PRESCRIBING THE IMPLEMENTING GUIDELINES ON THE REVISED TAX RATES ON ALCOHOL AND TOBACCO PRODUCTS PURSUANT TO THE PROVISIONS OF REPUBLIC ACT NO. 10351 AND TO CLARIFY CERTAIN PROV…
of Section 244 in relation to Section 245 of the National Internal
Revenue Code (NIRC) of 1997, as amended, these Regulations are hereby
promulgated to implement the provisions of Republic Act No. 10351, “An
Act Restructuring The Excise Tax On Alcohol And Tobacco Products By
Amending Sections 141, 142, 143, 144, 145, 8, 131 And 288 of Republic
Act No. 8424, Otherwise Known As The National Internal Revenue Code Of
1997, as amended By Republic Act No. 9334, And For Other Purposes”, as
well as to clarify certain provisions of existing revenue regulations on
alcohol and tobacco products.
SEC. 2. DEFINITION OF TERMS. – For purposes of these Regulations, the following words and phrases shall have the meaning indicated below:
(a) ACT – shall refer to Republic Act (R.A.) No. 10351;
(b) CARBONATED WINE – shall refer to an effervescent
wine artificially charge with carbon dioxide and containing more than
0.392 of carbon dioxide per 100 milliliters of wine;
(c) CIGARETTES PACKED BY HAND – shall refer to the
manner of packaging of cigarette sticks using an individual person’s
hands and not through any other means such as a mechanical device,
machine or equipment;
(d) COMPOUNDED LIQUORS – shall refer intoxicating
beverages whatever concocted by or resulting from mixture of or addition
to distilled spirits, either before or after rectification, of any
coloring matter, flavoring extract or essence or other kind of wine,
liquor or other ingredient;
(e) NET RETAIL PRICE – shall refer to the price at
which the alcohol and tobacco products are sold on retail in at least
five (5) major supermarkets in Metro Manila, excluding the amount
intended to cover the applicable excise tax and the value-added tax. For
alcohol and tobacco products which are marketed outside Metro Manila,
the “net retail price” shall mean the price at which the alcohol and
tobacco products are sold in at least five (5) major supermarkets in the
region excluding the amount intended to cover the applicable excise tax
and the value-added tax;
(f) SPARKLING WINE OR CHAMPAGNE– shall refer to an
effervescent wine containing more than 0.392 grams of carbon dioxide per
100 milliliters of wine resulting solely from the secondary
fermentation of the wine within a closed container;
(g) STILL WINE – shall refer to wine containing not more than 0.392 of carbon dioxide per 100 milliliters of wine; and
(h) SUGGESTED NET RETAIL PRICE – shall refer to the net
retail price at which locally manufactured or imported alcohol or
tobacco product is intended to be sold by the manufacturer or importer
at retail in major supermarkets or retail outlets in the prescribed
minimum number of Revenue Regions for brands with national or regional
markets.
SEC. 3. REVISED RATES AND BASES OF THE SPECIFIC TAX. –
There shall be levied, assessed and collected an excise tax on alcohol
or tobacco products, in accordance with the following schedule:
Based on the net retail price per proof (excluding the excise and value-added taxes), and
Per proof liter15%
Php20.00
15%
Php20.00
20%
Php20.00
20%
Php20.80
20%
Php21.63
20%
Effective 1/1/2016, the specific tax rate shall be increased by 4% every year thereafter
(a) Sparkling
wines/champagnes,
where the net retail
price (excluding
the excise and
value-added taxes)
per bottle of 750
ml., regardless of
proof is:(1) Five Hundred
Pesos (P500.00) or
less(2) More than Five
Hundred Pesos
(P500.00)(b) Still wines and
carbonated wines
containing fourteen
percent (14%) of
alcohol by volume
or less(c) Still wines and
carbonated wines
containing more
than fourteen
percent (14%) of
alcohol by volume
but not more than
twenty- five percent
(25%) of alcohol by
volume(d) Fortified wines
containing more
than twenty-five
(25%) percent of
alcohol by volume
shall be taxed as
distilled spirits
Php250.00
Php700.00
Php30.00
Php60.00
Taxed as
Distilled
Spirits
Php260.00
Php728.00
Php31.20
Php62.40
Taxed as Distilled Spirits
Php270.40
Php757.12
Php32.45
Php64.90
Taxed as Distilled Spirits
Php281.22
Php787.40
Php33.75
Php67.50
Taxed as Distilled Spirits
Php292.47
Php818.90
Php35.10
Php70.20
Taxed as Distilled Spirits
Effective
1/1/2014, the
specific tax
rate shall be
increased by
4%
every year
thereafter
ILLUSTRATION: No. 1- Distilled Spirits Facts: ABC Corp. removes from its factory Brand “XEY” Whisky with the following details:
– 2400 bottles @ 330 ml bottle – 40% alcohol strength – Net Retail Price (NRP) is Php 30.00 per bottle
Step 1. Compute the proof of Brand “XEY” by multiplying the alcohol strength by 2.
