Honda Appeals After Chile Disqualifies Pickup for Tax Credit

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By Tom Azzopardi

Japanese carmaker Honda Motor Co. has sought an injunction against a ruling by Chile’s tax authority that its prize-winning Honda Ridgeline pickup truck doesn’t qualify for a tax credit.

In the filing before the Santiago Court of Appeals, datedJan. 13, lawyers representing Honda’s Chilean subsidiary Honda Motor de Chile SA said the Servicio de Impuestos Internos (SII) acted discriminately after ruling that importers and buyers of the Honda Ridgeline model don’t qualify for tax credits against Chile’s 19 percent value-added tax.

“The situation has resulted in losses worth millions of dollars to Honda, which are increasing day by day, as it pushes buyers of the Ridgeline trucks to the competition, given that they can obtain their trucks at a real price 19% cheaper than Honda,” said Cristian Gandarillas and Gabriel del Rio of Gandarillas, Montt, Del Río & Krausse in the filing.Many potential customers have delayed their decision to purchase until this month so that a favorable ruling on the injunction would allow Honda to recover at least part of the losses. Otherwise, the company could face annual losses totaling $37 million, they said. Most vehicle sales occur in Chile between September and December when new models become available.

SII disqualified the Ridgeline from the benefits in Opinion 3259, issued last year, as it was built using a unibody—where the chassis and bodywork form a single structure. Most light vehicles are built using a unibody design while all trucks, buses and most pickups use a separate frame and chassis.

Under Ruling No. 2,669, issued in 1998, to be recognized as a pickup, SII requires a vehicle to have been designed especially to transport goods, to have a load capacity of up to 2,000 kilograms and be equipped with separate passenger cabins and load beds.

The lawyers said the ruling contradicrs prior determinations and all available technical information on the issue, including from national automotive association ASAC. The Ridgeline has a separate passenger cabin and load bed, and the SII has ruled that other unibody models, such as Ssangyong’s New Actyon Sport NAS611 model, can qualify for the tax benefits, they noted.

The company added that the Honda Ridgeline had been chosen North American Truck of the Year 2017 by specialist media in the U.S., is sold in more than 20 countries and only Chile doesn’t recognize it as a pick-up for tax purposes.

The 3.5l Ridgeline retails for 32.5 million pesos ($49,000).

To contact the reporter on this story: Tom Azzopardi in Santiago at correspondents@bna.com

To contact the editor responsible for this story: Penny Sukhraj at psukhraj@bna.com

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