Question & AnswerQ&A (BOC CUSTOMS ADMINISTRATIVE ORDER NO. 07-2014)
The main purpose of BOC Customs Administrative Order No. 07-2014 is to prescribe the revised depreciation schedule for imported motor vehicles to be applied for guidance and uniform implementation in determining depreciation rates for customs duties and tax computations.
The Order prescribes the Straight Line Method for depreciation of No-Dollar Importation (NDI) motor vehicles, with a detailed schedule decreasing multiplier annually from 0% in the current year to 50% at 5 years old.
For a 3-year-old no-dollar imported motor vehicle, the allocated depreciation rate is 30% with a multiplier of 0.70, effectively applying a 21% depreciation.
For tax-exempt vehicles registered to Diplomatic Missions, the depreciation rate is computed at 10% per year using the straight line method but not exceeding 50% for computation of duties when using specified valuation methods.
The maximum depreciation allowed for used trucks and heavy equipment is 90%, calculated straight line at 10% per year.
All previous Orders, Memoranda, Circulars, or parts thereof which are inconsistent with this Order are deemed revoked, amended, and/or modified accordingly with the effectivity of this Order.
The Order took effect fifteen (15) days after its publication in the Official Gazette or a newspaper of general circulation and after depositing three (3) certified copies at the UP Law Center.
For the current year model, the depreciation rate is 0%, meaning no depreciation is applied for that year.
The depreciation is computed at 10% per year using the straight line method but should not exceed 50% of the original cost or value when calculating ad valorem tax or duties for vehicles transferred from diplomatic or consular ownership.