Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session

2467

House Bill No.

Introduced by
HON. FERDINAND MARTIN G. ROMUALDEZ
and

HON. YEDDA MARIE K. ROMUALDEZ

AN ACT INCREASING THE EXCISE TAX ON ALCOHOL PRODUCTS,
HEATED TOBACCO. PRODUCTS AND VAPOR PRODUCTS, AMENDING
FOR THIS PURPOSE SECTIONS 141, 142, 143, 144 (B), 144(C), 147 AND
150 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED, AND FOR OTHER PURPOSES.

EXPLANATORY NOTE

Republic Act (RA) 10351 or the Sin Tax Reform was ‘signed into law in
December 2012. The law is @ good governance measure with Positive impact
on both fiscal and Public health. RA 10351 corrected the long-standing
weaknesses of the tobacco and alcohol excise tax ‘system and increased the
fates to reduce the demand for these Products. The Sin Tax Law also raised
much needed revenues to fund the Universal Health Care (UHC) program of
the government.

The Sin Tax Law has been an unqualified success in its health and revenue
objectives. Since its implementation in 2013, the government collected
P427.6 billion pesos in incremental revenues (CY 2013-2018), of which
P132.8 billion or 31.1 percent is from alcohol. This has increased the budget
Of the Department of Health (DOH) as the incremental revenues derived from


RA 10351 were largely earmarked for UHC. The DOH budget more than
tripled from P53.2 billion in 2013 to P166.7 billion in 2018 or a growth of 213.2
Percent. A large amount of the incremental revenues earmarked for health is
allocated for expanded health services and Premium subsidies for the health
insurance of indigents and senior citizens not covered by the National Health
Insurance Program. As a result, Philippine Health Insurance Corporation
(PhilHealth) almost tripled the coverage of the poor and the near poor from
5.2 million in 2013 to 15.7 million indigents by the end of 2018.

However, with the passage of RA 11223 or the UHC Law, funding requirement
increased substantially. The estimated funding for its first year of
implementation alone costs P257 billion, and a total of P1.4 trillion from 2020
to 2024. The implementation of the UHC Law will be funded by the sin tax
earmarked funds through the regular annual budget of the DOH and
PhilHealth, Philippine Gaming Corporation (PAGCOR), Philippine Charity
Sweepstakes Office (PCSO), and PhilHealth Premium contributions. Of the
P257 billion funding requirement for 2020, only P195 billion will be funded by
these sources, incurring a funding gap of P62 billion.

In order to reduce this funding gap, Congress approved a bill increasing
excise tax on tobacco products, and imposed new taxes on heated tobacco
Products (HTPs) and vapor products. The estimated revenue generated under
the Congress-approved bill is P15.7 billion in 2020, and a total of P129.9
billion from 2020 to 2024. However, this amount is not enough to close the
funding gap of the UHC Law.

This bill seeks to increase the tax on alcohol Products, and HTPs and vapor
Products to provide additional funding source for the UHC Law in order to
further reduce the funding gap. This additional funding will help sustain
PhilHealth coverage for all Filipino families; improve accessibility, affordability,
and quality of health care; and provide better outpatient benefit package,
including check- up or consultation and medicines.


An equally important objective of the bill is to discourage excessive
Consumption of alcohol products especially among the youth. Excessive
alcohol drinking leads to diseases like cirrhosis or liver damage and
pancreatitis, among others. Moreover, alcohol drinking leads to behaviors like
drunk driving and domestic violence. According to Online National Electronic
Injury Surveillance System of the DOH, there were 3,213 vehicular accidents
due to alcohol intoxication or 5.9 Percent of the 54,177 transport or vehicular
Crash-related injury cases in 2018. This has more than doubled from 1,376
alcohol-related accidents in 2013. This reform seeks to bring us close to the
DOH target of 10.0 percent reduction in harmful alcohol consumption.

The increase in excise tax rates on HTPs is in line with the definition of
cigarettes under Republic Act (RA) No. 9211. Cigarettes are defined as any
foll or tubular construction, which contain tobacco or its derivatives, and
intended to be burned or heated under ordinary conditions of use. Further,
Section 147 of the 1997 Tax Code, as amended, defines cigarettes as rolls of
finely cut leaf tobacco, or any substitute therefor, wrapped in paper or in any
other material. Since HTPs are of roll or tubular construction that contain
tobacco materials and several filter sections wrapped in paper intended to be
heated, these products should be classified as Cigarettes subject to the same
excise tax rate.

The health impact and Safety of using vapor products and whether it is an aid
to cigarette smoking cessation have not yet received conclusive evidence.
However, because of the established addictive effect of nicotine, we propose
to increase the excise tax rates of vapor products to discourage consumption.
To prevent the children and youth from consuming vapor products, variants
with flavoring other than plain tobacco or Plain menthol, are proposed to be
Prohibited.

Imposing higher excise taxes is still the most effective policy tool to affect
Prices to discourage consumption of sin Products, in particular, among the
youth and the poor who are the most sensitive to price changes.


In light of the foregoing, the Passage of this bill is earnestly sought.

ne G. ROMUALDEZ

HON. YEDDA K, ROMUALDEZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Batasan Hills, Quezon City

EIGHTEENTH CONGRESS
First Regular Session
2467

House Bill No.

SE ee

Introduced by
HON. FERDINAND MARTIN G. ROMUALDEZ
and

HON. YEDDA MARIE K. ROMUALDEZ

ee

AN ACT INCREASING THE EXCISE TAX ON ALCOHOL PRODUCTS,
HEATED TOBACCO PRODUCTS AND VAPOR PRODUCTS, AMENDING
FOR THIS PURPOSE SECTIONS 141, 142, 143, 144 (B), 144(C), 147 AND

150 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED, AND FOR OTHER PURPOSES.

