BIR Ruling [UN-045-95]

January 23, 1995 BIR RULING [UN-045-95] Toyota Motors Phils. Corporation Km. 15 South Superhighway Paraaque, Metro Manila Gentlemen : This refers to your internal revenue tax case involving the total amount of P158,750,993.21 representing deficiency ad valorem tax inclusive of increments for the period from February 23, 1989 up to April 10, 1991 under Letter of Demand dated October 21, 1991, details of which are as follows: I. Underdeclaration of selling price of automobiles sold/removed, through non-inclusion in pricing of factory installed aircon and stereo units. Deficiency ad valorem tax (basic) P81,543,907.50 Surcharge (25%) 20,385,976.88 Interest (20% P.A. up to 10/31/91) 24,354,020.86 TOTAL P126,483,905.24 ============= II. Misdeclaration of sales/removals of high-priced model automobiles, which were paid ad valorem tax based on the rate of low-priced models. Deficiency ad valorem tax (basic) P114,532.35 Surcharge (25%) 28,633.10 Interest (20% P.A. up to 10/31/91) 47,883.73 TOTAL P191,049.18 ============= III. Sales of some models of automobiles at prices lower than cost of production as per Manufacturer's Sworn Statement filed with this Office, in contravention with Section 127(b) in relation to paragraph (c) of the same Section of the Tax Code, as amended. Deficiency ad valorem tax (basic) P21,691,341.35 Surcharge (25%) 5,422,835.34 Interest (20% P.A. up to 10/31/91) 4,961,862.10 TOTAL P32,076,038.79 GRAND TOTAL P158,750,933.21 ============= In connection therewith, please be informed that the deficiency ad valorem tax assessments in the respective amounts of P126,483,905.24 and P32,076,038.79 have been cancelled pursuant to the Memorandum-decision dated June 3, 1994 of the Chief, Law Division, which was duly approved by the Commissioner of Internal Revenue. However, your deficiency ad valorem tax liability of P191,049.18 still remains which must be paid by you upon receipt of the corresponding Authority To Accept Payment (ATAP) from this Office. Additionally, you are informed that there was found due from you the amount of P9,964,973.13 representing 10% value-added tax, exclusive of surcharge, interest and compromise penalty, on service income/fee derived from the installation of aircons and stereos on Toyota vehicles sold and/or removed during the same period (February 23, 1989 to April 10, 1991). A letter of demand/assessment notice in the aforesaid amount of P9,964,973.13 plus surcharge, interest and compromise penalty will be issued against you by the Chief, Assessment Division of Revenue Region No. 8, Makati, pursuant to Revenue Memorandum Order No. 37-94. Very truly yours, ALICIA P. CLEMENO Assistant Commissioner (Legal Service)