BIR Ruling

July 27, 1977 Mr. Benjamin M. Acosta 22 Pio Valenzuela Valenzuela, Metro Manila S i r : This refers to your letter of even date requesting that freight charges be excluded in the computation of the compensating tax due on your car, a 2-door Ford Mustang Model 1970 with Motor No. OF01F186879 brought into the Philippines via U.S. Military Sealift Command vessel for your personal use. It is represented that you are a retired U.S. Navy serviceman returning to settle in the Philippines. In reply, I have the honor to inform you that it appearing that freight charges on the importation of the above-described car was paid by the U.S. Government, said charges should be included in the total landed cost of the automobile for compensating tax purposes. The fact that freight charges due was paid by the U.S. Government does not justify the exclusion of the same from the total landed cost thereof in determining the compensating tax since there is no provision of the Tax Code which provides for the exclusion of freight charges if they are paid by a government or someone other than the importer. (Jose Ma Espino, et al v. Actg. Commissioner of Internal Revenue, CTA Case No. 1532, January 31, 1969). However, considering that the aforesaid motor vehicle is more than six (6) years old, it is entitled to depreciation allowance of 90% for purposes of the compensating tax pursuant to Department Order No. 13-62 which provides in part, as follows: "xxx xxx xxx "In ascertaining, estimating and determining the dutiable value of cars of US brands and manufacture, appraisers may take into account, but shall not be limited to, the retail factory price published in the Red or Blue Book. "2. The published retail factory price as published in the Red and Blue Book shall be entitled to depreciation allowance for the applicable model year of all makes of cars regardless of country where manufactured, in accordance with the following table: "Current Year Models 10% One year Old Models 25% Two Year Old Models 40% Three Year Old Models 50% Four Year Old Models 60% Five Year Old Models 70% Six Year Old Models 80% All Old Models 90% "xxx xxx xxx Very truly yours, EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8