Be it enacted by the Senate and the House of Representatives of the
Philippines in Congress assembled:

SECTION 1. Chapter III of the National Internal Revenue Code of 1997
(NIRC), as amended, is hereby amended, which shall read as follows:

CHAPTER III — EXCISE TAX ON ALCOHOL PRODUCTS

SEC. 141. Distilled Spirits. — On distilled Spirits, subject to the provisions of
Section 133 of this Code, an excise tax shall be levied, assessed and
collected based on the following schedules


[(a) Effective on January 1, 2013
(1) An ad valorem tax equivalent to fifteen percent (15%) of the net
fetail price (excluding the excise tax and the value-added tax) per
Proof; and

(2) In addition to the ad valorem tax herein imposed, a ‘specific tax of
Twenty pesos (P20. 00) per proof liter.

(b) Effective on January 1, 2015
(1) An ad valorem tax equivalent to twenty percent (20%) of the net
retail price (excluding the excise tax and the value-added tax) per
proof; and
(2) In addition to the ad valorem tax herein imposed, a ‘specific tax rate
of Twenty pesos (P20.00) per proof liter.

(c) In addition to the ad valorem tax herein imposed, the specific tax rate of
Twenty pesos (P20. 00) per proof liter imposed under this Section shall be
increased by four percent (4%) every year thereafter effective on January 1,
2016, through revenue regulations issued by the Secretary of Finance.]

(A) EFFECTIVE ON JANUARY 1, 2020
(1) AN AD VALOREM Tax EQUIVALENT TO TWENTY-FIVE
PERCENT (25%) OF THE NET RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX) PER PROOF; AND
(2) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED, A
SPECIFIC TAX OF FORTY PESOS (P40.00) PER PROOF LITER.

(B) EFFECTIVE ON JANUARY 1, 2021
(1) AN AD VALOREM Tax EQUIVALENT TO TWENTY-FIVE
PERCENT (25%) OF THE NET RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX) PER PROOF; AND


(2) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED, A
SPECIFIC TAX OF FORTY-FIVE PESOS (P45.00) PER PROOF
LITER.

(C) EFFECTIVE ON JANUARY 1, 2022
(1) AN AD VALOREM TAX EQUIVALENT TO TWENTY-FIVE
PERCENT (25%) OF THE NET RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX) PER PROOF; AND
(2) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED, A
SPECIFIC TAX OF FIFTY PESOS (P50.00) PER PROOF LITER.

(D) EFFECTIVE ON JANUARY 1, 2023
(1) AN AD VALOREM TAX EQUIVALENT TO TWENTY-FIVE
PERCENT (25%) OF THE NET RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX) PER PROOF; AND
(2) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED, A
SPECIFIC TAX OF FIFTY-FIVE PESOS (P55.00) PER PROOF LITER.

(E) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED, THE
SPECIFIC TAX IMPOSED UNDER THIS SECTION SHALL BE INCREASED
BY TEN PERCENT (10%) EVERY YEAR THEREAFTER EFFECTIVE ON
JANUARY 1, 2024, THROUGH REVENUE REGULATIONS ISSUED BY THE
SECRETARY OF FINANCE.

Medicinal preparations, flavoring extracts, and all other preparations, except
toilet preparations, of which, excluding water, distilled spirits from the chief
ingredient, shall be subject to the same tax as such chief ingredient.

This tax shall be proportionally increased for any strength of the spirits taxed
over proof spirits, and the tax shall attach to this substance as soon as it is in
existence as such, whether it be subsequently separated as pure or impure
Spirits, or transformed into any other substance either in the process of
original production or by any subsequent process.


‘Spirits or distilled spirits’ is the substance known as ethyl alcohol, ethanol or
Spirits of wine, including all dilutions, purifications and mixtures thereof, from
whatever source, by whatever Process produced, and shall include whisky,
brandy, rum, gin and vodka, and other similar products or mixtures.

‘Proof spirits’ is liquor containing one-half (1/2) of its volume of alcohol of a
specific gravity of seven thousand nine hundred and thirty-nine ten
thousandths (0.7939) at fifteen degrees centigrade (15C). A ‘proof liter’ means
a liter of proof spirits.

‘Net retail price’ shall mean the Price at which the distilled spirits is 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 distilled spirits which are marketed Outside Metro Manila, the ‘net retail
price’ shall mean the price at which the distilled spirits is 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. PROVIDED THAT THE
NET RETAIL PRICE SHALL BE INITIALLY PROVIDED BY THE
MANUFACTURER THROUGH A SWORN STATEMENT AND SHALL BE
VALIDATED BY THE BUREAU OF INTERNAL REVENUE THROUGH A
PRICE SURVEY.

Major supermarkets, as contemplated under this Act, shall be those with the
highest annual gross sales in Metro Manila or the region, as the case may be,
as determined by the BUREAU OF INTERNAL REVENUE [National Statistics
Office], and shall exclude retail outlets or kiosks, convenience or sari-sari
stores, and others of a similar nature: Provided, That no two (2) ‘supermarkets.
in the list to be surveyed are affiliated and/or branches of each other:
Provided, finally, That in case a particular distilled Spirit is not sold in major
‘supermarkets, the price survey can be conducted in retail outlets where said
distilled spirit is sold in Metro Manila or the Fegion, as the case may be, upon
the determination of the Commissioner of Internal Revenue.


The net retail price shall be determined by the Bureau of Internal Revenue
through [a] BIANNUAL price survey under oath.

The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight
Committee on the Comprehensive Tax Reform Program (COCCTRP) created
under Republic Act No. 8240.

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.

Distilled spirits introduced in the domestic market after the effectivity of this
Act shall be initially taxed according to their suggested net retail prices.

‘Suggested net retail price’ shall mean the price (excluding the value-added
tax and the excise tax) at which locally manufactured or imported distilled
spirits are intended by the manufacturer or importer to be sold on retail in
major supermarkets or retail outlets in Metro Manila for those marketed
nationwide, and in other regions, for those with regional markets. At the end of
three (3) months from the Product launch, the Bureau of Internal Revenue
shall validate the ‘Suggested net retail price of the new brand against the net
retail price as defined herein and initially determine the correct tax on a newly
introduced distilled spirits. After the end of nine (9) months from such
validation, the Bureau of Internal Revenue shall revalidate the initially
validated net retail price against the net retail price as of the time of
revalidation in order to finally determine the Correct tax on a newly introduced
distilled spirits.


[All distilled spirits existing in the market at the time of the effectivity of this Act
Shall be taxed according to the tax rates Provided above based on the latest
price survey of the distilled Spirits conducted by the Bureau of Internal
Revenue.]

The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight
Committee on the Comprehensive Tax Reform Program created under
Republic Act No. 8240.

Manufacturers and importers of distilled spirits shall, within thirty (30) days
from the effectivity of this Act, and within the first five (5) days of every third
month thereafter, submit to the Commissioner a Sworn statement of the
volume of sales AND REMOVALS for each Particular brand of distilled spirits
sold at his establishment for the three-month Period immediately preceding.

Any manufacturer or importer who, in violation of this Section, misdeclares or
misrepresents in his or its sworn statement herein required any pertinent data
or information shall, upon final findings by the Commissioner that the violation
was committed, be penalized by a summary cancellation or withdrawal of his
or its permit to engage in business as manufacturer or importer of distilled
spirits.

Any corporation, association or partnership liable for any of the acts or
omissions in violation of this Section shall be fined treble the amount of
deficiency taxes, Surcharges and interest which may be assessed pursuant to
this Section

Any person liable for any of the acts or omissions prohibited under this
Section shall be Criminally liable and penalized under Section 254 of this
Code. Any person who willfully aids or abets in the commission of any such
act or omission shall be criminally liable in the same manner as the principal.


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. 142. Wines. - On wines, there shall be collected per liter of volume
capacity effective on [January 1, 2013] JANUARY 1, 2020, the following
excise taxes:

(a) Sparkling wines/champagnes regardless of Proof, if the net retail
Price per bottle of seven hundred fifty millliter (750 ml.) volume
capacity (excluding the excise tax and value-added tax) is:

(1) Five hundred pesos (P500.00) or less ~ [Two hundred fifty
Pesos (P250.00)] THREE HUNDRED FORTY-EIGHT PESOS
(P348.00); and

(2) More than Five hundred Pesos (P500.00) - [Seven hundred
Pesos (P700.00)] NINE HUNDRED SEVENTY-FOUR PESOS
(P974.00).

(b) Still wines and carbonated wines Containing fourteen percent (14%)
Of alcohol by volume or less, [Thirty pesos (P30.00)] FORTY-TWO
PESOS (P42.00); and

(c) Still wines and carbonated wines containing more than fourteen
percent (14%) but not more than twenty-five percent (25%) of alcohol
by volume, [Sixty pesos (P60,00)] EIGHTY-FOUR PESOS (P84.00).

The rates of tax imposed under this Section shall be increased by [four
percent (4%)] TEN PERCENT (10%) every year thereafter effective on
January 1, [2014] 2021, through revenue regulations issued by the Secretary
of Finance.


Fortified wines containing more than twenty-five percent (25%) of alcohol by
volume shall be taxed as distilled Spirits. ‘Fortified wines’ shall mean natural
wines to which distilled spirits are added to increase their alcohol strength.

‘Net retail price’ shall mean the price at which sparkling wine/champagne is
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 sparkling wines/champagnes which are marketed outside Metro
Manila, the ‘net retail price’ shall mean the Price at which the wine is 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. PROVIDED THAT
THE NET RETAIL PRICE SHALL BE INITIALLY PROVIDED BY THE
MANUFACTURER THROUGH A SWORN STATEMENT AND SHALL BE
VALIDATED BY THE BUREAU OF INTERNAL REVENUE THROUGH A
PRICE SURVEY.

Major supermarkets, as contemplated under this Act, shall be those with the
highest annual gross sales in Metro Manila or the region, as the case may be,
as determined by the BUREAU OF INTERNAL REVENUE [National Statistics
Office], and shall exclude retail outlets or kiosks, convenience or sari-sari
stores, and others of a similar nature: Provided, That no two (2) ‘supermarkets.
in the list to be surveyed are affiliated and/or branches of each other:
Provided, finally, That in case a particular ‘Sparkling wine/champagne is not
‘sold in major supermarkets, the Price survey can be conducted in retail outlets
where said sparkling wine/champagne is sold in Metro Manila or the region,
as the case may be, upon the determination of the Commissioner of Internal
Revenue.

The net retail price shall be determined by the Bureau of Internal Revenue
through [a] BIANNUAL price survey under oath.

The methodology and all Pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight


Committee on the Comprehensive Tax Reform Program created under
Republic Act No. 8240.

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.

Sparkling wines/champagnes introduced in the domestic market after the
effectivity of this Act shall be initially tax classified according to their
‘suggested net retail prices.

‘Suggested net retail Price’ shall mean the price (excluding VAT and excise
tax) at which locally manufactured or imported sparkling wines/champagnes
are intended by the manufacturer or importer to be sold on retail in major
‘supermarkets or retail outlets in Metro Manila for those marketed nationwide,
and in other regions, for those with regional markets. At the end of three (3)
months from the product launch, the Bureau of Internal Revenue shall validate
the suggested net retail price of the Sparkling wine/champagne against the net
retail price as defined herein and initially determine the correct tax bracket to
which a newly introduced Sparkling wine/champagne shall be classified. After
the end of nine (9) months from such validation, the Bureau of Internal
Revenue shall revalidate the initially validated net retail price against the net
retail price as of the time of revalidation in Order to finally determine the
Correct tax bracket to which a newly introduced ‘sparkling wine/champagne
shall be classified.

The proper tax classification of Sparkling wines/champagnes, whether
registered before or after the effectivity of this Act, shall be determined every
two (2) years from the date of effectivity of this Act.


[All sparkling wines/champagnes existing in the market at the time of the
effectivity of this Act shall be taxed according to the net retail prices and the
tax rates provided above based on the latest Price survey of the sparkling
wines/champagnes conducted by the Bureau of Internal Revenue. ]

The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight
Committee on the Comprehensive Tax Reform Program created under
Republic Act No. 8240.

Manufacturers and importers of wines shall, within thirty (30) days from the
effectivity of this Act, and within the first five (5) days of every month
thereafter, submit to the Commissioner a sworn Statement of the volume of
sales AND REMOVALS for each particular brand of wines sold at his
establishment for the three-month period immediately preceding.

Any manufacturer or importer who, in violation of this Section, misdeclares or
misrepresents in his or its sworn statement herein required any pertinent data
or information shall, upon final findings by the Commissioner that the violation
was committed be penalized by a ‘summary cancellation or withdrawal of his
Or its permit to engage in business as manufacturer or importer of wines.

Any corporation, association or Partnership liable for any of the acts or
omissions in violation of this Section shall be fined treble the amount of
deficiency taxes, surcharges and interest which may be assessed pursuant to
this Section.

Any person liable for any of the acts or omissions prohibited under this
Section shall be criminally liable and penalized under Section 254 of this
Code. Any person who willfully aids or abets in the commission of any such
act or omission shall be criminally liable in the same manner as the principal.
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. 143. ALCOPOPS AND Fermented Liquor. — There shall be levied,
assessed and collected an excise tax on ALCOPOPS, beer, lager beer, ale,
Porter and other fermented liquors except tuba, basi, tapuy and similar
domestic fermented liquors in accordance with the following schedule

[Effective on January 1, 2013

(a) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume capacity is Fifty pesos and sixty centavos
(P50.60) or less, the tax shall be Fifteen Pesos (P15.00) per liter; and

(b) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume Capacity is more than Fifty pesos and sixty
centavos (P50.60), the tax shall be Twenty pesos (P20. 00) per liter.

Effective on January 1, 2014

(a) If the net retail Price (excluding the excise tax and the value-added
tax) per liter of volume capacity is Fifty pesos and ‘sixty centavos
(P50.60) or less, the tax shall be Seventeen pesos (P17.00) per
liter; and

(b) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume Capacity is more than Fifty pesos and sixty
centavos (P50.60), the tax shall be ‘Twenty-one pesos (P21 00) per
liter.

Effective on January 1, 2015


(a) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume capacity is Fifty pesos and sixty centavos
(P50.60) or less, the tax shall be Nineteen pesos (P19.00) per liter;
and

(b) If the net retail Price (excluding the excise tax and the value-added
tax) per liter of volume Capacity is more than Fifty pesos and sixty
centavos (P50.60), the tax shall be Twenty-two pesos (P22.00) per
liter.

Effective on January 1, 2016

(a) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume capacity is Fifty pesos and sixty centavos
(P50.60) or less, the tax shall be Twenty-one pesos (P21.00) per
liter; and

(b) If the net retail Price (excluding the excise tax and the value-added
tax) per liter of volume Capacity is more than Fifty pesos and sixty
centavos (P50.60), the tax shall be Twenty-three pesos (P23.00) per
liter.

Effective on January 1, 2017, the tax on all fermented liquors shall be Twenty-
three pesos and fifty centavos (P23.50) per liter]

EFFECTIVE ON JANUARY 1, 2020, THE TAX ON ALL FERMENTED
LIQUORS REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD
AND BREWED AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS
SUCH AS PUBS AND RESTAURANTS SHALL BE FORTY PESOS (P40.00)
PER LITER.

EFFECTIVE ON JANUARY 1, 2021, THE TAX ON ALL FERMENTED
LIQUORS REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD


AND BREWED AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS
SUCH AS PUBS AND RESTAURANTS SHALL BE FORTY-FIVE PESOS
(P45.00) PER LITER.

EFFECTIVE ON JANUARY 1, 2022, THE TAX ON ALL FERMENTED
LIQUORS REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD
AND BREWED AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS
SUCH AS PUBS AND RESTAURANTS SHALL BE FIFTY PESOS (P50.00)
PER LITER.

EFFECTIVE ON JANUARY 1, 2023, THE TAX ON ALL FERMENTED
LIQUORS REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD
AND BREWED AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS
SUCH AS PUBS AND RESTAURANTS SHALL BE FIFTY-FIVE PESOS
(P55.00) PER LITER.

The rates of tax imposed under this Section shall be increased by [four
Percent (4%)] TEN PERCENT (10%) every year thereafter effective on
January 1, [2018] 2024, through revenue regulations issued by the Secretary
of Finance. [However, in case of fermented liquors affected by the ‘no
downward reclassification’ provision prescribed under this Section, the four
percent (4%) increase shall apply to their respective applicable tax rates.]

‘ALCOPOPS' SHALL MEAN PRE-MIXED ALCOHOLIC BEVERAGES WITH
ALCOHOL CONTENT OF LESS THAN 10% ALCOHOL BY VOLUME AND
WHICH ALCOHOL IS FROM MALT OR WINES OR A DISTILLATION
PROCESS. ALCOPOPS SHALL BE TAXED AS FERMENTED LIQUOR.

