Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila.
FIFTEENTH CONGRESS
First Regular Session

House BILL No,_ 3332

Introduced by HON. ERIC “Owen” G. SINGSON, JR.

EXPLANATORY NOTE

On the 1% of January 2011, the last tranche of excise tax increases will be
implemented for both alcohol and tobacco products, as embodied in Republic Act No.
9334. This law, which was enacted in 2004, provides for automatic excise tax increases
every two (2) years from 2005-2011. Records show that through this system of increases
every two years, the government was able to derive a steady stream of government
revenues. In 2009, for example, excise tax collections from tobacco and alcohol
products amounted to P24.230 billion and P20.637 respectively."

Owing to the absence of a law which would ensure the efficient implementation of
increases after 2011, there is a need to enact a law for this purpose. The need to pass
legislation is further highlighted by the fact there are various studies showing the hazards
of cigarette smoking as well as drinking alcohol. As such, there should be another law
promulgated so that after 2011, when the last period of increases will take affect, the
government will still be able to achieve the two-pronged purpose of complying with its
mandate of promoting the state's health objective while enhancing its revenue generation
role in the process. The latter objective becomes more paramount in light of the need for
more revenues to plug the budget deficit.

In view of the fact that any and all tax increases should be properly planned and
considering that the current system is instrumental in the sustained rise in excise tax
collections from 2005 until today, this bill envisions to maintain the automatic excise tax
increases every two (2) years or from 2013 to 2017.

For the foregoing reasons, the approval of this legislative measure is earnestly
sought.

Ksue Simaqnen hy

Hon. ERIC “Owen” G. SINGSON, JR.

‘ Budget of Expenditures and Sources of Funds (2011),


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

FIFTEENTH CONGRESS
First Regular Session

3332

HOUSE BILL NO.

Introduced by HON. ERIC “Owen” G. SINGSON

AN ACT INCREASING THE EXCISE TAX RATES IMPOSED ON ALCOHOL AND
TOBACCO PRODUCTS, AMENDING FOR THE PURPOSE SECTIONS 141, 142,143,
144 AND 145 OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED

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

SECTION 1. Section 141 of the National Internal Revenue Code of 1997, as amended, is
hereby further amended to read as follows:

"SEC. 141. Distilled Spirits. - On distilled spirits, there shall be collected, subject
to the provisions of Section 133 of this Code, excise taxes as follows:

(@) If produced from the sap of nipa, coconut, cassava, camote, or buri
palm or from the juice, syrup or sugar of the cane, provided such
materials are produced commercially in the country where they are
processed into distilled spirits, per proof liter, [Eleven pesos and sixty-five
centavos (P11.65):] TWELVE PESOS AND TEN CENTAVOS (P12.10);

“(b) If produced from raw materials other than those enumerated in the
preceding paragraph, the tax shall be in accordance with the net retail
price per bottle of seven hundred fifty milliliter (750 ml.) volume capacity
(excluding the excise tax and the value-added tax) as follows:

"(1) Less than Two hundred and fifty pesos (P250.00) - [One
hundred twenty-six pesos (P126.00), per proof liter] ONE
HUNDRED THRITY ONE PESOS AND FOUR CENTAVOS
(P131.04);

(2) Two hundred and fifty pesos (P250.00) up to Six hundred and
seventy-five pesos (P675.00) — [Two hundred fifly-two pesos
(P252.00), per proof liter; and] TWO HUNDRED SIXTY-TWO
PESOS AND EIGHT CENTAVOS (P262.08);

"(3) More than Six hundred and seventy five pesos (P675.00) —
[Five hundred four pesos (P504.00), per proof liter.) FIVE
HUNDRED TWENTY-FOUR PESOS AND SIXTEEN CENTAVOS
(P524.16);


(©) Medicinal preparations, flavoring extracts, and all other preparations,
except toilet preparations, of which, excluding water, distilled spirits form
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 shail
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 alcoho!
of a specific gravity of seven thousand nine hundred and thirty-nine ten
thousandths (0.7939) at fifteen degrees centigrade (15°C). A ‘proof liter’
means a liter of proof spirits.

