Cheaper EVs ahead! PBBM cuts import duties on EVs, spare parts until 2028

Battery Electric Vehicles (BEV) and their spare parts will likely get cheaper in a few months. 

This is after President Ferdinand Marcos Jr. signed Executive Order (E.O.) No. 12 on January 13, 2023. 

The measure implements the temporary lifting of specific import duties, particularly granting zero percent Most-Favored Nation or MFN Rate of Duty tariffs on various BEVs until 2028. It does not include Hybrid EVs (HEV).

The order takes effect 30 days after its publication in the Official Gazette. The Palace released a copy of the E.O. on January 19, 2023.

However, the Bureau of Customs still has to promulgate Implementing Rules and Regulations for the order to be enforced.

The National Economic Development Authority, which endorsed the reduction of MFN tariff rates on November 2022, will review the order after one year.

What BEVs are included?

The covered BEVs that will receive 0% MFN Rate of Duty include:

• Motor cars and other motor vehicles principally designed for the transport of persons, including station wagons and racing cars

• Motor vehicles for the transport of 10 or more persons, including the driver

• Motor vehicles for the transport of goods

• Kick scooters, self-balancing cycles, pocket motorcycles

• Bicycles with an auxiliary electric motor not exceeding 250 Watts and with a maximum speed not exceeding 25 km/h

“Temporarily modifying the rates of import duty on electric vehicles, and their parts and components, will help boost the electric vehicle market in the country, support the transition to emerging technologies, and encourage consumers to consider electric vehicles as a cleaner and greener transportation option,” Marcos said in the E.O.

Latest set of EV incentives

The highly awaited E.O. is the latest in a string of incentives that the government is rolling out to promote EV use in the Philippines.

Under the Tax Reform for Acceleration and Inclusion Law, or TRAIN Law, the government already provides excise-tax exemptions for battery EVs. It also imposes 50 percent of the excise tax rate for hybrid EVs.

An excise tax, according to the Bureau of Internal Revenue, is a tax “imposed on the production, sale or consumption of a commodity in a country.”

Meanwhile, Republic Act 11697, or the “Electric Vehicle Industry Development Act,” offers various non-fiscal incentives for EV owners until April 2030. These include:

• Exemptions from number-coding schemes implemented by the Metropolitan Manila Development Authority and local government units. 

• Priority at the Land Transportation Office (LTO) for all their registration concerns

• A 30-percent discount for battery EVs and a 15-percent discount for hybrid EVs for the LTO motor vehicle user's charge, vehicle registration, and inspection fees

Electric Vehicle Association of the Philippines (EVAP) president Edmund Araga told AutoFun Philippines on November 2022 that the government is working on other fiscal incentives for people who buy an EV.

Only new EVs by 2040

R.A. 11697 also sets a timeframe for when industrial and commercial companies, public transport operators, and government agencies will be required to have fleets that are at least five percent EV.

The law aims to transition these sectors to become fully electric.

R.A. 11697 also mandates significant changes in infrastructure for EVs, including the construction of dedicated EV parking slots and charging stations in all new public and private establishments.

Buildings that will be renovated must also comply with EV parking requirements.

Incentives will play a vital role in EV acceptance, especially considering the government’s goal of selling only brand-new EVs locally by 2040.

Would you go for an EV now that there is greater government support for electrification?