40% x 2 = 80 proof
Step 2. Compute the excise tax due on the removals.
(A) Specific Tax Due Per Bottle of 330 ml.:
Specific Tax per proof liter P20.00 Multiplied by Proof of 330 ml.
bottle (.330 ml x .80) .264 Specific Tax per bottle of 330 ml . P 5.28
(B) Ad Valorem Tax Due Per Bottle of 330 ml.: NRP of 330 ml bottle
P30.00 Multiplied by Proof .80 NRP per proof P24.00 Multiplied by Ad
Valorem Tax rate 15% Ad Valorem Tax Due per bottle of 330 ml. P 3.60
Total Excise Tax Rate per bottle of 330 ml. P 8.88 Multiplied by total
number of bottles removed 2,400 Total Excise Tax Due P21,312.00 No. 2 –
Cigars FACTS: Total Retail Selling Price, net of VAT and excise tax, per
box of cigar containing 25 pieces, P 3,000.00 Step 1: Compute the NRP
per cigar. P 3,000.00 divided by 25 cigars = P 120.00 Step 2: Compute
the total excise tax due. Ad Valorem Tax (AVT) Due per cigar:
NRP-P120.00 x AVT rate 20% P 24.00 Add: Specific Tax (ST) Due: Specific
Tax Rate per cigar P 5.00 Total Excise Tax Per Cigar P 29.00 Multiplied
by the number of cigars per box 25 Total Excise Tax Due and Payable
P725.00
SEC. 4. TAX CLASSIFICATION OF ALCOHOL AND TOBACCO PRODUCTS. –
Any alcohol or tobacco product that is introduced in the domestic
market on or after the effectivity of this Act shall be initially tax
classified according to their suggested net retail prices as declared in
the prescribed manufacturer’s or importer’s sworn statement, subject to
the initial validation and revalidation requirements prescribed under
Revenue Regulations No. 3-2006, as amended by Section 6 of these
Regulations.
In case of an alcohol and or tobacco product that
was duly registered with the BIR before the effectivity of the Act but
was not tax classified by the BIR according to the new tax rates
provided under the Act, such product shall be treated as a newly
introduced product upon re-introduction thereof in the domestic market
after the effectivity of the Act. Accordingly, the tax classification
thereof shall be based on the suggested net retail price declared in the
aforesaid sworn statement, subject to the initial validation and
revalidation requirements.
The proper tax classification of all
fermented liquors and tobacco products, whether registered before or
after the effectivity of the Act, shall be determined every two (2)
years from the date of effectivity of the Act.
For purposes of
tax classification, alcohol or tobacco products, whether imported or
domestically manufactured, shall be taxed according to their individual
brand name (whether or not with prefix or suffix), color and/or design
of label (such as logo, font, picturegram, and the like), manner and/or
form of packaging or size of container of the product. Accordingly, the
following instances, but not limited to, shall be taxed differently:
(a) Two products bearing exactly the same root name but with different
suffixes or prefixes (b) Two products bearing exactly the same brand
name but with different colors and/or design of labels (c) Two products
bearing exactly the same brand name and label but with different forms
of packaging (e.g., soft packs and hard packs for cigarettes, or in
bottles, cans or kegs for alcohol products) (d) Two products bearing
exactly the same brand name and label but with different sizes of
container (e.g., one liter, 500 ml., 330 ml., etc., for alcohol
products) (e) One product is sold in a regular basis while the other
product is introduced in a limited basis such as a special edition, for
specific occasion and other similar instances
SEC. 5. DOWNWARD RECLASSIFICATION OF FERMENTED LIQUORS. –
Any downward reclassification of any fermented liquor product that is
duly registered with the BIR at the time of effectivity of the Act which
will reduce the tax imposed herein, or the payment thereof, shall be
prohibited. Starting January 1, 2014, the applicable tax rate shall be
increase by four percent (4%) annually: Provided, however, it shall not be lower than the rates prescribed under Section 3 of these Regulations.
