Tax Consequences of the Assembly and Distribution of Trucks and Buses

January 16, 1995 BIR RULING NO. 007-95 149 000-00 007-95 Pilipinas Hino, Inc. E. delos Santos Avenue cor. Madison Street Mandaluyong, Metro Manila Attention: Mr . Felipe S . Barroga AVP Controller Gentlemen : This refers to your letter dated October 10, 1994 stating that you are presently engaged in the assembly and distribution of trucks and buses; that your principal place of office is in Mandaluyong City, where you pay your internal revenue taxes and where your business transactions and accounting records are conducted and kept respectively; that your assembly plant is located in Valenzuela, Metro Manila; and that you plan to assemble a new product, the Suzuki Vitara, a five-door wagon with a seating capacity of five (5) passengers and an engine displacement of 1600 cc. LexLib Based on the foregoing facts, you posed the following issues for clarification : 1) Is Suzuki Vitara subject to excise tax ? 2) In the affirmative, where should the payment be made? 3) Which Revenue District Office has the authority to supervise the removals of your assembled vehicles? 4) Which Revenue District Office has the authority to examine your book of accounts? 5) What procedure are required to observe in the registration of vehicles for excise tax purposes? In reply, please be informed as follows : Question No. 1. Pursuant to BIR Ruling No. 75-89 dated April 14, 1989, stating: ". . . automobile may be safely defined as 4-wheeled motor vehicle (other than trucks and jeeps as defined under R.A. No. 4136 and No. 1188) which is propelled by gasoline, diesel or any motive fuel and specially designed for the transport of persons and not used primarily for the carrying of freight or merchandise: Provided, however, that its registered carrying capacity shall not exceed nine passengers." the Suzuki Vitara falls within the class of utility vehicles which are taxable as automobiles. Accordingly, it is subject to both excise tax and-value added tax imposed under Section 149 and 100(a), respectively, of the Tax Code, as amended. Question Nos. 2, 3, 4, and 5 You will pay both your excise tax and value-added tax liabilities in Mandaluyong City where your principal place of business is located. The same Revenue District Office who is vested with authority to issue Letters of Authority pursuant to Revenue Memorandum Order No. 26-94 shall have the authority to examine your books of accounts. However, the Revenue District Office of Valenzuela will supervise the removals of the assembled vehicles from the factory premises thereat. Moreover, before removal of any assembled vehicle from your factory premises, it is necessary that you comply with the following requirements: a) Pay the corresponding excise tax pursuant to Section 149 of the Tax Code, as amended: b) Before the sale of any vehicle, you must cause it to be registered with the Land Transportation Office (LTO). Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue