AutoIndustriya.com / AutoIndustriya.com | November 27, 2017 17:53
Tax reform law not yet finalized, but government advises auto companies to prepare to comply
No law has yet been finalized or signed, but it seems the government is already advising automobile companies to prepare themselves for the excise tax on cars.
That was the word given to AutoIndustriya.com from an executive in the auto industry involved in premium and luxury automobiles. Auto companies were given an advisory from the government to prepare for the immediate implementation of the comprehensive revised tax code, also known as Tax Reform for Acceleration and Inclusion Act (TRAIN).
The notice stated that new tax schedules will be implemented by January 1, 2018, even though the law itself has not yet been finalized. The tax reform law is only scheduled to start the bicameral conference today, November 27, 2017, in order to reconcile the differences between the Senate and House versions.
TRAIN is the centerpiece of President Duterte's promise to the public to lower personal income taxes for Filipinos. However, given the government's increased spending (particularly in major infrastructure projects under the Build! Build! Build! Program), the reduction in income taxes will have to be recouped via other means of taxation such as excise taxes on basic commodities such as sugar and fuel, as well as automobiles, particularly vehicles in the more expensive premium and luxury sectors.
For TRAIN to be implemented by January 1, 2018, the government's target is to have the final version signed into a Republic Act by the President and published in the Official Gazette by December 15, 2017.
Despite not having been signed into law yet, the tax reform is already having a marked effect on automotive distributors, particularly the premium and luxury brands; many executives are reporting dwindling stocks as their customers have advanced their automobile purchases to avoid the tax hikes as the proposed excise tax schedules will raise prices for more expensive vehicles significantly.