ILLUSTRATION:
No. 3 FACTS: MAA, Inc., a beer manufacturer, produces the following: –
LUV brand, NRP Php21.50 per liter and currently taxed at Php15.49 under
Republic Act (RA) No. 9334 – GIV brand, NRP of Php51.50 per liter and
currently taxed at Php20.57 under RA No. 9334 Question: What is the
applicable excise tax rate on MAA, Inc.’s LUV and GIV brands on January
1, 2013 and January 1, 2014? Answer: Due to the prohibition on downward
reclassification on fermented liquors, MAA, Inc. should apply the
following tax rates: LUV Brand Jan. 1, 2013: Applicable tax rate is
P15.49 per liter instead of the specific tax rate of Php15.00 per liter
(since NRP of Php 21.50 is less than Php50.60) classified imposed under
the Act. Jan. 1, 2014: Applicable tax rate is P17.00 per liter instead
of the specific tax rate of Php16.10 (Php15.49 x 104%). GIV Brand Jan.
1, 2013: Applicable tax rate is P20.57 per liter instead of the specific
tax rate of Php20.00 per liter (since NRP of Php 51.50 is more than
Php50.60) classified imposed under the Act. Jan. 1, 2014: Applicable tax
rate is P21.39 (Php20.57 x 104%) per liter instead of the specific tax
rate of Php21.00.
SEC. 6. REVISED REVALIDATION PERIOD FOR NEWLY INTRODUCED ALCOHOL OR TOBACCO PRODUCTS. –
The revalidation of the suggested net retail price of a newly
introduced alcohol or tobacco product shall be conducted after the end
of nine (9) months from the initial validation. The initial validation
and revalidation of the suggested net retail price of all newly
introduced alcohol and tobacco products shall be conducted exclusively
by the authorized representatives of the BIR.
SEC. 7. SUBMISSION OF SWORN STATEMENT.
– Every local manufacturer or importer of alcohol and tobacco products
shall a duly notarized manufacturer’s or importer’s sworn statement for
alcohol or tobacco product showing, among others, the following
information:
(a) Name, address, TIN and assessment number of the
manufacturer or importer; (b) Complete root name of the brand as well as
the complete brand name with modifiers, if any; (c) Complete
specifications of the brand detailing the specific measurements,
weights, manner of packaging, etc.; (d) Name(s) of the region(s) where
the brand is/are to be marketed; (e) Wholesale price per case, gross and
net of VAT and excise tax; (f) Suggested retail price, gross and net of
VAT and excise tax, per pack or per bottle, as the case may be; (g)
Detailed production/importation costs and all other expenses incurred or
to be incurred until the product is finally sold (e.g. materials,
labor, overhead, selling and administrative expenses) per case; (h)
Applicable rate of excise tax per unit of measure or value, as the case
may be; and (i) Corresponding excise and value-added taxes per case.
The manufacturer’s or importer’s sworn statement shall be submitted as a
supporting document to the prescribed application for the initial
registration of alcohol or tobacco product and thereafter submit an
updated sworn statement on or before the end of the months of June and
December of the year: Provided, however, That whenever there is a
change in the cost to manufacture, produce and sell the brand or change
in the actual selling price of the brand, the updated sworn statement
shall be submitted at least five (5) days before the actual removal of
the product from the place of production or release from the customs’
custody, as the case may be: Provided, further, That if the
manufacturer or importer sells or allows such goods to be sold at
wholesale in another establishment of which he is the owner or the
profits thereof of which he has an interest, the selling price in such
establishment shall constitute the wholesale price. Should such price be
less than the said costs and expenses, a proportionate margin of profit
of not less than ten percent (10%) thereof shall be added to constitute
the wholesale price. With respect to imported alcohol or tobacco
products, the cost of importation shall, in no case, be less than the
value indicated in the reference books or any other reference materials
used by the BOC in determining the proper valuation of the imported
products, or the dutiable value as defined under the Tariff and Customs
Code of the Philippines, as amended, whichever, is higher: Provided, finally,
That, in case the newly introduced alcohol or tobacco product shall be
subsequently marketed in another region/other regions before the proper
tax classification is finally determined by the BIR, an updated sworn
statement shall be submitted to the appropriate BIR Office before the
same shall be removed from the place of production.
