Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 35-91)
The withholding tax rate is 2% on the gross selling price for all motor vehicles, but it is reduced to 1% for sales, exchanges, or transfers of brand new motor vehicles by participants of the Car Development Program (CDP) or Commercial Vehicle Development Program (CVDP).
All such transactions on or after June 1, 1991, are subject to the creditable withholding tax.
No, motorcycles and similar vehicles are exempt from the withholding tax under these regulations.
No, motor vehicles sold, exchanged, or transferred for P50,000 or less and which are 1978 or earlier models are exempt from withholding tax, provided both conditions are met.
The tax base is the gross selling price or total amount of consideration without deducting discounts or price adjustments, excluding Value Added Tax (VAT). If the selling price stated in the sales documents is lower than the official Schedule of Values of Motor Vehicles, the higher value will be used as the tax base.
Sales by such manufacturers to their franchised dealers are exempt from withholding tax, but if sold to a person other than the franchised dealer, it is subject to withholding tax.
The tax should be deducted and withheld by the buyer at the time the income payment is paid or payable, and the withheld tax shall be remitted to the BIR within ten days after the end of the month in which the transaction occurred.
The Land Transportation Office (LTO) shall not register the vehicle without a Certificate Authorizing Registration (CAR) issued by the appropriate Revenue District Officer showing payment or exemption of the creditable withholding tax.
Yes, as an exception to the general rule, the withholding agent may file the withholding tax return and pay the tax in the Revenue District Office where the motor vehicle is or shall be registered.
No, donations are not subject to creditable withholding tax, but they are subject to donor's tax under Philippine law.
Each vehicle exchanged is subject to withholding tax based on its fair market value at the time of the exchange, with two taxable transactions occurring, each subject to the withholding tax.
No, such auction sales conducted by the Bureau of Customs, a government agency exempt from income tax, are exempt from the withholding tax. However, foreclosure sales of motor vehicles are subject to withholding tax.