The Bureau of Internal Revenue (BIR) has issued Revenue Regulations (RR) No. 18-2025 following the enactment of the Capital Markets Efficiency Promotion Act, also known as CMEPA, which removes the excise tax exemption on pick-up vehicles effective 1 July 2025.
Under Section 149 of the National Internal Revenue Code, pick-up vehicles were previously exempted under the Tax Reform for Acceleration and Inclusion Law, also known as TRAIN Law, due to their importance to micro, small, and medium enterprises (MSMEs), particularly in agriculture, trade, and logistics. However, the Department of Finance (DOF) has long argued that exemption has been applied broadly, even to double-cab pick-up vehicles that are increasingly marketed and used as passenger or lifestyle vehicles with similar functions to sport utility vehicles and should therefore be taxed accordingly.
Salient features of RR No. 18-2025 are as follows:
- Pick-up vehicles shall refer to all motor vehicles having enclosed cab and open bodies with low sides and tailgates.
- All pick-up vehicles shall be subject to ad valorem excise tax based on the manufacturer’s or assembler’s or importer’s selling price summarized below:
a. 4% for up to P600,000;
b. 10% for over P600,000 to P1,000,000;
c. 20% for over P1,000,000 to P4,000,000; and,
d. 50% for over P4,000,000.
- Hybrid vehicles shall continue to benefit from a 50% reduction in excise tax, while purely electric vehicles shall remain exempt. The BIR shall make the determination on the appropriate tax treatment, based on the Department of Energy’s list of recognised electric vehicles, published on its website, without prejudice to the BIR’s authority to conduct any post-verification assessment of the automobiles.
- Manufacturers, assemblers or importers shall submit the following to the BIR no later than 16 July 2025 or within 15 days from the effectivity of RR No. 18-2025:
a. Sworn statement on all brands or models of pick-up vehicles as of 30 June 2025; and,
b. Notarised list of inventory of on-hand completely built-up pick-up vehicles, including completely knocked-down and semi-knocked-down units that are located within their plant, storage facility or warehouse, or the customs premises, and those in transit for which import entries have been filed with the Bureau of Customs (BOC) on or before 30 June 2025.
- Excise tax shall not apply to pick-up units included in the duly submitted inventory list as of 30 June 2025, and those units in transit for which import entries have been filed with the BOC on or before 30 June 2025, and withdrawn on or after 1 July 2025.
The DOF expects the measure to align the tax treatment of pick-up vehicles with other passenger vehicles and address revenue leakages caused by the broad application of tax exemptions. Industry groups, however, anticipate that the reimposition of excise tax will raise retail prices and affect MSMEs that rely on pick-up vehicles for business operations.
Source:
P&A Grant Thornton
Certified Public Accountants
P&A Grant Thornton is the Philippine member firm of Grant Thornton International Ltd.
As published in SunStar Cebu, dated 03 September 2025