[Fermented liquors which are brewed and sold at micro-breweries or ‘small
establishments such as pubs and restaurants shall be ‘Subject to the rate of
Twenty-eight pesos (P28.00) per liter effective on January 1, 2013: Provided,
That this rate shall be increased by four percent (4%) every year thereafter


effective on January 1, 2014, through revenue regulations issued by the
Secretary of Finance.]

[Fermented liquors introduced in the domestic market after the effectivity of
this Act shall be initially tax classified according to their suggested net retail
prices]

[Suggested net retail price’ shall mean the net retail Price at which locally
manufactured or imported fermented liquor are intended by the manufacturer
or importer to be sold on retail in major supermarkets or retail outlets in Metro
Manila for those marketed nationwide, and in other regions, for those with
regional markets. At the end of three (3) months from the product launch, the
Bureau of Internal Revenue shall validate the ‘suggested net retail price of the
newly introduced fermented liquor against the net retail price as defined
herein and initially determine the correct tax bracket to which a newly
introduced fermented liquor, as defined above, shall be classified. After the
end of nine (9) months from such validation, the Bureau of Internal Revenue
shall revalidate the initially validated net retail Price against the net retail price
as of the time of revalidation in order to finally determine the correct tax
bracket to which a newly introduced fermented liquor shall be classified.]

[Net retail price’ shall mean the Price at which the fermented liquor is sold on
retail in at least five (5) major supermarkets in Metro Manila (for brands of
fermented liquor marketed nationally), excluding the amount intended to cover
the applicable excise tax and the value-added tax. For brands which are
marketed outside Metro Manila, the ‘net retail price’ shall mean the price at
which the fermented liquor is 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.]

[Major supermarkets, as contemplated under this Act, shall be those with the
highest annual gross sales in Metro Manila or the region, as the case may be,
as determined by the National Statistics Office, and shall exclude retail outlets


or kiosks, convenience or sari-sari stores, and others of a similar nature:
Provided, That no two (2) supermarkets in the list to be surveyed are affiliated
and/or branches of each other: Provided, finally, That in case a particular
fermented liquor is not sold in major supermarkets, the price survey can be
Conducted in retail outlets where said fermented liquor is sold in Metro Manila
or the region, as the case may be, upon the determination of the
Commissioner of Internal Revenue.]

[The net retail price shall be determined by the Bureau of Internal Revenue
(BIR) through a price survey under oath. ]

[The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight
Committee on the Comprehensive Tax Reform Program created under
Republic Act No. 8240.]

[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 ]

[Any downward reclassification of Present categories, for tax purposes, of
fermented liquors duly registered at the time of the effectivity of this Act which
will reduce the tax imposed herein, or the Payment thereof, shall be
prohibited]

[The proper tax classification of fermented liquors, whether registered before
or after the effectivity of this Act, shall be determined every two (2) years from
the date of the effectivity of this Act.]

[All fermented liquors existing in the market at the time Of the effectivity of this
Act shall be classified according to the net retail Prices and the tax rates


Provided above based on the latest price Survey of the fermented liquors
conducted by the Bureau of Internal Revenue.]

[The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight
Committee on the Comprehensive Tax Reform Program created under
Republic Act No. 8240.]

Every brewer or importer of ALCOPOPS AND/OR fermented liquor shall,
within thirty (30) days from the effectivity of this Act, and within the first five (5)
days of every month thereafter, submit to the Commissioner a sworn
statement of the volume of sales AND REMOVALS for each particular brand
of ALCOPOPS AND/OR fermented liquor sold at his establishment for the
three-month period immediately preceding.

Any brewer or importer who, in violation of this Section, misdeclares or
misrepresents in his or its sworn statement herein required any pertinent data
or information shalll, upon final findings by the Commissioner that the violation
was committed, be penalized by a ‘summary cancellation or withdrawal of his
or its permit to engage in business as brewer or importer of ALCOPOPS
AND/OR fermented liquor.

Any corporation, association or Partnership liable for any of the acts or
omissions in violation of this Section shall be fined treble the amount of
deficiency taxes, surcharges and interest which may be assessed pursuant to
this Section.

Any person liable for any of the acts or omissions Prohibited under this
Section shall be criminally liable and penalized under Section 254 of this
Code. Any person who willfully aids or abets in the commission of any such
act or omission shall be criminally liable in the same manner as the principal.


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. 2. Section 144 (B) and 144 (C) of the National Internal Revenue Code of
1997, as amended, are hereby further amended to read as follows:

Sec. 144 (B) Heated Tobacco Products. - There shall be levied,
assessed and collected on heated tobacco Products an excise tax at the rate
prescribed below:

“(1) [en pesos (P10.00)] FORTY-FIVE PESOS (P45.00) per pack of
twenty (20) units or Packaging combinations of not more than twenty (20)
units effective on January 1, 2020;

“FIFTY PESOS (P50.00) per pack of twenty (20) units or packaging

combinations of not more than twenty (20) units effective on January 1,

202[0}1;

“FIFTY-FIVE PESOS (P55.00) per pack of twenty (20) units or

Packaging combinations of not more than twenty (20) units effective on

January 1, 202[0]2;

“SIXTY PESOS (P60.00) per pack of twenty (20) units or packaging

combinations of not more than twenty (20) units effective on January 1,

202[0]3;

“2) PROVIDED THAT t[T]he rates of tax imposed under this
Subsection shall be increased by five percent (5%) every year effective on
January 1, 202[1]4, through revenue regulations issued by the Secretary of
Finance.

“Heated tobacco products shall only be packed in twenties and other
Packaging combinations of not more than twenty (20) units.

