CHAPTER VI.

EXCISE TAX ON MISCELLANEOUS ARTICLES

Sec. 149. Automobiles

Definition of Terms under the NIRC provisions:

Automobile: Any 4 or more wheeled motor vehicle regardless of seating capacity, which
is propelled by gasoline, diesel, electricity or any other motor power: Provided, That for
purposes of this Act, buses, trucks, cargo vans, jeeps/jeepneys/jeepney substitutes,
single cab, cassis, and special-purpose vehicles shall not be considered as
automobiles.
Truck/cargo: A motor vehicle of any configuration that is exclusively designed for the
carriage of goods and with any number of wheels and axles. Provided, That pick-ups
shall not be considered as trucks.

Jeep/jeepney/jeepney substitutes: “Philippine jeep or jeepney” which are of the jitney

type locally designed and manufacture generally from surplus parts or components. It
shall also include jeepney substitutes that are manufacture from brand-new single cab
chassis or cowl chassis and locally customized rear body that has continuous side way
row seats with open rear door and without retractable glass windows.
Bus: A motor vehicle of any configuration with gross vehicle weight of 4.0 tons or more
with any number of wheels and axles, which is generally accepted and specifically
designed for mass public transportation.

Single Cab Chassis: A motor vehicle with complete engine power train and chassis
equipped with a cab that has a maximum of 2 doors and 1 row of seats.
Special Purpose Vehicle: Motor vehicle designed for specific application such as
cement mixer, fire truck, boom truck, ambulance and/or medical unit, and off-road
vehicles for heavy industries and not for recreational purposes.
  Ad valorem tax on automobiles based on:
o Manufacturer’s/Importer’s Selling Price,
o Net of Excise; and
o Value-Added Tax
 Ad valorem refers to excise taxes based on selling price and other specified
value of goods and articles.
o Manner of computation: Units x Selling Price x ad valorem tax rate
 Automobiles used exclusively within the freeport zone shall be exempt from
excise tax.

Differences; NIRC and TRAIN

1. TAX SCHEDULE

Tax Schedule under the NIRC:

Over Up To Rate
0 Php 600,000 2%
Php 600,000 Php 1,100,000 Php 12,000 + 20% in Excess of Php 600,000
Php 1,100,000 Php 2,100,000 Php 112,000 + 40% in Excess of Php 1,100,000
Php 2,100,000 Over Php 512,000 + 60% in Excess of Php 2,100,000

o In sum, the schedule is progressive – the higher the cost of the vehicle, the higher
the tax rate.
Tax Schedule under the TRAIN Law effective January 1, 2018

Net Manufacturer’s Price/Importer’s Selling Price Rate

0 – 600,000 4%
Over 600,000 – 1,000,000 10%
Over 1,000,000 – 4,000,000 20%
Over 4,000,000 50%

o The TRAIN Law has simplified the computation of excise taxes on automobiles.
o Retains its progressive nature.

2. PICK-UPS

Under the NIRC, a pick-up is not considered as a truck while the TRAIN Law recognizes
pick-ups as trucks.

3. EXEMPTION FROM EXCISE TAX

No similar provision is found under the NIRC while the TRAIN Law now provides that
purely electric vehicles and pick-ups shall be exempt from excise tax on automobiles.

4. TAX RATES FOR HYBRID VEHICLES

No similar provision is found under the NIRC while the TRAIN Law now provides that
hybrid vehicles shall be subject to 50% applicable excise tax rate on automobiles.

5. DEFINITION OF HYBRID ELECTRIC VEHICLE

The TRAIN Law now provides for the definition of a hybrid electric vehicle, to wit:

A motor vehicle powered by electric energy, with or without, provision for off-vehicle
charging, in combination with gasoline, diesel, or any other motive power: Provided,
That, for the purpose of this Act, a hybrid electric vehicle must be able to propel itself
from a stationary condition using solely electric motor.

[ May 2 videos ako nahanap sa YouTube from KPMG about explanation ng effects ng
TRAIN Law sa low to middle-ranged vehicles at high-end vehicles ]
[ May Nakita rin akong explanation ni Atty. Karen Jimeno sa Philippine Star last year
about simulation ng effects ng new tax rates under the TRAIN Law ]

Sec. 150-A Non-Essential Services (new provision under the TRAIN Law)

o Tax Rate: 5% on the gross receipts net of excise and VAT

 o Taxable item/service: performance of services pertaining to Invasive
cosmetic procedures, surgeries, and body enhancements
 directed to solely towards:
 improving
 altering, or
 enhancing appearance

o Shall not apply to procedures necessary to ameliorate a deformity arising

from, or directly related to:
 Congenital or developmental defect or abnormality
 Personal injury resulting from accidents or trauma
 Disfiguring disease, tumor, virus, or infection

o Cases or treatments covered by the National Health Insurance Program

shall not be subject to this tax

Sec. 150-B Sweetened Beverages (new provision under the TRAIN Law)

o Tax: 6 pesos/liter of volume capacity

o Taxable item: sweetened beverages using:
 purely caloric sweeteners
 purely non-caloric sweeteners; and
 mix of caloric and non-caloric sweeteners
o Shall not apply to sweetened beverages using high fructose corn syrup
o Tax exempt: beverages using:
 purely coconut sap sugar
 purely steviol glycosides

o Tax: 12 pesos/liter of volume capacity

o Taxable item: sweetened beverages using:
 Purely high fructose corn syrup; or
 A combination with any caloric or non-caloric sweetener

o Relevant definition of terms:

o Sweetened beverages:
 non-alcoholic (liquid, powder, or concentrates)
 pre-packaged and sealed in accordance with FDA standards
 contains caloric or non-caloric sweeteners
o Caloric sweetener: a sweet substance including sucrose, fructose, and
glucose that produces a certain sweetness
o Non-caloric sweetener: artificially or chemically processed substance that
produces a certain sweetness; substance that can be directly added to the
beverage; includes aspartame, sucralose, saccharin, acesulfame
potassium, neotame, cyclamates, and other non-nutritive sweeteners.
 o High fructose corn syrup: sweet saccharide mixrture containing fructose
and glucose which is derived from corn and added to provide sweetness
to beverages which includes other similar fructose preparations.

o Filing of returns and payment of excise tax on domestic and imported sweetened
beverages: Sec. 130 and 131 of the NIRC applies

o Penalty:
o Summary cancellation or withdrawal of the permit to engage in business
as manufacturer or importer of sweetened beverages: If the CIR and/or
Customs finds that any manufacturer or importer violates this section by
misdeclaring or misrepresenting in the sworn statement as provided in
Sec. 130(c) of the NIRC any pertinent date or information thereto.
o Payment in fine treble the amount of deficiency taxes, surcharges and
interest which may be assessed: as to corporations, associations or
partnerships violating this Section.
o Fine not less than Php30,000 but not more than Php100,000 and
imprisonment of not less than 2 but not more than 4 years: For any
individual who willfully aids or abets in the commission of such act or
omission as prohibited in this section; criminal liability as a principal
o Deportation: If offender is not a Filipino citizen

o Specific responsibility of the FDA:

o Requiring manufacturers and importers of sweetened beverages to
indicate on the label the type of sweetener used, and on sweetened
beverages in powder form to indicate on the label the equivalent of each
serving per liter of volume capacity
o Post-marketing surveillance of sweetened beverages
o Inspection of manufacturing sites

o Duty of the Commissioner to ensure payment of taxes :

o Prescribing nonremovable and unique identification or markings
conspicuously affixed and form part of the label of all excisable sweetened
beverages
o To be caused by the Commissioner the printing of the same.