Pick-Ups Lose Tax-Exempt Status Starting July 1, 2025

The Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) No. 018-2025 to amend specific provisions of RR No. 25-2003, as amended, primarily concerning the excise tax on automobiles. This regulatory issuance implements Section 149 of the National Internal Revenue Code (NIRC) of 1997, as further amended by Section 18 of Republic Act No. 12214, known as the “Capital Markets Efficiency Promotion Act” (CMEPA).

The main objective of RR No. 018-2025 is the removal of pick-ups from the list of tax-exempt automobiles. The Regulations define “PICK-UPS” as motor vehicles having an enclosed cab and open bodies with low sides and tailgates. Effective July 1, 2025, these vehicles are explicitly excluded from the list of tax-exempt removals. Consequently, pick-up vehicles are now subject to the standard ad valorem tax schedule applied to other automobiles under Section 149 of the Tax Code.

The applicable ad valorem tax rates, based on the net manufacturer’s or importer’s selling price (excluding excise and value-added tax), are levied and collected as follows:

Selling Price Bracket	Tax Rate
Up to P600,000.00	4%
Over P600,000.00 up to P1,000,000.00	10%
Over P1,000,000.00 up to P4,000,000.00	20%
Over P4,000,000.00	50%

The regulations reinforce the preferential tax treatment for environmentally friendly vehicles. Purely electric vehicles shall continue to be exempt from the Excise Tax on automobiles. Hybrid vehicles shall be subject to fifty percent (50%) of the applicable excise tax rates.

The classification and recognition of electric vehicles are determined based on the Department of Energy’s (DOE) list of recognized electric vehicles, and the BIR shall make the final determination of exemption based on this list.Pick-ups are also excluded from the list of tax-exempt removals of automobiles. The following conditions remains exempt from ad valorem tax under certain conditions except pick-ups: a) Removals for Export, b) Delivery to Tax-Exempt Persons or Entities, c) Removals for delivery and use exclusively within the freeport zone, and d) Removal of automobiles for test run. The exemptions are subject to certain conditions.