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DOE proposes to travel abroad to certify hybrid, EV for excise tax exemption


The excise tax discount for electric is apparently not in effect yet

Looking at getting a hybrid or electric vehicle to use around the Metro?

Well, it seems like there's a bit of a conundrum that has yet to be resolved, particularly with the excise tax exemption on EVs and hybrids.

Republic Act 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law, is already in effect and has overhauled the excise tax schedules for automobiles. According to TRAIN, hybrids will have only 50% excise be collected, while battery electric vehicles (BEVs, or just EVs) that run purely on electricity will have zero excise tax collected.


However, while many presumed that the law is already in effect with hybrids and EVs, that is not the case. The news is odd especially since several manufacturers have already announced that they wave of new electric and hybrid models in the market, while others with existing models have had their price cuts in accordance with TRAIN.

The problem lies with the certificate of endorsement (COE) that the vehicle is indeed a hybrid or an EV, and that problem was squarely farmed off to the Department of Energy (DOE) by the Bureau of Internal Revenue (BIR) in Revenue Regulations 5-2018, Section 4, Paragraph E: “The Department of Energy (DOE) shall determine whether the automobiles are hybrid vehicles or purely electric vehicles. 

Now the DOE is trying to figure out how to be able to certify that the vehicles are indeed hybrids or EVs, and have conducted public consultations including the stakeholders. In typical government fashion, they hilariously made an acronym for the car manufacturers, assemblers, importers and distributors: MAIDs.

In a draft copy of the proposed Department Circular to the MAIDs, the DOE outlined their plans for certifying the vehicles with a Validation Certificate (VC). The DOE says that the MAIDs will submit a request for validation with pertinent information such as vehicle type, make, drivetrain specifications and more. 

A source told that carmakers are proposing that the paper documentation should be enough for the certification, but sources indicate that the DOE stated that they have to perform physical inspections of the vehicle (and tests if necessary) which are difficult to do at the ports, given the space constraints. A test outside of the port will not be amenable either as the MAID will have to pay the standard excise tax to be able to bring the vehicles out to be certified. Even after a VC is issued, the MAIDs worry that the return of the excise tax they paid will take a long time to be refunded.

Interestingly enough, under Section 3 of said Department Circular draft, the DOE proposes that, if the inspection/validation cannot be performed locally, they mandate that the requesting MAID “shall cover the logistical arrangements and cost for all the travelling expenses and documentation of two (2) DOE personnel who will conduct the validation.”

The proposal for an all-expense paid trip abroad by government officials courtesy of car manufacturers and distributors is odd, especially since the national government has clamped down on trips being taken by public servants. 

The Department Circular is still a draft and will likely undergo many more public consultations and subsequent edits. If it pushes through with the travel abroad portion, will we see a lot of trips made by DOE personnel... with the MAIDs? 

Below is the draft Department Circular in full:

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