New excise taxes on cars, fuel effective January 1, 2018

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President Duterte signs first phase of tax reform bill

It's official: President Rodrigo Duterte has signed the first phase of the tax reform bill.

This means that the excise taxes on fuel and vehicles, along with other commodities, will take effect on January 1, 2018. This tax reform aims to raise Php 130 billion in revenues to fund numerous infrastructure projects, and other programs for the current administration.

In the months leading up to the signing of Republic Act 10963, the House of Representatives passed the reform package back in May, 2017. Four months after Congress passed the Bill, the Senate approved the program with Senate Bill 1592. Exactly one week ago, a bicameral committee concluded their discussions on House Bill 5636 and Senate Bill 1592. the committee has agreed on the new tax system for automobiles, one that features a new four-tier scheme as opposed to the Congress version with five tiers and the Senate version with two. The revised version has been signed by the President.

Under RA 10963, vehicle excise taxes are as follows:

4% - up to PhP 600,000

10% - PhP 600,000 over up to PhP 1,000,000

20% - over PhP 1,000,000 up to PhP 4,000,000

50% - over PhP 4,000,000

 

The fuel excise tax was also revised as seen below:

Gasoline - PhP 7.00

Diesel - PhP 2.50

Kerosene - PhP 3.00

Auto LPG - PhP 2.50

Certain vehicles will be imposed less or exempted from the excise tax, particularly hybrids and electric vehicles. The taxes levied on hybrid vehicles will only half of conventional internal combustion engine (gas or diesel) vehicles. Pure electric vehicles on the other hand are exempt from excise taxes. However, there is still pending legislation to further make these vehicles accessible by lowering import duties and other incentives.

Other vehicles exempted are trucks, cargo vans, jeeps (i.e. "owner" type), jeepneys, jeepney substitutes (i.e. FB body), special purpose vehicles (i.e. cement mixer, crane trucks, etc.), single cab chassis, and pick-up trucks.

Besides the revised taxes on fuel and vehicles, RA 10963 sees lower personal income taxes for those who have an annual salary of under Php 250,000, higher taxes on certain commodities such as coal and sugar (with exemptions), plus an incremental tax increase for tabacco from 2023 and onwards.

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