AN ACT RATIONALIZING THE EXCISE TAX ON AUTOMOBILES

Case Overview and Summary

Summary of Republic Act No. 9224

Excise Tax on Automobiles
- Levies an ad valorem tax on automobiles based on the manufacturer's or importer's selling price, net of excise and value-added taxes. (Section 1)
- Tax rates based on price brackets:
    - Up to P600,000: 2%
    - Over P600,000 to P1.1 million: P12,000 + 20% of excess over P600,000 (Section 1)
    - Over P1.1 million to P2.1 million: P112,000 + 40% of excess over P1.1 million (Section 1)
    - Over P2.1 million: P512,000 + 60% of excess over P2.1 million (Section 1)
- Price brackets to be indexed every 2 years if peso-dollar exchange rate changes by more than 10%. (Section 1)
- Price brackets to be indexed immediately if peso-dollar exchange rate changes by at least 20% within the 2-year period. (Section 1)
- Definitions:
    - Automobile: 4 or more wheeled motor vehicle, excluding buses, trucks, cargo vans, jeeps/jeepneys/jeepney substitutes, single cab, chassis, and special-purpose vehicles. (Section 1)
    - Truck/cargo van: Motor vehicle designed for carrying goods, excluding pick-ups. (Section 1)
    - Jeep/jeepney/jeepney substitute: Locally designed and manufactured jitney-type vehicle from surplus parts or brand-new single cab chassis with customized rear body. (Section 1)
    - Bus: Motor vehicle with gross vehicle weight of 4.0 tons or more, designed for mass or public transportation. (Section 1)
    - Single cab chassis: Motor vehicle with complete engine, chassis, and cab with maximum 2 doors and 1 row of seats. (Section 1)
    - Special purpose vehicle: Motor vehicle designed for specific applications like cement mixer, fire truck, ambulance, and off-road vehicles for heavy industries. (Section 1)
- For imported automobiles not for sale, tax based on total landed value. (Section 1)
- Automobiles used exclusively within freeport zones are exempt from excise tax. (Section 1)

Implementation
- Secretary of Finance to promulgate implementing rules and regulations within 30 days of approval. (Section 2)

Other Provisions
- Separability clause (Section 3)
- Repealing clause for inconsistent laws, decrees, executive orders, etc. (Section 4)
- Effectivity clause: 15 days after publication of approved implementing rules and regulations. (Section 5)