The regulation will limit the exemption of Asian utility vehicles (AUVs) from the excise tax by imposing strict seat measurements for determining seating capacity.
According to Finance Secretary Jose Isidro Camacho, the regulation is being issued ahead of the proposed measure lifting the exemption of AUVs from the excise tax and shifting the basis of vehicle taxation from fuel type and engine displacement to the actual value of the automobile.
Under the new regulation, four-wheel drive vehicles would no longer be exempted from the excise tax regardless of the number of seats.
According to the regulation, 10-seater vehicles will still be exempted from the excise tax, but only if the actual measurement of the seating capacity complies with the new standard measurement.
Tightening up the basis of measuring seating capacity, the regulation provides that each seat should have a horizontal area with seat and feet space of 35 centimeters by 60 centimeters for each passenger. The driver’s seat, on the other hand, should be at least 50 centimeters wide and 60 centimeters long.
Camacho said the number of seats would be determined by counting the number of seat spaces that meet these area specifications. This means that half-seats would not be considered as one passenger seat even if there are several half-seats available in one vehicle.
To count as one seat, Camacho said each seat should also have sufficient leg room and unobstructed ceiling space. Jump seats, fold-away or fold-down seats would be considered one seat but only if they were factory-installed and if the intended passengers would have access to the side doors.
However, even factory-installed jumper seats would not be counted as one seat unless it was designed and sufficient for a passenger to seat comfortably with his back and shoulders fully rested on the back rest.
"A seat without its own back rest shall not be counted even if it complies with the requirement on seat measurements, feet spaces, leg and head rooms," Camacho said.
These additional provisions of the new regulation would be a blow to automobile manufacturers that have so far been successful at increasing the seating capacity of their AUVs in order to qualify for exemption from the excise tax.
Hardest hit would be Honda Motors whose popular CR-V has been exempted from the tax after it installed a jumper seat in the baggage compartment, supposedly to fit four more people, thereby increasing its seating capacity from six to 10 passengers.
The Bureau of Internal Revenue (BIR) earlier said the new regulation would remove the CR-V’s exemption but the bureau would allow Honda to apply the exemption on vehicles already in stock at the time the order is issued.
Honda originally released the CR-V as a four-wheel drive vehicle but the company eventually introduced a two-wheel drive version in April last year.