Luxury Vehicle Sales Decline 30%

Sales in the market of luxury vehicles in the 1st quarter dropped by an unreasonably 30 percent as buyers, mostly upwardly mobile middle class, have become extra careful not to attract the fanatical eyes of the Bureau of Internal Revenue (BIR).

One of the officials of one of the luxury car companies in the country said 3 luxury car brands namely BMW, Mercedes Benz and Lexus only sold 264 units in the January – March period this year or 30 percent lower than the same period last year.

“Because of the heightened campaign of the BIR, buyers are scared, especially that most of our buyers are middle-class businessmen, who can now afford to upgrade their lifestyle,” the source said.

On the other hand, even the corporate clients and legitimate businessmen have cancelled their plans to buy luxury vehicles on the capture that they could face because of the undue inspection from the tax agency.

Among the 3 luxury car brand models, Mercedes Benz, having the biggest decrease with a reduction of 40 percent negative growth.

BMW, a German vehicle brand, posted the highest sales but still had a dropping off about 37 percent, while Lexus’ decline a modest 2 percent decrease.

Lexus sold a total of 75 units and is eyeing to sell a total of at least 300 units this year from 264 units last year.

Lexus Manila is set to introduce major model changes this year including its best selling RX, which is priced for P1.3 million.

Meantime, the hybrid models of Lexus have not really picked up as hybrids still account for a very small portion of total industry sales.

Lexus hybrid models have sold only 50 units so far.

Its hybrid cars are GT 200, GS450H, RX450H, LS600H with GT model accounting for 40 percent of sales being the most affordable at P2.3 million to P2.8 million.

There have been a good number of hybrid vehicle brands in the country but only Toyota has full hybrid models, the others are “mild” hybrid brands.

“We need to educate the market because hybrid is still little percentage of vehicle sales,” an official said.

Aside from the lack of awareness, the price of hybrid vehicles has remained very prohibitive because of the huge tax burden imposed on these imported cars.

The robust sales of hybrid vehicles in the US, Malaysia and Singapore have been largely attributed to the duty-tax treatment and other perks given to these vehicles.

For instance, a Lexus car in the US could sell for $200,000 with all the taxes but ends up only at $100,000 a unit because of the removal of taxes.

In the Philippines, hybrid vehicles are slapped with import duty, excise tax, vat vat and sales tax and 4 percent municipal tax.

Without these taxes, a P2.3-million hybrid could sell at considerably lower price of P1.6 million.

BIR: No More Deadline Extension

Respective individuals and corporations received a reminder coming from the Bureau of Internal Revenue (BIR) that they have only until today to file their 2011 income tax returns (ITRs).

Ms. Kim S. Jacinto Henares, BIR Commissioner, provided specific instructions to all revenue deputy and assistant commissioners in supervising the tax filing operations on the regional and district levels, mainly those in Metro Manila where a lot of taxpayers are based.

Including the 25% surcharge and 20% interest per year, she highlighted that April 16 is the deadline and will not be extended, if so, fines will be obligatory on late filers.

BIR chief uttered that in case of purposive or intentional neglect to file a return, the present surcharge will be increased to 50 percent of the tax due.

Whether single or married, an individual taxpayer is allowed of the basic personal immunity of P50,000 plus P25,000 for each dependent child but not exceeding four. Only the other half reporting income can get the personal immunity.

The supplementary exemption for children shall be obtained by the husband, unless he waives his right in favor of his wife.

In the case of legally separated spouses, the supplementary exemption shall be claimed by the spouse who has safekeeping of the dependents.

Required to file ITRs are Filipino citizens residing here, Filipinos residing abroad but earning income here and foreigners residing and deriving income from the country.

An individual is excused from filing an ITR if his revenue does not surpass his total personal and additional exemptions and whose income has been subjected to final withholding tax.

Also exempted from this are the minimum wage earners and Overseas Filipino Workers (OFW) as far as their earnings from such employment are concerned.

An OFW is however required to file return and pay taxes if he derives income from sources within the country, say operating a grocery store and apartment houses.