“No heated tobacco Products manufactured in the Philippines and
Produced for export shall be Temoved 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 heated
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.


“Heated 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.

“Manufacturers, distributors, and importers of heated tobacco products
shall, within thirty (30) days from the effectivity of this Act, and within the first
five (5) days of every month thereafter, submit to the Commissioner a sworn
statement of the volume of sales AND REMOVALS for each particular brand
of heated tobacco products sold for the three-month period immediately
preceding.

“Any manufacturer, distributor, or importer who, in violation of this
Section, misdeclares, or misrepresents in his or its sworn statement herein
required any pertinent data or information shall, upon the final findings by the
Commissioner that the violation was committed, be penalized by a summary
cancellation or withdrawal of hisher or its permit to engage in business as
manufacturer, distributor, or importer of heated tobacco products.

“Any corporation, association or partnership liable for any of the acts or
omissions in violation of this Section shall be fined treble the amount of
deficiency taxes, surcharges and interest which may be assessed pursuant to
this Section.

“SELLING OF HEATED TOBACCO PRODUCTS AT A PRICE
LOWER THAN THE COMBINED EXCISE AND VALUE-ADDED TAXES
IMPOSED UNDER THE LAW SHALL BE PROHIBITED. THE SELLER OF
SUCH PRODUCTS SHALL BE PUNISHED WITH A FINE OF NOT LESS
THAN TEN (10) TIMES THE AMOUNT OF EXCISE PLUS VALUE-ADDED
TAXES DUE BUT NOT LESS THAN TWO HUNDRED THOUSAND PESOS
(P200,000.00) NOR MORE THAN FIVE HUNDRED THOUSAND PESOS
(500,000.00), AND IMPRISONMENT OF NOT LESS THAN FOUR (4)
YEARS BUT NOT MORE THAN SIX (6) YEARS.

“THE BUREAU OF INTERNAL REVENUE IS MANDATED TO ISSUE
A REVENUE REGULATION PRESCRIBING THE FLOOR PRICE OR THE
MINIMUM PRICE OF HEATED TOBACCO PRODUCT TAKING INTO


ACCOUNT THE SUM OF THE EXCISE AND VALUE-ADDED TAXES AS
PROVIDED HEREIN.

“Any person liable for any of the acts or omissions prohibited under this
Section shall be criminally liable and penalized under Section 254 of this
Code. Any person who willfully aids or abets in the commission of any such
act or omission shall be criminally liable in the same manner as the principal.

“If the offender is not a citizen of the Philippines, he/she shall be
deported immediately after serving the sentence, without further proceedings
for deportation.

“The sale and distribution, or transfer of heated tobacco products by
any person to minors; purchasing, or otherwise receiving heated tobacco
Products from a minor; and the sale, purchase, and use of heated tobacco
products by minors, shall be prohibited. ‘Minor’ refers to any person below
eighteen (18) years old. Any violation of this provision shall be punishable with
the same penalties provided for in Republic Act No. 9211, otherwise known as
the “Tobacco Regulation Act of 2003’,

“It shall not be a defense for the person selling or distributing that he/
she did not know nor had any reason to believe that the product was for the
consumption of the minor to whom it was sold.

“Unit packets and any outside wrapping of heated tobacco products
and other similar products shall carry a health warning compliant with the
Republic Act No. 10643, otherwise known as “The Graphic Health Warnings
Law’.

“Manufacturers and importers are given a period of one (1) year from
the effectivity of this Act to comply therewith.

“Eighteen (18) months after the effectivity of this Act, no person or legal
entity shall sell or commercially distribute or display any heated tobacco
Product without ensuring that the labels and Packages, as well as any other
container used in displaying the said products meet the requirements under
this Act.

“Any violation of the foregoing provisions on health warnings shall be
punishable with the same penalties as. Provided for in Republic Act No. 10643,
otherwise known as “The Graphic Health Warnings Law.”


“Section 144 (C) Vapor Products. — [There shall be levied, assessed
and collected on vapor products excise tax at the rates prescribed below:]
VAPOR PRODUCT SHALL INCLUDE NICOTINE SALT/SALT NICOTINE,
AND CONVENTIONAL “FREEBASE” OR “CLASSIC” NICOTINE, AND
OTHER SIMILAR PRODUCTS AS MAY BE DETERMINED BY REVENUE
REGULATION:

['(1) Effective on January 1, 2020, individual cartridge, refill, pod, or
Container of vapor products Containing liquid solutions or gel sold in the
following quantities:

Quantity | Excise tax
[0.00 ml to 10.00 mI Ten pesos (P 10.00)
10.01 ml to 20.00 mi | ‘Twenty pesos (P20.00)
20.01 ml to 30.00 ml Thirty pesos (P30.00)
30.01 ml to 40.00 ml Forty pesos (P40.00)
| 40.01 ml to 50.00 mi Fifty pesos (P50.00)
[More than 50.00 ml Fifty pesos (P50.00) plus Ten pesos
} (P10.00) for every additional 10.00
[ml

“(1) NICOTINE SALT OR SALT NICOTINE - THERE SHALL BE
LEVIED, ASSESSED AND COLLECTED ON ANY LIQUID SUBSTANCE
REGARDLESS OF NICOTINE CONTENT, INCLUDING NICOTINE-FREE
LIQUIDS OR ANY SIMILAR PRODUCT USED IN ANY OF THE DEVICES
LISTED IN SUBSECTION 150(D) OF THIS ACT, FURTHER CLASSIFIED
AS NICOTINE SALT OR SALT NICOTINE AN EXCISE TAX BASED ON THE
FOLLOWING SCHEDULES:

EFFECTIVE ON JANUARY 1, 2020, FORTY-FIVE (P45.00) PER
MILLILITER OR A FRACTION THEREOF;

EFFECTIVE ON JANUARY 1, 2021, FIFTY PESOS (P50.00) PER
MILLILITER OR A FRACTION THEREOF;

EFFECTIVE ON JANUARY 1, 2022, FIFTY-FIVE PESOS (P55.00)
PER MILLILITER OR A FRACTION THEREOF;


EFFECTIVE ON JANUARY 1, 2023, SIXTY PESOS (P60.00) PER
MILLILITER OR A FRACTION THEREOF;

['(@)] PROVIDED THAT t[T]he rates of tax imposed under this
Subsection shall be increased by five percent (5%) every year effective on
January 1, 202[1]4, through revenue regulations issued by the Secretary of
Finance.

