Toyota urges BOI to plug AUV tax ‘loophole’

Toyota Motor Philippines Corp. (TMPC) is urging the Board of Investments (BOI) to plug the tax loophole created by allowing sports utility vehicles (SUVs) to enjoy a tax-exempt status similar to the one granted to Asian utility vehicles (AUVs).

In a position paper submitted to the BOI, TMPC president Nobuharu Tabata said "the biggest problem with the current tax system is the loophole created by allowing SUVs to enjoy the tax-exempt status granted to AUVs."

"Instead of subjecting the poor man’s AUV to burgeoning taxes, the government should eliminate the SUV loophole," Tabata said.

Tabata urges the government to focus on the development of the AUV market where there is a greater potential for exports.

He pointed out that subjecting the AUVs to an excise tax won’t make the economy better and won’t raise the much needed revenues needed by the government.

"What the government can do right now is to modify the existing tax structure in line with the promotion of industry development," Tabata said, adding that "this they can do by plugging the SUV loophole and adjusting the tax rate for high-end models."

The TMPC executive said that the AUV has developed a wide base of local parts which have a high local value-added and contributes to employment generation.

Because of the high value-added content of AUVs, Tabata said, the "Philippines has a better chance of developing a long-term export winner."

Tabata warned that the future of AUVs is "threatened by a proposed measure to rationalize the excise taxes on vehicles by widening the tax base which would subject all AUVs to an excise tax."