, or similar transaction for nominal or valuable consideration intended to transfer ownership of, or title to, automobiles, a percentage tax to be...
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Presidential Decrees
Amending Section 195 Of The National Internal Revenue Code Of 1977 To Provide For A More Realistic And Equitable Sales Tax System For Automobiles.
Presidential Decree No. 1357
Summary of Presidential Decree No. 1357
Amending Section 195 of the National Internal Revenue Code of 1977 to Provide for a More Realistic and Equitable Sales Tax System for Automobiles
- Recognizes the vital role of the car manufacturing industry in economic development (Whereas clause)
- Aims to revise the tax system to provide a more realistic and equitable sales taxation for automobiles (Whereas clause)
Percentage Tax on Sales of Automobiles (Section 1)
- Levies a percentage tax on every original sale, barter, exchange, or similar transaction intended to transfer ownership or title to automobiles
- Tax to be paid by the manufacturer or importer
Tax Rates for Locally Manufactured Automobiles (Section 1(A))
- Tax rates based on the "suggested retail or list price" or actual retail price, whichever is higher
- Tax rates range from 10% to 70%, with higher rates for higher price ranges
- Specific tax rates and price ranges provided in the law
Tax Rates for Imported Automobiles (Section 1(B))
- Tax rates based on the landed cost plus mark-up as established by Section 193(b) of the Code
- Tax rates range from 100% to 200%, with higher rates for higher price ranges
- Specific tax rates and price ranges provided in the law
Tax Credits (Section 1)
- Any percentage, specific, or mining tax paid on raw materials, parts, accessories, or other articles forming part of the finished product shall be credited against the sales tax due on the finished product
- If the total tax paid on raw materials exceeds the sales tax due, the excess shall be credited against the sales tax liabilities for the succeeding taxable quarter
- The amount of tax on raw materials must be indicated as a separate item in the sales invoice
Tax Exemptions (Section 1)
- Parts and accessories of automobiles imported as completely knocked down parts by registered assemblers under the progressive car manufacturing program of the Board of Investments, or their replacements, shall be subject to the tax under Section 199
- Imported and locally manufactured spare parts and accessories with which automobiles are usually equipped shall be subject to the tax under Section 199
- Imported and locally manufactured parts and accessories principally for ornamentation or embellishment, and imported standard automobile parts and accessories certified by the Board of Investments as being locally manufactured and available in sufficient quantity and comparable in quality and price, shall be subject to a tax of 70% of landed cost plus mark-up
Definition of "Suggested Retail or List Price" (Section 1)
- The price at which locally manufactured automobiles are offered for sale to the public, as fixed by the assemblers
- Shall not be less than 15% over and above the selling price of the assembler to the dealer, or not less than 30% over and above the manufacturing cost in case of direct sales to the public by the assemblers
Reporting Requirements for Assemblers (Section 1)
- Automobile assemblers shall submit a sworn statement of the "suggested retail or list price" to the Commissioner of Internal Revenue before offering the product for sale
- Assemblers shall periodically notify any projected change in the "suggested retail or list price"
- Assemblers are required to publish their respective "suggested retail or list prices" or any change thereof in a newspaper of general publication
Definition of "Automobiles" (Section 1)
- A sale of an automobile shall be considered a sale of the chassis and body together with parts and accessories with which they are usually equipped, including other parts and accessories permanently attached at the time of the original sale
- The term "automobiles" excludes motor vehicles classified as trucks and jeeps
Implementation and Regulations (Section 2)
- The Secretary of Finance shall, upon recommendation of the Commissioner of Internal Revenue, promulgate the rules and regulations for the implementation of this Decree
Repealing Clause (Section 3)
- All laws, rules, and regulations inconsistent with or contrary to the provisions of this Decree are deemed repealed or amended accordingly
Effectivity (Section 4)
- This Decree shall take effect on April 1, 1978
Amending Section 195 of the National Internal Revenue Code of 1977 to Provide for a More Realistic and Equitable Sales Tax System for Automobiles
- Recognizes the vital role of the car manufacturing industry in economic development (Whereas clause)
- Aims to revise the tax system to provide a more realistic and equitable sales taxation for automobiles (Whereas clause)
Percentage Tax on Sales of Automobiles (Section 1)
- Levies a percentage tax on every original sale, barter, exchange, or similar transaction intended to transfer ownership or title to automobiles
- Tax to be paid by the manufacturer or importer
Tax Rates for Locally Manufactured Automobiles (Section 1(A))
- Tax rates based on the "suggested retail or list price" or actual retail price, whichever is higher
- Tax rates range from 10% to 70%, with higher rates for higher price ranges
- Specific tax rates and price ranges provided in the law
Tax Rates for Imported Automobiles (Section 1(B))
- Tax rates based on the landed cost plus mark-up as established by Section 193(b) of the Code
- Tax rates range from 100% to 200%, with higher rates for higher price ranges
- Specific tax rates and price ranges provided in the law
Tax Credits (Section 1)
- Any percentage, specific, or mining tax paid on raw materials, parts, accessories, or other articles forming part of the finished product shall be credited against the sales tax due on the finished product
- If the total tax paid on raw materials exceeds the sales tax due, the excess shall be credited against the sales tax liabilities for the succeeding taxable quarter
- The amount of tax on raw materials must be indicated as a separate item in the sales invoice
Tax Exemptions (Section 1)
- Parts and accessories of automobiles imported as completely knocked down parts by registered assemblers under the progressive car manufacturing program of the Board of Investments, or their replacements, shall be subject to the tax under Section 199
- Imported and locally manufactured spare parts and accessories with which automobiles are usually equipped shall be subject to the tax under Section 199
- Imported and locally manufactured parts and accessories principally for ornamentation or embellishment, and imported standard automobile parts and accessories certified by the Board of Investments as being locally manufactured and available in sufficient quantity and comparable in quality and price, shall be subject to a tax of 70% of landed cost plus mark-up
Definition of "Suggested Retail or List Price" (Section 1)
- The price at which locally manufactured automobiles are offered for sale to the public, as fixed by the assemblers
- Shall not be less than 15% over and above the selling price of the assembler to the dealer, or not less than 30% over and above the manufacturing cost in case of direct sales to the public by the assemblers
Reporting Requirements for Assemblers (Section 1)
- Automobile assemblers shall submit a sworn statement of the "suggested retail or list price" to the Commissioner of Internal Revenue before offering the product for sale
- Assemblers shall periodically notify any projected change in the "suggested retail or list price"
- Assemblers are required to publish their respective "suggested retail or list prices" or any change thereof in a newspaper of general publication
Definition of "Automobiles" (Section 1)
- A sale of an automobile shall be considered a sale of the chassis and body together with parts and accessories with which they are usually equipped, including other parts and accessories permanently attached at the time of the original sale
- The term "automobiles" excludes motor vehicles classified as trucks and jeeps
Implementation and Regulations (Section 2)
- The Secretary of Finance shall, upon recommendation of the Commissioner of Internal Revenue, promulgate the rules and regulations for the implementation of this Decree
Repealing Clause (Section 3)
- All laws, rules, and regulations inconsistent with or contrary to the provisions of this Decree are deemed repealed or amended accordingly
Effectivity (Section 4)
- This Decree shall take effect on April 1, 1978