BIR NEWS: 10% VAT ON AUCTIONED VEHICLES

Manila, June 6, 2003 -- The Bureau of Internal Revenue (BIR) will start 
collecting 10 percent value-added tax (VAT) on all vehicles for auction at 
Subic and other economic zones using the winning bid price as the basis of 
valuation.

BIR commissioner Guillermo Parayno said this would apply on all future 
sales and previous sales retroactive starting in 1999 when the basis of the 
valuation was changed from bid price to the foreign suppliers' invoice price.

The rules will apply pending the issuance of specific rules on duty and tax 
collections on government auctions.

Parayno said the interim VAT collection is meant to revert the basis of 
computation on the original formula, which is the bid price.

The change was made in 1999 on a verbal authorization of the commissioner 
of the Bureau of Customs (BOC) at the time authorizing the use of 
transaction value as the basis for customs valuation following complaints 
of delay in the release of auctioned vehicles by winning bidders.

But the government is shortchanged under the new formula, since the payment 
does not reflect the improvements made in the vehicle, which increases the 
value of the vehicle. This has raised question on the integrity of the 
auctions since the change is perceived to be beneficial to auctioneers as 
it brings down the duties and taxes payable.

Since there are no written rules, Parayno urged the BOC to immediately come 
up with regulations on the value for customs purposes of auction goods.

For past sales, Parayno said the BIR will issue letters of authority on all 
importers/auctioneers at the Subic Bay Metropolitan Area and other special 
economic zones and assess a 10-percent VAT on all sales starting 1999, when 
the basis of valuation was changed. (By IRMA ISIP, Malaya)

Reported by: Sol Jose Vanzi

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