The sworn
statement prescribed herein shall be subject to verification by the BIR
to validate its contents with respect to its accuracy and completeness.
In the event that the contents thereof are found to be inaccurate and/or
incomplete, the taxpayer shall be required to submit a revised sworn
statement, without prejudice to the imposition of corresponding
sanctions and penalties.
SEC. 8. UNDERSTATEMENT OF SUGGESTED NET RETAIL PRICE. –
The understatement of the suggested net retail price by as much as
fifteen percent (15%) of the actual net retail price shall render the
manufacturer or importer liable for additional excise tax equivalent to
the tax due and difference between the understated suggested net retail
price and the actual net retail price.
ILLUSTRATION:
No. 4 – CPI Corp., a cigarette manufacturer, submitted a sworn
statement of a cigarette product, “Mirage”, wherein the tax rate to be
imposed is P12.00 per pack based on the Suggested Net Retail Price
(SNRP), excluding VAT and excise, of P 9.50 per pack. After three months
from the date of submission of the sworn statement, the BIR conducted a
price survey and found out that the Actual Net Retail Price (ANRP),
excluding VAT and excise tax is actually P12.00 subject to the higher
excise tax rate of P25.00 per pack. The total volume removed by CPI
Corp. on the product is 10,000 packs from the time of its removal up to
the time of the price survey. Compute the total deficiency excise tax
and penalties of CPI Corp., if there are any.
Step 1. Determine whether or not the understatement of the SNRP is equal to or more than 15% of the ANRP
SNRP per Sworn Statement P 9.50 ANRP per Validation 12.00 Difference P
2.50 Percentage of understatement [(P2.50/ P9.50) x 100%] 26.32%
Since the understatement of 26.32% is more than 15%, CPI Corp is,
therefore, liable to the additional penalty for understatement of
suggested net retail price.
Step 2. Compute the deficiency excise and interest
Tax rate per ANRP P 25.00 Less: Tax Rate paid per SNRP 12.00 Deficiency
Tax 13.00 Add: Additional Excise Tax Excise Tax Due on ANRP 25.00
Difference (SNRP-ANRP) 2.50 27.50 Total adjusted tax due per pack 40.50
Multiplied by volume removed 10,000 Total Adjusted Deficiency tax due
P405,000.00 Add: 20% Interest [P405,000x 20% x3/12] 20,250.00 Total
adjusted deficiency excise tax and interest P425,250.00
Step 3. Compute the additional penalty to CPI Corp. as a juridical person
Total adjusted deficiency excise tax and interest P 425,250.00
Additional penalty as a juridical entity [P425,250 x 3] P 1,275,750.00
Step 4. Compute the total amount due from CPI Corp. Total adjusted
deficiency excise tax and interest P 425,250.00 Additional penalty as a
juridical entity [P425,250 x 3] 1,275.750.00 Total Amount Due P
1,701,000.00
SEC. 9. EXCISE TAX TREATMENT OF ALL IMPORTATIONS
OF ALCOHOL OR TOBACCO PRODUCTS BY DUTY FREE PHILIPPINES, DUTYFREE SHOPS,
OR INTO ECONOMIC ZONES AND FREEPORT ZONES. – The provision of any
special or general law to the contrary notwithstanding, the importation
of alcohol or tobacco products, even if destined for tax and duty-free
shops, Duty Free Philippines or into the chartered or legislated
economic and/or freeport zones shall be subject to excise tax pursuant
to the provisions of the Act.: Provided, however, That, upon the
effectivity of the Act, the importation of any alcohol or tobacco
product bearing suffixes or prefixes to the root name, color and/or
design of the label (such as logo, font, picturegram, and the like),
manner and/or form of packaging or size of container of the product that
is different from that already registered and locally being sold in the
domestic market shall be treated as a newly introduced product.
Accordingly, the same shall be initially classified according to its
suggested net retail price, subject to the validation and revalidation
requirements prescribed by these Regulations.
