BOC sets lower duty on cars made in ecozones

Motor vehicles assembled inside ecozones and sold locally will be levied a duty of only three to seven percent, according to a new Customs administrative order (CAO) issued by Customs Commissioner Antonio M. Bernardo.

Bernardo issued CAO 1-2003 to clarify the tax status of completely built-up (CBU) units assembled from imported completely knocked down (CKD) units by participants of the Motor Vehicle Development Program (MVDP) located inside ecozones.

Industry sources said there has been some confusion about the tariff rate to be imposed on such CBUs. Normally, the tariff rate on CBUs is 30 percent.

As an incentive to participants to the MVDP, the government agreed to consider CBUs assembled in ecozones as CKDs once the vehicles are sold in the local market.

The government has been trying to convince MVDP participants to make the Philippines a regional hub for the ASEAN. The sources, however, said the government should first level the playing field for all MVDP participants, before it can convince them to make the Philippines their regional hub.

The BOC clarification was an offshoot of an earlier assessment made by its collection district in Laguna against Ford Motor Co. Philippines.

The BOC’s collection district in Laguna had earlier assessed FMC the amount of P488.5 million for the importation of 4,366 vehicles. The Laguna BOC district had based its assessment on a tariff rate of 30 percent for CBUs.

Ford Philippines, however, disputed this assessment, saying that it has been importing some of its car components. – Marianne Go