Claiming of depreciation allowance, maintenance expense and input VAT

Depreciation allowance, maintenance  expenses and input VAT on motor vehicles can only be claimed by a taxpayer subject to the following conditions: 

  a. Purchase of vehicle must be substantiated with official receipts and other records indicating the price, motor vehicle identification number, chassis number, etc.
  b. Taxpayer has to prove the direct connection of the motor vehicle to the business.
  c. Only one vehicle for land transport is allowed for the use of an official or employee with value not exceeding P2.4 million.
  d. No depreciation shall be allowed for yachts, helicopters, airplanes or land vehicles over P2.4 million unless the vehicle is used in the company's  transport operations or lease of transport equipment. 

The regulations was published on October 17, 2012 and took effect immediately.

Please see attached copy of RR 12-2012 for your reference and guidance.