“(2) CONVENTIONAL “FREEBASE” OR “CLASSIC” NICOTINE -
THERE SHALL BE LEVIED, ASSESSED AND COLLECTED ON ANY
LIQUID SUBSTANCE, REGARDLESS OF NICOTINE CONTENT,
INCLUDING NICOTINE-FREE LIQUID OR ANY SIMILAR PRODUCT USED
IN ANY OF THE DEVICES LISTED IN SUBSECTION 150 (D) OF THIS ACT,
FURTHER CLASSIFIED AS CONVENTIONAL “FREEBASE” OR
“CLASSIC” NICOTINE AN EXCISE TAX BASED ON THE FOLLOWING
SCHEDULES:

EFFECTIVE ON JANUARY 1, 2020, FOUR PESOS AND FIFTY
CENTAVOS (P4.50) PER MILLILITER OR A FRACTION THEREOF;

EFFECTIVE ON JANUARY 1, 2021, FIVE PESOS (P5.00) PER
MILLILITER OR A FRACTION THEREOF;

EFFECTIVE ON JANUARY 1, 2022, FIVE PESOS AND FIFTY
CENTAVOS (P5.50) PER MILLILITER OR A FRACTION THEREOF;

EFFECTIVE ON JANUARY 1, 2023, SIX PESOS (P6.00) PER
MILLILITER OR A FRACTION THEREOF;

PROVIDED THAT THE RATES OF TAX IMPOSED UNDER THIS
SUBSECTION SHALL BE INCREASED BY FIVE PERCENT (5%) EVERY
YEAR EFFECTIVE JANUARY 1, 2024, THROUGH REVENUE
REGULATIONS TO BE ISSUED BY THE SECRETARY OF FINANCE.

“THE MANUFACTURE, IMPORTATION, SALE AND DISTRIBUTION
OF VAPOR PRODUCTS WITH FLAVORING OTHER THAN PLAIN
TOBACCO OR PLAIN MENTHOL, SHALL BE PROHIBITED.

“Manufacturers, distributors, and importers of vapor products shall be
required to indicate on the Package the actual volume in milliliters of the liquid
solutions and gels.


“No vapor products manufactured in the Philippines and Produced for
the export shall be removed from their place of manufacture or exported
without posting of an export bond equivalent to the amount of customs duty,
excise and value-added taxes due thereon if sold domestically. Provided,
however, That vapor Products for export may be transferred from the place of
manufacture to a bonded facility, upon posting of a transfer bond prior to
export.

“Vapor 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.

“Manufacturers, distributors, and importers of vapor products ‘shall,
within thirty (30) days from the effectivity of this Act, and within the first five (5)
days of every month thereafter, submit to the Commissioner a sworn
Statement of the volume of sales for each particular brand of vapor products
sold for the three-month Period immediately Preceding.

“Any manufacturer, distributor, or importer who, in violation of this
Section, misdeclares or misrepresents in his/her or its Sworn statement herein
fequired pertinent data or information Shall, upon final findings by the
Commissioner that the violation was committed, be penalized by a summary
cancellation or withdrawal of hismer or its permit to engage in business as
manufacturer, distributor, or importer of vapor products.

“Any corporation, association or partnership liable for any for any of the
acts or omissions in violation of this Section shall be fined treble the amount
Of deficiency taxes, ‘Surcharges and interest which may be assessed pursuant
to this Section.

“SELLING OF VAPOR PRODUCTS AT A PRICE LOWER THAN THE
COMBINED EXCISE AND VALUE-ADDED TAXES IMPOSED UNDER THE
LAW SHALL BE PROHIBITED. THE SELLER OF SUCH PRODUCTS
SHALL BE PUNISHED WITH A FINE OF NOT LESS THAN TEN (10) TIMES
THE AMOUNT OF EXCISE PLUS VALUE-ADDED TAXES DUE BUT NOT
LESS THAN TWO HUNDRED THOUSAND PESOS (P200,000.00) NOR
MORE THAN FIVE HUNDRED THOUSAND PESOS (500,000.00), AND


IMPRISONMENT OF NOT LESS THAN FOUR (4) YEARS BUT NOT MORE
THAN SIX (6) YEARS.

“THE BUREAU OF INTERNAL REVENUE IS MANDATED TO ISSUE
A REVENUE REGULATION PRESCRIBING THE FLOOR PRICE OR THE
MINIMUM PRICE OF VAPOR PRODUCTS TAKING INTO ACCOUNT THE
SUM OF THE EXCISE AND VALUE-ADDED TAXES AS PROVIDED
HEREIN.

“Any person liable for any of the acts or omissions prohibited under this
Section shall be criminally liable and penalized under Section 254 of this
Code. Any person who willfully aids or abets in the commission of any such
act or omission shall be criminally liable in the same manner as the principal.

“If the offender is not a citizen of the Philippines, he/she shall be
deported immediately after serving the sentence, without further proceedings
for deportation.

