MANILA – The Department of Finance (DOF) is opposing a proposal to exempt electric vehicles (e-vehicles) from value-added tax (VAT), saying that there are enough measures to incentivize the industry.
“We support the purpose of the bill. It will promote the use of e-vehicles. However, we express concern with respect to the VAT exemption supposed to be granted in the bill,” Finance Undersecretary Bayani Agabin said during the Senate Committee on Energy hearing for the “Electric Vehicles and Charging Stations Act” on Wednesday.
The Finance official noted that the Tax Reform for Acceleration and Inclusion (TRAIN) law has already limited VAT exemptions “so we will have a wide tax base.”
“The proposal to grant VAT exemptions to the sale of e-vehicles is not the proper way to incentivize the sale of e-vehicles. We have enough laws, we have BOI (Board of Investments) which grants tax holidays, duty free on imports they can avail of that,” Agabin said.
Under the proposed Senate Bill No. 174 or “An Act Providing the National Policy and Regulatory Framework for the use of Electric Vehicles, and the Establishment of Electric Charging Stations,” the purchase of e-vehicles shall have exemption from the payment of VAT, which shall be available for nine years from the effectivity of the law.
For his part, Senate Energy committee chair Senator Sherwin Gatchalian said the purpose of granting fiscal incentives is to further develop of the e-vehicles industry and help them compete “head-to-head” with internal combustion engine vehicles.
However, Agabin said e-vehicles already enjoy fiscal incentives as it is already exempted from paying excise taxes under the TRAIN law.
The TRAIN law has imposed higher excise taxes on motor vehicles.
It imposed a tax rate of 4 percent on vehicles costing P600,000 and below, from the previous rate of 2 percent.
Cars priced at P600,000 to P1 million were slapped with a 10 percent tax from 2 percent.
Cars priced between P1 million and P4 million were given a tax rate of 20 percent from the previous scheme of P112,000 plus 40 percent in excess of P1.1 million for cars costing P1.1 million to P2.1 million.
Vehicles that each cost P4 million and above were levied a rate of 50 percent from the previous scheme of P512,000 plus 60 percent in excess of P2.1 million. (GMA News)
