Excise Tax on Cars in the Philippines: How BIR Automobile Excise Tax and VAT Stack
Buying a car in the Philippines means paying two taxes stacked on top of the manufacturer’s or importer’s price: automobile excise tax under NIRC Section 149, ranging from 4% to 50% depending on price bracket, followed by 12% VAT computed on the excise-inclusive amount. That stacking — VAT charged on top of excise tax, not just on the base price — is why a car’s total tax load compounds faster than a single flat rate would suggest. This post walks through the current TRAIN-law bracket table and a full worked computation so you can see exactly where the numbers come from.
Check Your Car Tax Math Before You Sign FREE →This post is a focused deep-dive on automobiles. For the broader mechanics of how excise tax works across all excisable goods (not just cars), see What Is Excise Tax in the Philippines?. For how VAT applies when a vehicle is imported rather than bought locally, see VAT on Importation in the Philippines.
What is the legal basis for car excise tax? #
Automobile excise tax in the Philippines is imposed under NIRC Section 149, with the current rate structure set by the TRAIN Law (Republic Act No. 10963), effective January 1, 2018. Section 149 was originally rationalized by Republic Act No. 9224 in 2003, which introduced a bracketed, price-based excise schedule for automobiles in place of older rate structures. TRAIN then replaced that 2003-era bracket schedule with the rates currently in force, applied to the same tax base concept: the vehicle’s net price before mark-up, VAT, and other charges.
What is the tax base — sticker price or something else? #
Car excise tax is not computed on the price a buyer sees on the dealer’s sticker or invoice — it’s computed on the Net Manufacturer’s Price for locally manufactured or assembled units, or the Net Importer’s Selling Price for imported units. That net price strips out the dealer’s markup, the 12% VAT, and other charges added downstream, leaving the manufacturer’s or importer’s own selling price as the base the excise tax bracket applies to. This distinction matters because two cars with the same retail sticker price can carry different excise tax if their net manufacturer’s or importer’s prices differ.
What are the current TRAIN-law excise tax brackets? #
Since January 1, 2018, automobile excise tax under the TRAIN Law runs across four brackets, from 4% at the lowest price tier up to 50% on the portion of net price above ₱4,000,000. The table below reflects the rates currently in force; TRAIN replaced an earlier, differently structured bracket schedule from the RA 9224 era, so any car-tax reference using older percentage figures is describing a schedule no longer in effect.
| Net Manufacturer’s/Importer’s Price | Excise tax rate |
|---|---|
| Up to ₱600,000 | 4% |
| Over ₱600,000 up to ₱1,000,000 | ₱24,000 + 10% of the value in excess of ₱600,000 |
| Over ₱1,000,000 up to ₱4,000,000 | ₱64,000 + 20% of the value in excess of ₱1,000,000 |
| Over ₱4,000,000 | ₱664,000 + 50% of the value in excess of ₱4,000,000 |
Because bracket figures like these are periodically referenced inconsistently across secondary sources, confirm the exact current brackets against the BIR or the Department of Finance before relying on them for a large purchase decision.
How does VAT stack on top of the excise tax? #
The 12% VAT on a car sale or importation is computed on the price after excise tax has already been added — not on the pre-excise net price — which means VAT is effectively charged on the excise tax itself. In practice, the seller or importer first applies the applicable excise tax bracket to the net manufacturer’s or importer’s price, adds that excise tax to the price, and then computes 12% VAT on the resulting excise-inclusive total. This ordering is what makes a car’s combined tax burden compound rather than simply add: the buyer is paying VAT on a tax, not only on the underlying value of the vehicle.
Worked example: a ₱1,500,000 net-price car #
A car with a Net Manufacturer’s Price of ₱1,500,000 falls in the third bracket, generating ₱164,000 in excise tax, and then 12% VAT is computed on the excise-inclusive ₱1,664,000 — for a combined excise-plus-VAT burden of ₱363,680 on top of the base price. Here is the step-by-step computation:
| Step | Computation | Amount |
|---|---|---|
| 1. Net Manufacturer’s Price | Given | ₱1,500,000 |
| 2. Bracket applied | Over ₱1,000,000 up to ₱4,000,000: ₱64,000 + 20% of excess over ₱1,000,000 | — |
| 3. Excess over ₱1,000,000 | ₱1,500,000 − ₱1,000,000 | ₱500,000 |
| 4. 20% of excess | ₱500,000 × 20% | ₱100,000 |
| 5. Excise tax due | ₱64,000 + ₱100,000 | ₱164,000 |
| 6. VAT base (price + excise tax) | ₱1,500,000 + ₱164,000 | ₱1,664,000 |
| 7. VAT due | ₱1,664,000 × 12% | ₱199,680 |
| 8. Total tax added (excise + VAT) | ₱164,000 + ₱199,680 | ₱363,680 |
| 9. Final tax-inclusive price | ₱1,500,000 + ₱363,680 | ₱1,863,680 |
On a ₱1,500,000 net-price vehicle, excise tax and VAT together add ₱363,680 — roughly 24% of the original net price — before the dealer’s own markup and other charges are even factored in. This is why the final showroom price of a mid-range car can run well above what the net manufacturer’s price alone would suggest.
