New Tax for Cars Signed into Law

The new tax reform bill has been signed by President Duterte today. The TRAIN, as it is commonly referred to, has adjusted taxes on several categories including a tax exemption on all personal income tax below Php250,000 (annually).

Likewise, automobiles will have a new or simpler tax structure. For cars, the new tax scheme is as follows:

Net Manufacturer’s / Importer’s Price
Up to P600,000 == 4%
P600,000 to 1,000,000 == 10%
P1,000,000 to 4,000,000 == 20%
Above P4,000,000 == 50%

Take note that these are based on Net Manufacturer’s Price or Importers Price.

Here’s a comparison table between the old and the new tax scheme.

Let’s do some examples.

Importer’s Price: Php600,000
Base Price (Old Tax): Php612,000
Base Price (New Tax): Php624,000

Importer’s Price: Php800,000
Base Price (Old Tax): Php852,000
Base Price (New Tax): Php880,000

Importer’s Price: Php1,00,000
Base Price (Old Tax): Php1,092,000
Base Price (New Tax): Php1,100,000

Importer’s Price: Php1,500,000
Base Price (Old Tax): Php1,772,000
Base Price (New Tax): Php1,800,000

Importer’s Price: Php2,500,000
Base Price (Old Tax): Php3,252,000
Base Price (New Tax): Php3,000,000

Importer’s Price: Php3,000,000
Base Price (Old Tax): Php4,052,000
Base Price (New Tax): Php3,600,000

Importer’s Price: Php4,000,000
Base Price (Old Tax): Php5,652,000
Base Price (New Tax): Php4,800,000

Importer’s Price: Php5,000,000
Base Price (Old Tax): Php7,252,000
Base Price (New Tax): Php6,000,000

With the Base Price, the dealers will still have to add their gross profit margins as well before we end up with the final selling price.