Gov’t eyes suspension of ad valorem tax on electric vehicles

The Philippine government is looking to temporarily suspend the collection of one of the taxes imposed on imported electric vehicles in the country, eyeing the implementation of such measure for several years to help grow the industry.

Patrick Aquino, director at the energy utilization management of the Department of Energy (DOE) said on Thursday that the prospective suspension of the collection of the ad valorem tax for imported vehicles is under discussion with officials of the National Economic and Development Authority (Neda).

“Based on our understanding, we are just waiting for the settling of the new officials. The zero percent ad valorem is expected to be released within the year,” Aquino said during a press conference at the F1 Manila Hotel in Taguig. He, however, noted that an accompanying executive order is necessary for its full implementation.

Aquino said that this measure would see the suspension of the tax, which ranges from 5 percent to 10 percent, on these environment-friendly vehicles depending on the country of origin.

The DOE official said this fiscal incentive would be on top of the reduced excise tax for electric vehicles under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Under the law, pure electric vehicles are 100 percent exempted from excise tax while Hybrid plug-in electric cars enjoy a 50-percent exemption.

Aquino stressed the measure was intended to have a sunset provision.

“The zero percent (rate) is not a permanent item. They are looking at five to seven years at most,” Aquino said.

Electric Vehicle Association of the Philippines (EVAP) chair Ferdi Raquelsantos said during the same press conference that more than 5,000 electric motorcycles were sold in the market in 2021.

The electric vehicle sector also sold 7,220 electric tricycles, 311 passenger cars, 43 sports utility vehicles, 815 commercial utility vehicles, 12 trucks and 10 buses in the same year.