An individual is not required to file ITR but may voluntarily submit one for purposes of loans and foreign travel requirements.

DOF Chief To Pacman: We Love You, But Please Pay Taxes

“Nobody is exempted from the Bureau of Internal Revenue’s (BIR) investigation” according to the country’s finance chief. These words are reminding Sarangani Rep. Manny Pacquiao to be aware of what the policies are.

However, Finance Secretary Cesar Purisima said that the tax agency is not distressing Pacquiao.

“I don’t think the BIR will dare harass an eight-time world champion. I believe this is just the BIR doing its job. No one is exempted from being investigated by the BIR. Even me, they ask for my files. We love Mr. Pacquiao and we respect him and we wish him the best. But at the same time we have a duty to make sure that we review everyone’s income tax return. And I don’t think Congressman Pacquiao should take this personally. I bet you most BIR people are fans of his and this is only the BIR doing its job,” Purisima said.

He also mentioned that the boxing champ doesn’t need to feel uneasiness about the issue if he already paid all his taxes. Also he gave assertion that there would be no double taxation if Pacquiao already paid his compulsions in the US.

“I think what the BIR is doing is to ask for documents because that’s part of the audit of any taxpayer. They’re asking for the amount of the taxes paid in the US and then the amount of taxes and revenue from the Philippines so that they can determine what taxes are due or not. There is no harassment,” he said.

Purisima stated that the BIR would not dare bother Pacquiao who is a “national icon, a national symbol and a national pride.”

He as well urged Pacquiao to give in his minutes to the bureau because it is his obligation as a citizen of the country.

Pacquiao on the other side asserted in a press conference that the charges filed by the BIR were meant to harass him.

Last February, the tax agency filed disrespect charges against the boxing champ for disregarding the BIR’s letters asking him to submit documents to the agency concerning his profits and corresponding tax payments.

A letter of Authority was issued by the BIR’s regional director Rozil Lozares for the boxing icon requesting him to acquire the documents regarding his profits.

Pacquiao’s tax payments significantly dropped to some P7 million in 2009 from P100 million in 2008, according to the tax agency.

Seemingly, Pacquiao disregarded the BIR’s request for documents.

BIR needs to examine 33 tax records including Pacquiao’s annual income tax return in 2010 which comprises his book of accounts, list of assets, as well as his earnings from his fights against Antonio Margarito and Joshua Clottey.

The tax agency also requested Pacquiao to supply them datum of his product endorsements.

The BIR filed a case against the boxing champion at the Office of the City Prosecutor in Koronadal in relation with their ongoing investigation.

Under heavy anxiety to raise incomes, BIR has been moving up efforts to collect taxes.

It is their goal to collect P1.066 trillion this year amount higher than last year’s objective of P940 billion and the actual tax-take of P924 billion.

I’m ashamed, says resigned BIR chief

MANILA, Philippines — Sixto Esquivias IV has resigned as commissioner of the Bureau of Internal Revenue (BIR) because, according to him, “it was the honorable thing to do.”

“The BIR has a large tax collection shortfall right now, and I feel ashamed to stay,” Esquivias said in Filipino in a telephone interview with the Philippine Daily Inquirer Monday night.

Esquivias, who was appointed to the top BIR post on Nov. 1, 2008, said he found it prudent to resign to give way to anyone who may be better at making the agency meet its tax collection targets.

“If someone can do the job better, then why would I stay?” he said.

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Gov’t pump-priming to continue next year

Teves: Balanced budget moved to 2013.

MANILA, Philippines – Finance secretary Margarito Teves said the government would still be on a pump-priming mode through 2010, appeasing concerns against a perceived premature belt-tightening, which critics said could stall the economy’s move to recovery.

“We are not yet doing an exit [from the pump-priming mode]. Next year’s budget will still have some degree of stimulus although not as huge as this year’s,” Teves told reporters yesterday at the sidelines of a forum on corporate governance organized by the Organization of Economic Cooperation and Development (OECD) held in Makati City.

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