"Net retail price’, as determined by the Bureau of Internal Revenue
through a price survey to be conducted by the Bureau of Internal
Revenue itself, or by the National Statistics Office when deputized for the
purpose by the Bureau of Internal Revenue, shall mean the price at which
the distilled spirits is sold on retail in at least ten (10) major supermarkets
in Metro Manila, 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 distilled spirits is ‘sold in at least five (5) major supermarkets in the
fegion excluding the amount intended to cover the applicable excise tax
and the value-added tax.

"Variants of existing brands and variants of new brands which are
introduced in the domestic market after the effectivity of this Act shall be
taxed under the proper classifcation thereof based on their suggested net
retail price: Provided, however, That such classification shall not, in any
case, be lower than the highest classification of any variant of that brand.

“A’variant of a brand’ shall refer to a brand on which a modifier is prefixed
andior suffixed to the root name of the brand.

"New brands, as defined in the immediately following paragraph, shall
initially be classified according to their suggested net retail price.

“Willful understatement of the suggested net retail price by as much as.
fifteen percent (15%) of the actual net retail price shall render the
manufacturer 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.

“New brand’ shall mean a brand registered after the date of effectivity of
RA. No. 8240.

“Suggested net retail price’ shall mean the net retail price at which new
brands, as defined above, of 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 determine the correct tax
‘bracket to which a particular new brand of distilled spirits, as defined
above, shall be classified. After the end of eighteen (18) months from
such validation, the Bureau of intemal 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 which a
particular new brand of distilled spirits shall be classified: Provided,
however, That brands of distilled spirits introduced in the domestic market
between January 1, 1997 and December 31, 2003 shall remain in the
classification under which the Bureau of Internal Revenue has determined
them to belong as of December 31, 2003. Such classification of new
brands and brands introduced between January 1, 1997 and December
31, 2003 shall not be revised except by an act of Congress.

“The rates of tax imposed under this Section shall be increased by [eight
percent (8%)] FOUR PERCENT (4%) every two years starting on
(January 1, 2007 until January 1, 2011] JANUARY 1, 2013 TO JAN
UARY 1, 2017.

"Any downward reclassification of present categories, for tax purposes, of
existing brands of distilled spirits 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 classification of each brand of distilled spirits based on the average
net retail price as of October 1, 1996, as set forth in Annex ‘A’, including
the classification of brands for the same products which, although not set
forth in said Annex‘A’, were registered and were being commercially
produced and marketed on or afler October 1,1996, and which continue
to be commercially produced and marketed after the effectivity of this Act,
shall remain in force until revised by Congress.

"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 Gommissioner a sworn
statement of the volume of sales 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, knowingly
misdeciares or misrepresents in his or its swom 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 spirit.

"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 142 of the National Internal Revenue Code of 1997, as amended BY
REPUBLIC ACT NO. 9334, is hereby further amended to read as follows:

"SEC 142. Wines. - On wines, there shall be collected per liter of volume
capacity, the following taxes:

"(@) Sparkling wines/champagnes regardless of proof , if the net retail
Price per bottle (excluding the excise tax and the value-added tax) is—

"(1) Five hundred pesos (P500.00) or less ~ [One hundred forty-
five pesos and sixty centavos (P145.60)] ONE HUNDRED FIFTY-
ONE PESOS AND FOURTY-TWO CENTAVOS (P151,42) ; and

"(2) More than Five hundred pesos (P500.00) ~ [Four hundred
thirty-six pesos and eighty centavos _(P436.80).] FOUR
HUNDRED FIFTY-FOUR PESOS AND TWENTY-SEVEN
CENTAVOS (P254.27).

"(b) Stil wines containing fourteen percent (14%) of alcohol by volume or
less, [Seventeen pesos and forty-seven centavos (P17.47);] EIGHTEEN
PESOS AND SEVENTEEN CENTAVOS (P18.17) and

"(c) Still wines containing more than fourteen percent (14%) but not more
than twenty-five percent (25%) of alcohol by volume, [Thirty-four pesos
and ninety-four centavos (P34.94)] THIRTY-SIX PESOS AND THIRTY-
FOUR CENTAVOS (P36.34).

“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.

let retail price’, as determined by the Bureau of Internal Revenue through a
price survey to be conducted by the Bureau of Internal Revenue itself, or by the
National Statistics Office when deputized for the purpose by the Bureau of
Internal Revenue, shall mean the price at which wine is sold on retail in at least
ten (10) major supermarkets in Metro Manila, 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 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.

