Honda to drop case if tax is deferred

Honda Cars Philippines Inc. (HCPI) is willing to withdraw its case against the Bureau of Internal Revenue (BIR) if the Department of Finance (DOF) agrees to defer the implementation of BIR Revenue Regulation 4-2003.

Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI) president Jose Ch. Alvarez said that Honda had informed him that they would agree to withdraw their case against the BIR as long as the DOF defers the implementation of a BIR ruling tightening the seat measurement requirement for 10-seater vehicles.

Honda is seeking a permanent injunction against the implementation of the ruling which would primarily hit its CRV model.

HCPI was able to get a reclassification of its former sport utility vehicle (SUV) model CRV to an Asian utility vehicle (AUV) after the BIR approved a more compact 10-seater measurement.

Following the reclassification of the CRV into an AUV, the CRV effectively became tax-exempt, allowing Honda to lower its price tag.

Honda’s availment of the tax loophole provided by the 10-seater ruling stirred up some resentment among other vehicle manufacturers.

In a move to appease the industry and supposedly level the playing field anew, the BIR issued RR 4-2003 which would effectively raise the tax rate to between 35 percent to 50 percent on vehicles found not conforming to the required seat measurement.

The BIR ruling was also seen as a move by the government to quell any further objection from the automotive industry against the proposed shift in the auto excise tax system from engine displacement to value-based.