SEC. 10. ADDITIONAL EXPORT AND IMPORT REQUIREMENTS FOR TOBACCO PRODUCTS. –
No tobacco products manufactured in the Philippines and produced for
export shall be removed from their place of manufacture or exported
without posting of an export bond equivalent to the amount of the excise
tax due thereon if sold domestically; provided, however, that tobacco
products for export may be transferred from the place of manufacture to a
bonded facility, upon posting of a transfer bond, prior to export.
Tobacco products imported into the Philippines and destined for foreign
countries shall not be allowed entry without posting a bond equivalent
to the amount of customs duty, excise and value-added taxes due thereon
if sold domestically. SEC. 11. REVISED PROVISIONS FOR THE MANNER OF PACKAGING OF CIGARETTES. –
All Cigarettes whether packed by hand or packed by machine shall only
be packed in twenties (20s), and through other packaging combinations
which shall result to not more than twenty sticks of cigarettes:
Provided, That, in case of cigarettes packed in not more than twenty
sticks, whether in 5 sticks, 10 sticks and other packaging combinations
below 20 sticks, the net retail price of each individual package of 5s,
10s, etc. shall be the basis of imposing the tax rate prescribed under
the Act.
SEC. 12. TRANSITORY PROVISIONS. – Upon the effectivity of the Act, the following transitory provisions shall be strictly observed by all concerned:
(a) All alcohol and tobacco products existing in the market at the time
of the effectivity of this Act shall be initially classified according
to the tax rates prescribed by the Act based on the 2010 price survey of
these products conducted by the Bureau of Internal Revenue (BIR),
subject to the prohibition against downward reclassification on
fermented liquors: Provided, however, That in case of alcohol and
or tobacco products that were introduced after the 2010 price survey
but before the effectivity of the Act, their respective tax
classification or rate shall be based on the suggested net retail price
declared in latest sworn statement filed by the local manufacturer or
importer, as the case maybe. The Commissioner of Internal Revenue shall
issue a Revenue Memorandum Circular containing the tax
classifications/rates applicable to all alcohol and tobacco products
existing in the market at the time of the effectivity of the Act. (b)
For purposes of determining the actual volume of locally manufactured
alcohol and tobacco products that shall be imposed with the new tax
rates upon the removal thereof from the place of production, an actual
stocktaking shall be conducted by the BIR on all stocks of locally
manufactured alcohol and tobacco products held in possession by the
manufacturer as of the effectivity of the Act. (c) The specific tax that
was paid on the physical inventory of ethyl alcohol held in possession
by manufacturers of compounded liquors as of the effectivity of the Act
subsequently used as raw materials in the production of compounded
liquors shall not be entitled to tax credit/refund or shall not be
deducted from the total excise tax due on compounded liquors.
SEC. 13. PENALTIES.
– Violations of these Regulations shall be subject to the corresponding
penalties under Title X of the NIRC of 1997, as amended.
Further, the following penalty provisions are hereby prescribed pursuant to the provisions of the Act, as follows:
(a) Any manufacturer or importer who misdeclares or misrepresents in
his or its sworn statement herein required any pertinent data or
information shall, upon discovery, be penalized by a summary
cancellation or withdrawal of his or its permit to engage in business as
a manufacturer or importer of alcohol or tobacco products; (b) Any
corporation, association or partnership liable for any of the acts or
omissions in violation of the Act and implemented by these Regulations
shall be fined treble the aggregate amount of deficiency taxes,
surcharges and interest which may be assessed pursuant to the provisions
of the Act; (c) Any person liable for any of the acts or omission
prohibited under the Act and implemented by these Regulations shall be
criminally liable and penalized under Section 254 of the NIRC of 1997,
as amended; and (d) If the offender is not a citizen of the Philippines,
he shall be deported immediately after serving the sentence, without
further proceedings for deportation. SEC. 14. SEPARABILITY CLAUSE –
If any of the provisions of these Regulations is declared invalid by a
competent court, the remainder of these Regulations or any provision not
affected by such declaration of invalidity shall remain in force and
effect. SEC. 15. REPEALING CLAUSE. – All regulations, rulings,
orders, or portions thereof which are inconsistent with the provisions
of these Regulations are hereby revoked, repealed or amended,
accordingly. SEC. 16. EFFECTIVITY. – These Regulations shall take effect upon its publication in leading newspapers of general circulation.
(SGD.) CESAR V. PURISIMA Secretary of Finance Recommending Approval: (SGD.) KIM S. JACINTO-HENARES Commissioner of Internal Revenue