“Variants of existing brands and variants of new brands which are introduced in
the domestic market after the effectivity of this Act shall be taxed under the
proper classification thereof based on their suggested net retail price: Provided,
however, That such classification shall not, in any case, be lower than the highest
classification of any variant of that brand.


“A ‘variant of a brand’ shall refer to a brand on which a modifier is prefixed and/or
suffixed to the root name of the brand.

"New brands, as defined in the immediately following paragraph, shall initially be
classified according to their suggested net retail price.

“New brand’ shall mean a brand registered after the date of effectivity of R. A.
No. 8240.

“Suggested net retail price’ shall mean the net retail price at which new brands,
as defined above, of locally manufactured or imported wines 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
determine the correct tax bracket to which a particular new brand of wine, as
defined above, shall be classified. After the end of eighteen (18) 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 which a particular new brand
of wines shall be classified: Provided, however, That brands of wines introduced
in the domestic market between January 1, 1997 and December 31, 2003 shall
remain in the classification under which the Bureau of Internal Revenue has
determined them to belong as of December 31, 2003. Such classification of new
brands and brands introduced between January 1, 1997 and December 31, 2003
shall not be revised except by an act of Congress.

"The rates of tax imposed under this Section shall be increased by [eight percent
(8%)] FOUR PERCENT (4%) every two years starting on [January 1, 2007 until
January 1, 2011.] JANUARY 1, 2013 TO JAN UARY 1, 2017.

['Any downward reclassification of present categories, for tax purposes, of
existing brands of wines 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 classification of each brand of wines based on the average net retail price
as of October 1,1996, as set forth in Annex 'B’, including the classification of
brands for the same products which, although not set forth in said “Annex B”,
were registered and were being commercially produced and marketed on or after
October 1, 1996, and which continue to be commercially produced and marketed
after the effectivity of this Act, shall remain in force until revised by Congress.

"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 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, knowingly
misdeclares or misrepresents in his or its swom 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
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. 3. Section 143 of the National Internal Revenue Code of 1997, as amended BY
REPUBLIC ACT NO. 9334,, is hereby further amended to read as follows:

8240.

“SEC. 143. Fermented Liquor. - There shall be levied, assessed and
collected an excise tax on beer, lager beer, ale, porter and other fermented
liquors except tuba, basi, typuy and similar fermented liquors in accordance with
the following schedule:

(a) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume capacity is less than Fourteen pesos and fifty
centavos (P14.50), the tax shall be (Eight pesos and twenty- seven
centavos (P8.27) per liter] EIGHT PESOS AND SIXTY CENTAVOS
(P.8.60);

“(b) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume capacity is Fourteen pesos and fifty centavos
(p14.50) up to Twenty-two pesos (P22.00), the tax shall be [Twelve pesos
and thirty centavos (P12.30) per liter;] TWELVE PESOS AND SEVENTY-
NINE CENTAVOS (P12.73)

“(©) If the net retail price (excluding the excise tax and the value-added
tax) per liter of volume capacity is more than Twenty-two pesos (P22.00),
the tax shall be (Sixteen pesos and thirty-three centavos (P16.33) per
liter.] SIXTEEN PESOS AND NINETY-EIGHT CENTAVOS (P16.98).

"Variants of existing brands and variants of new brands which are introduced in
the domestic market after the effectivity of this Act shall be taxed under the
proper classification thereof based on their suggested net retail price: Provided,
however, That such classification shall not, in any case, be lower than the highest
classification of any variant of that brand,

“A ‘variant of a brand’ shalll refer to a brand on which a modifier is prefixed and/or
suffixed to the root name of the brand.

“Fermented liquors which are brewed and sold at micro-breweries or small
establishments such as pubs and restaurants shall be subject to the rate in
paragraph (e) hereof.

"New brands, as defined in the immediately following paragraph, shall initially be
classified according to their suggested net retail price.

“New brand’ shall mean a brand registered after the date of effectivity of R.A. No.


"Suggested net retail price’ shall mean the net retail price at which new
brands, as defined above, of 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 new brand
against the net retail price as defined herein and determine the correct tax
bracket to which a particular new brand of fermented liquor, as defined
above, shall be classified. After the end of eighteen (18) months from
such validation, the Bureau of inters 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 which a
particular new brand of fermented liquors shall he classified: Provided,
however, That brands of fermented liquors introduced in the domestic
market between January 1, 1997 and December 31, 2003 shall remain in
the classification under which the Bureau of Internal Revenue has
determined them to belong as of December 31,2003. Such classification
of new brands and brands introduced between January 1, 1997 and
December 31, 2003 shall not be revised except by an act of Congress,

"Net retail price’, as determined by the Bureau of Internal Revenue
through a price survey to be conducted by the Bureau of Internal
Revenue itself, or the National Statistics Office when deputized for the
purpose by the Bureau of Internal Revenue, shall mean the price at which
the fermented liquor is sold on retail in at least twenty (20) 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.

