Industry sources said the government plans to extract/create a separate tariff heading for used vehicles under the current tariff classification for brand new vehicles.
Based on the new tariff heading, the government would then be able to impose a surcharge on used vehicles in the form of a duty that would be based on the transaction value.
The new surcharge would still be on top of the existing ad valorem tax slapped on used vehicles based on their value.
The sources explained the government has noted that most importers are currently able to avoid paying the proper taxes by undervaluating the vehicles.
They also said the government also plans to make adjustments on the existing ad valorem tax by shifting the basis to the acquisition cost.
The surcharge would be slapped on the used vehicle once it is brought out of the special duty-free zones and into the Philippine customs zone.
Industry sources said the government would still hold a public hearing on the proposed new tariff heading for used vehicles.
The government has been trying to stop the importation of used vehicles because it is adversely affecting the local automotive manufacturing industry.