Regulations Further Amending the Transitory Provisions of Revenue Regulations No. 4-2003, As Amended by Revenue Regulations No. 8-2003, Pertaining to the Deadlines on the Submission of Inventory List and Inventory Taking of Automobiles

July 17, 2003 REVENUE REGULATIONS NO. 21-03 SUBJECT : Regulations Further Amending the Transitory Provisions of Revenue Regulations No. 4-2003, As Amended by Revenue Regulations No. 8-2003, Pertaining to the Deadlines on the Submission of Inventory List and Inventory Taking of Automobiles TO : All Internal Revenue Officers and Others Concerned SECTION 1 . Scope . Pursuant to the provisions of Section 244 in relation to Section 245 of the National Internal Revenue Code of 1997, these Regulations are hereby promulgated to amend the deadlines set forth in the transitory provisions of Revenue Regulations No. 4-2003, as amended by Revenue Regulations No. 8-2003, pertaining to the submission of inventory list and inventory taking of automobiles. SECTION 2 . Transitory Provisions . Section 6 of Revenue Regulations No. 4-2003, further amending Revenue Regulations No. 14-97, as amended by Revenue Regulations No. 14-99, is hereby further amended to read as follows: "SEC. 6. TRANSITORY PROVISIONS. (a) The provisions of Revenue Regulations No. 14-97, as amended by Revenue Regulations No. 14-99, shall be applicable to all automobiles completely assembled or imported (Completely-Built-Up or CBU units), including Completely-Knocked-Down (CDK) and Semi-Knocked Down (SKD) units, that are still in the custody of the Bureau of Customs and where import entries thereof have already been filed, or in the place of production, assembly plant or warehouse, as the case may be, as of September 8, 2003 . (b) For this purpose, the following must be complied with: (i) All importers and/or assemblers shall submit a duly notarized list of inventory on-hand of completely assembled automobiles (CBUs), including Completely-Knocked-Down (CDK) and SemiKnocked Down (SKD) units, that are located within the assembly plant or warehouse or the customs' premises as of September 8, 2003 , indicating therein the engine, body and chassis numbers thereof. The list shall be submitted to the Commissioner of Internal Revenue, thru the Chief, Large Taxpayers Assistance Division II, not later than September 12, 2003 . Failure to submit the inventory list on the part of the importers/assemblers shall be construed that said importers/assemblers do not have any inventory on hand of CBUs, CKDs and SKDs as of September 8, 2003 ; and (ii) A stocktaking of the aforesaid inventories shall be conducted by the Bureau of Internal Revenue for purposes of validating the said list, within five (5) days from the date of submission thereof. SECTION 3 . Effectivity Clause . These Regulations shall take effect immediately. AEcTCD (SGD.) JOSE ISIDRO N. CAMACHO Secretary of Finance Recommending Approval: (SGD.) GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue MEMORANDUM FOR : HON. JOSE ISIDRO N. CAMACHO Secretary of Finance FROM : GUILLERMO L. PARAYNO, JR. Commissioner of Internal Revenue DATE : July 14, 2003 SUBJECT : Proposed Revenue Regulations Amending the Transitory Provisions of Revenue Regulations No. 4-2003, as amended by Revenue Regulations No. 8-2003 In view of the impending implementation of Revenue Regulations (RR) No. 4-2003, as amended, on September 8, 2003, there is a need to promulgate an amendment to the provisions of RR No. 8-2003 with respect to the deadlines set forth therein for the submission of the list of existing inventories and the conduct of the ocular inspection and inventory taking thereof. Under RR No. 8-2003, the assemblers/importers of automobiles are given a tax relief to the effect that the all inventories included in the submitted list and have been physically verified to be on-hand as of February 15, 2003 shall continue to be covered by the provisions of RR No. 14-99 even if these are sold on or after the implementation of RR 4-2003 on March 31, 2003. If the herein proposed Regulations shall not be given due course, and considering that the such inventories may have been fully exhausted before September 8, 2003, excise tax shall be imposed on the removals of all motor vehicles that will be subjected to excise tax for the first time under the new Regulations. The deferment of the implementation date of RR 4-2003 to September 9, 2003 without adjusting the deadlines set forth in the transitory provisions will be inconsistent with the intention of RR No. 8-2003; thus, rendering its objective nugatory. The proposed inventory cut-off date of September 7, 2003 as contained in the draft Revenue Regulations was selected because a cut-off date earlier than September 7, 2003 will again invite a similar problem created by RR No. 8-2003. The February 15, 2003 deadline for the submission of inventory list as set forth under RR No. 8-2003 have raised issues on the appropriate tax treatment on removals of additional purchases/production of units from February 16, 2003 up to March 30, 2003, before the effectivity of the said Regulations on March 31, 2003. The industry players argued that since the Regulations will take effect on March 31, 2003, all existing inventories as of March 30, 2003 should have been covered by tax relief prescribed under the transitory provisions. However, in order obviate possible undue accumulation of inventories by affected industry players for purposes of availing the tax relief under the proposed transitory provisions, it is respectfully suggested that proper timing for the approval and issuance of the herein proposed Revenue Regulations be given due consideration. HTSaEC Published in Manila Bulletin on July 22, 2003.