In a bid to curb smuggling of used cars, Department of Finance (DOF) Secretary Cesar Purisima has requested the Department of Transportation and Communications (DOTC) to draft a policy to issue differently colored license plates for cars imported through Special Economic Zones, or ecozones. The announcement comes amid reports of 'virtual car smuggling' through freeports.

The Bureau of International Revenue's (BIR) National Internal Revenue Code (NIRC) allows freeport locators to import vehicles tax-free for their own use, provided the vehicles were not used outside the freeport.

The DOF cited that it has received accounts of importers selling imported tax-free vehicles to parties outside the ecozones, an abuse of the tax exemption provision for freeport zones.

"We cannot have a level, competitive playing field if we do not strictly enforce the rules for everyone, even locators in ecozones. The new plates will keep our cars driving along Daang Matuwid," stressed Finance Secretary Cesar Purisima.

Last month, the Supreme Court's second division upheld the decision of the Aparri Regional Court upholding EO 156, which bans importation of used cars to the country including freeports. The Bureau of Customs has been instructed not to process vehicle importation in ecozones pending the finality of the Supreme Court decision.

While data from the Land Transportation Office shows a significant decline in the number of imported motor vehicles registered under the 'special registration' category, from 36,737 in 2010 to 28,952 in 2012. The bulk of these registrations come from Region III, where numbers have also gone down from 19,619 in 2010 to 16,941 in 2012.

Citing the drop in the LTO specially registered cars does not follow the trend of continued increase of registrations in all classifications and types of cars from 2010 to 2012, Purisima further implied that registered tax-exempt used vehicles have been sold outside freeports in Central Luzon. Interestingly, CAMPI and AVID have reflected an increase in vehicles sales for the formal automotive market in 2012.

"With differently colored license plates, it would become much easier to determine which cars have been imported duty-free through the Ecozones and restrict their use outside these locations," said Purisima.