It’s final: Rolex watches not subject to 20% excise tax | Inquirer Business

It’s final: Rolex watches not subject to 20% excise tax

/ 04:00 AM July 11, 2022

The Department of Finance (DOF) has ruled that expensive watches made of precious metals cannot be levied a 20-percent excise tax, reversing an earlier ruling made by the taxman.

The DOF opinion issued by former Finance Secretary Carlos Dominguez III last June 29 before he stepped down reversed a ruling issued by former Internal Revenue Commissioner Caesar Dulay in 2021, which told the luxury watchmaker Rolex that their wristwatches manufactured using precious metals were subject to excise tax under Section 150(a) of the Tax Code.

ADVERTISEMENT

Back in 2019, Rolex’s Philippine branch office, through its legal counsel, argued before the Bureau of Internal Revenue (BIR) that the wristwatches it imported and sold in the country were not subject to the 20-percent levy.

But the BIR said the Tax Code’s Section 150, which covered taxation of nonessential goods, “should be taken as a whole.” In particular, Section 150(a) covered “all goods commonly or commercially known as jewelry, whether real or imitation, pearls, precious and semiprecious stones and imitations thereof; goods made of, or ornamented, mounted or fitted with, precious metals or imitations thereof or ivory…; opera glasses and lorgnettes.”

FEATURED STORIES

The Tax Code said precious metals included gold, platinum, silver, as well as other metals of same or bigger value, while “imitations” included these metals’ alloys and platings.

As such, “a wristwatch (considered as ‘goods’) made of precious metals, is subject to excise tax,” the BIR said.

However, Rolex appealed the BIR ruling to the DOF early this year.

For its part, the DOF said wristwatches and clocks were “not considered non-essential goods” under Section 150(a) of the Tax Code, as they were not listed down in the specific provision.

The DOF noted that “a perusal of how the Tax Code defined non-essential goods was by providing an enumeration of goods deemed falling within its category or classification,” but wristwatches and clocks were never included among non-essential goods in previous tax laws slapping percentage taxes on jewelry, automobiles, and perfumes.

“Thus, it is clear that when [the provision] was carried forward as Section 150 of the 1997 Tax Code for the purposes of imposing excise tax at 20 percent, the enumeration therein did not contemplate the inclusion of wristwatches and clocks,” the DOF said.

Also, the DOF said watches were “semi-essential” items because they allow wearers to keep track of time.

“Jewelry, on the other hand, is solely for personal adornment and, thus, is classified as non-essential,” according to the DOF.

—Ben O. de Vera INQ
Read Next
Don't miss out on the latest news and information.

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: Business, excise tax
For feedback, complaints, or inquiries, contact us.


© Copyright 1997-2022 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.