BIR issues tax hike rules on minerals, cigarettes, autos under TRAIN

The Bureau of Internal Revenue has issued the guidelines for the increase in excise taxes on minerals, cigarettes, vehicles as well as documentary stamp tax rates under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

The four revenue regulations (RR) signed by Finance Secretary Carlos G. Dominguez III and Internal Revenue Commissioner Caesar R. Dulay published Thursday, which will serve as the implementing rules and regulations of Republic Act No. 10963, were earlier deemed by the BIR as the “least contentious” among the TRAIN’s different provisions.

Under RR 1-2018, the BIR said that the excise tax per metric ton to be slapped on domestic as well as imported coal and coke were as follows: P50 starting Jan. 1 this year; P100 on Jan. 1, 2019; and P150 from Jan. 1, 2020 onwards.

“Coal produced under coal operating contracts entered into by the government pursuant to Presidential Decree No. 972 as well as those exempted from excise tax on mineral products under other laws shall now be subject to the applicable rates above beginning January 1, 2018,” RR 1-2018 read.

The excise tax on locally extracted or produced nonmetallic minerals and quarry resources will be 4 percent based on the actual market value of the gross output thereof at the time of removal; for imports, the tax will be 4 percent based on the value used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value-added tax, the BIR said.

Locally extracted natural gas as well as liquefied natural gas, meanwhile, will be exempt from excise tax.

In the case of metallic minerals, locally extracted or produced copper, gold, chromite and other metallic minerals will be slapped 4-percent excise tax based on the actual market value of the gross output thereof at the time of removal.

For imported copper, gold, chromite and other metallic minerals, the 4-percent excise tax will be based on the value used by the BOC in determining tariff and customs duties, net of excise tax and value-added tax.

“For indigenous petroleum, a tax of 6 percent of the fair international market price thereof, on the first taxable sale, barter, exchange or such similar transaction, such tax to be paid by the buyer or purchaser before removal from the place of production,” the BIR said, referring to the transfer of the product in its original state to a first taxable transferee.

The BIR defined indigenous petroleum as “locally extracted mineral oil, hydrocarbon gas, bitumen, crude asphalt, mineral gas and all other similar or naturally associated substances with the exception of coal, peat, bituminous shale and/or stratified mineral deposits.”

RR 3-2018, meanwhile, mandated for cigarettes unitary excise rates of P32.50 per pack from Jan. 1 to June 30, 2018; P35 from July 1, 2018 to Dec. 31, 2019; P37.50 from Jan. 1, 2020 to Dec. 31, 2021; and P40 from Jan. 1, 2022 to Dec. 31, 2023.

From Jan. 1, 2024 onwards, “the specific tax rate shall be increased by 4 percent every year thereafter,” RR 3-2018 said.

According to RR 5-2018 covering excise taxes on vehicles, the BIR said the ad valorem tax on automobiles will be as follows: 4 percent for units with a net manufacturer’s price/importer’s selling price of up to P600,000; 10 percent for units priced over P600,000 to P1 million; 20 percent for those priced over P1 million to P4 million; and 50 percent for luxury vehicles priced over P4 million.

Hybrid vehicles, on the other hand, will be taxed at half of the applicable excise tax rates.

Electric vehicles as well as pickup trucks will enjoy exemption from excise taxes. /je