Additional tax eyed on imported used vehicles

The Philippine Automotive Association (PAA) warned yesterday buyers of auctioned imported second-hand vehicles that they may have to pay additional taxes and duties, if the local court rules that the importation and subsequent sale of used vehicles is illegal.

Furthermore, the PAA said, buyers of the auctioned vehicles may not be able to renew the registration of their vehicles once the court rules that the importations and sales are illegal.

PAA has a pending case in court questioning the legality of the used car importations.

The PAA said that if the court rules that the importations are illegal, the buyers would have to pay additional taxes and duties on their vehicles computed on the auction value.

Under the present valuation, buyers do not have to pay any additional tax or duty since the importer had already paid taxes and duties based on their entry value.

However, the low tax and duty on imported used vehicles, as originally intended, was on the assumption that the vehicles would only be used within special Freeport areas and would not be brought out into the general Customs area.

Aside from the possible additional payment of taxes and duties, the PAA said, buyers of auctioned imported second-hand vehicles may also find themselves unable to renew the registration of their vehicles.

The PAA stressed that it is not giving up on its legal fight even though the Arroyo administration is set to issue another Executive Order laying down its policy on a selective ban on second-hand vehicle importations.

In fact, the PAA criticized the Arroyo administration for "declaring something illegal that is already illegal."

The second-hand vehicle importation, the PAA argues is in violation of the National Customs Code as well as the right-hand vehicle prohibition.

In the meantime, the Bureau of Import Services (BIS) of the Department of Trade and Industry clarified that it has never committed or even considered a total ban on the importation of used trucks and buses.

According to BIS director Chito Catibayan, the government’s existing policy on the importation of used trucks classifies those with gross vehicle weight rating (GVW) above six tons as liberalized while trucks with GVW between 4.5 and six tons are regulated.

Thus, trucks with GVW above six tons are freely importable, while importers of regulated trucks must obtain a permit from the DTI prior to importation.

Catibayan pointed out that many small and medium enterprises (SMEs) rely on small or low GVW second-hand trucks to pick-up and deliver their products.