Do electric, hybrid, or pickup vehicles get different treatment? #
Purely electric vehicles are fully exempt from automobile excise tax, hybrid electric vehicles pay only half the applicable bracket rate, and pickup trucks — long exempt — lost that exemption for units sold or imported from July 1, 2025 onward. These carve-outs sit on top of the bracket table above rather than replacing it:
- Purely electric vehicles: 100% exempt from automobile excise tax, intended to encourage EV adoption.
- Hybrid electric vehicles: pay only 50% of the excise tax otherwise computed under the applicable bracket.
- Pickup trucks: previously exempt from automobile excise tax entirely, but Revenue Regulations No. 18-2025, issued August 5, 2025 under the CMEPA law (Capital Markets Efficiency Promotion Act), removed that exemption effective July 1, 2025. Transition relief applies to pre-July-1-2025 inventory and units already in transit, so a pickup purchased or ordered before that date may still fall under the older exempt treatment depending on when it was booked into inventory.
Anyone comparing an EV, hybrid, or pickup purchase against a conventional gasoline or diesel car should factor these differences into the total tax computation, not just the base excise brackets.
Frequently asked questions #
How much is car excise tax in the Philippines? #
Under the TRAIN Law (Republic Act No. 10963), automobile excise tax ranges from 4% on vehicles with a Net Manufacturer’s or Importer’s Price of up to ₱600,000, up to 50% on the portion of that price exceeding ₱4,000,000. The exact bracket and fixed peso amounts depend on where the price falls; readers should confirm current rates with the BIR or DOF before a purchase decision.
Is car excise tax based on the sticker price? #
No. Automobile excise tax under NIRC Section 149 is based on the Net Manufacturer’s Price (for locally made or assembled units) or the Net Importer’s Selling Price (for imported units) — the price before the dealer’s markup, VAT, and other charges are added, not the retail price the buyer ultimately pays.
Do I pay VAT on top of the excise tax when buying a car? #
Yes. The 12% VAT on a car sale or importation is computed on the price after the excise tax has already been added, not on the pre-excise base price. This means VAT is charged on the excise tax itself, compounding the total tax added to the vehicle’s base price.
Are electric or hybrid vehicles exempt from excise tax? #
Purely electric vehicles are 100% exempt from automobile excise tax. Hybrid electric vehicles pay only 50% of the excise tax rate that would otherwise apply on the bracket schedule. Both incentives are meant to encourage adoption of lower-emission vehicles.
Are pickup trucks still exempt from excise tax? #
No, not entirely. Pickup trucks were exempt from automobile excise tax until Revenue Regulations No. 18-2025, issued August 5, 2025 under the CMEPA law, removed that exemption effective July 1, 2025. Transition relief applies to inventory or units already in transit before that date; buyers should confirm current treatment with the BIR before assuming an older exemption still applies.
Summary #
Car excise tax in the Philippines is computed on the vehicle’s Net Manufacturer’s or Importer’s Price — not the sticker price — using TRAIN-law brackets that run from 4% up to 50%, and 12% VAT is then layered on top of the excise-inclusive amount, compounding the total tax burden as shown in the ₱1,500,000 worked example above. Electric vehicles are fully exempt, hybrids pay half rate, and pickup trucks lost their long-standing exemption effective July 1, 2025 under Revenue Regulations No. 18-2025. Because bracket figures and exemptions are periodically updated, confirm the current numbers against the BIR or Department of Finance before finalizing a major vehicle purchase. For excise tax mechanics beyond automobiles, see What Is Excise Tax in the Philippines?; for how import VAT applies to a vehicle brought in from abroad, see VAT on Importation in the Philippines.