“The sale and distribution, or transfer of vapor products by any person
to minors; purchasing, or otherwise receiving vapor products from a minor;
and the sale, purchase, and use of vapor products by minors, shall be
Prohibited. ‘Minor’ refers to any person below eighteen (18) years old. Any
violation of this provision shall be punishable with the same penalties provided
for in Republic Act No. 9211, otherwise known as the “Tobacco Regulation Act
of 2003’,

“It shall not be a defense for the person ‘selling or distributing that he/
‘she did not know or was not aware of the real age of the minor. Neither shall it
be a defense that he/she did not know nor had any reason to believe that the
product was for the consumption of the minor to whom it was sold.

“Unit packets and any outside wrapping of vapor products and other
similar products shall carry a health warning compliant with Republic Act No.
10643, otherwise known as “The Graphic Health Warnings Law.”

“Manufacturers and importers are given a period of one (1) year from
the effectivity of this Act to comply therewith.

“Eighteen (18) months after the effectivity of this Act, no person or legal
entity shall sell or commercially distribute or display any vapor product without


ensuring that the labels and packages, as well as. any other container used in
displaying the said products meet the requirements under this Act.

“Any violation of the foregoing provisions on health warning shall be
Punishable with the same penalties Provided for in Republic Act No. 10643,
otherwise known as “The Graphic Health Warnings Law’

“Notwithstanding the provisions of this Act on heated tobacco products
and vapor products, this Act acknowledges the need for further scientific
evidence on the health impact of these products.

SEC. 3. Section 147 of the National internal Revenue code of 1997, as
amended, is hereby further amended to read as follows:

“SEC.147. Definition of Terms. — x x x.

XXX

(f) ‘Vapor products’ shall mean any liquid solution or gel which contains
nicotine that transforms into an aerosol without combustion through the
employment of a mechanical heating element, battery or circuit that can be
used to heat such solution or gel, and includes but is not limited to, a
cartridge, a tank, and the device without a Cartridge or tank. It is commonly
known as ‘e-liquids’ for ‘e-cigarettes.’ IT INCLUDES NICOTINE SALT/SALT
NICOTINE, AND CONVENTIONAL “FREEBASE” OR “CLASSIC”
NICOTINE, AND OTHER SIMILAR PRODUCTS. It also includes electronic
nicotine and non-nicotine delivery systems (ENDS/ENNDS) which are
combinations of non-tobacco Containing e-liquids or refills which contain up to
sixty-five milligrams per milliliter (65mg/ml) of nicotine in the e-liquid or refill
and an electronic delivery device to Produce an aerosol, mist or vapor that
users inhale by mimicking the act of smoking.”

F(1) THE TERM “SALT NICOTINE” OR “NICOTINE SALT” SHALL
REFER TO LIQUID SUBSTANCES COMPATIBLE FOR USE WITH LOw-
WATTAGE DEVICES UNDER SECTION 150(D) OF THIS ACT, WITH A
LOWER ALKALINITY DUE TO THE ADDITION OF SUBSTANCES SUCH
AS BENZOIC ACID, OR OTHER SIMILAR SUBSTANCES.

F(2) THE TERM “CONVENTIONAL “FREEBASE” OR “CLASSIC”
NICOTINE” SHALL REFER TO LIQUID SUBSTANCES COMPATIBLE FOR


USE WITH DEVICES UNDER SECTION 150(D) OF THIS ACT NOT
FALLING UNDER THE DEFINITION OF “SALT NICOTINE” OR “NICOTINE
SALT.”

SEC. 4. Section 150 of the NIRC, as amended, is hereby amended to read as
follows:

SEC. 150. Non-essential Goods. - There shall be levied, assessed and
collected a tax equivalent to twenty-percent (20%) based on the wholesale
price or the value of importation used by the Bureau of Customs in
determining tariff and customs duties, net of excise tax and value-added tax,
of the following goods:

Xxx

(C) Yachts and other vessels intended for pleasure or sports; AND 8}

(D) TOBACCO HEATING SYSTEMS AND ELECTRONIC OR
MECHANICAL CIGARETTE DEVICES, WHICH INCLUDE BUT ARE NOT
LIMITED TO ELECTRONIC AND/OR NON-ELECTRONIC NICOTINE
DELIVERY SYSTEMS, E- -CIGARETTES, VAPES, VAPORIZERS, VAPING
SYSTEMS, TANK SYSTEM, MODS, AND E- -HOOKAHS, OR ANY SIMILAR
PRODUCT, AS MAY BE DETERMINED BY REVENUE REGULATION, AND
ANY MANDATORY COMPONENT THEREOF EXCLUDING BATTERIES,
CHARGERS, AND CHARGING CABLES WHEN SOLD SEPARATELY.
HOWEVER, IF BATTERIES, CHARGERS, CHARGING CORDS, AND
OTHER ACCESSORIES ARE SOLD OR PACKAGED TOGETHER WITH A
TOBACCO HEATING OR ELECTRONIC OR MECHANICAL CIGARETTE
DEVICE AS ONE SALEABLE ITEM, THE VALUE THEREOF SHALL FORM
PART OF THE WHOLESALE PRICE OR THE VALUE OF IMPORTATION.
SEC. 5. Implementing Rules and Regulations. — The Secretary of Finance
shall, upon the recommendation of the Commissioner of THE BUREAU OF
Internal Revenue, Promulgate the necessary rules and regulations for the
effective implementation of this Act.


SEC. 6. Repealing Clause. - All laws, decrees, executive orders, rules and
regulations or parts thereof which are contrary to or inconsistent with this Act
are hereby repealed, amended or modified accordingly.

SEC. 7. Effectivity. - This Act shall take effect upon its publication either in the
Official Gazette or ina newspaper of general circulation.

Approved,