"The classification of each brand of fermented liquor based on its average
net retail price as of October 1, 1996, as set forth in Annex ‘C’, including
the classification of brands for the same products which, although not set
forth in said Annex 'C’, were registered and were being commercially
produced and marketed on or after October 1, 1996, and which continue
to be commercially produced and marketed after the effectivity of this Act,
shall remain in force until revised by Congress.

“The rates of tax imposed under this Section shall be increased by {eight
percent (8%)] FOUR PERCENT (4%) every two years starting on
[Vanuary 1, 2007 until January 1, 2011] JANUARY 4, 2013 TO JAN
UARY 1, 2017.

“Any downward reclassification of present categories, for tax purposes,
of existing brands of fermented liquor 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.

“Every brewer or importer of 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 for each particular brand of fermented liquor sold at his
establishment for the three-month period immediately preceding.


"Any brewer or importer who, in violation of this Section, knowingly
misdeclares or misrepresents in his or its sworn statement herein
required any pertinent data or information shall be penalized by a
summary cancellation or withdrawal of his or its permit to engage in
business as brewer or importer of fermented fiquor.

“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. 4. Section 144 of the National Internal Revenue Code of 1997, as amended BY
REPUBLIC ACT NO. 9334, is hereby further amended to read as follows:,

"SEC. 144. Tobacco Products. - There shalll be collected a tax of One peso AND.
FIFTY CENTAVOS [(P1.00)] P1.50 on each kilogram of the following products of
tobacco:

*(a) Tobacco twisted by hand or reduced into a condition to be consumed
in any manner other than the ordinary mode of drying and curing;

"(b) Tobacco prepared or partially prepared with or without the use of any
machine or instruments or without being pressed or sweetened except as
otherwise provided hereunder; and

"(c) Fine-cut shorts and refuse, scraps, clippings, cuttings, stems and
sweepings of tobacco except as otherwise provided hereunder.

"Stemmed leaf tobacco, tobacco prepared or partially prepared with or without
the use of any machine or instrument or without being pressed or sweetened,
fine-cut shorts and refuse, scraps, clippings, cuttings, stems, midribs, and
sweepings of tobacco resulting from the handling or stripping of whole leaf
tobacco shall be transferred, disposed of, or otherwise sold, without any
prepayment of the excise tax herein provided for, if the same are to be exported
or to be used in the manufacture of cigars, cigarettes, or other tobacco products
on which the excise tax will eventually be paid on the finished product, under
such conditions as may be prescribed in the rules and regulations promulgated
by the Secretary of Finance, upon recommendation of the Commissioner

“On tobacco specially prepared for chewing so as to be unsuitable for use in any
other manner, on each kilogram,{ Seventy-nine centavos (P0.79)] ONE PESO
{P1.00).

“The rates of tax imposed under this Section shall be increased by [six percent
(6%)] FOUR PERCENT (4%) every two years starting on January 1, 2007 until
January 1, 2011] JANUARY 2013 TO JANUARY 1, 2017.


“Manufacturers and importers of 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 swom statement of the volume of sales
for each particular brand of tobacco products sold at their establishment for the
three-month period immediately preceding.

“Any manufacturer or importer who, in violation of this Section, knowingly
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
manufacturer or importer of cigars or cigarettes.

“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 wilfully 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. 5. Section 145 of the National Internal Revenue Code, as amended BY REPUBLIC
ACT NO. 9334, , is further amended to read as follows:

"SEC. 145. Cigars and Cigarettes.
x x x

["(B) Cigarettes Packed by Hand. - There shall be levied, assessed and collected on
cigarettes packed by hand a tax at the rates prescribed below:

Effective on January 1, 2005, Two pesos (P2.00) per pack;

Effective on January 1,2007, Two pesos and twenty-three centavos (P2.23) per
pack;

Effective on January 1, 2009, Two pesos and forty-seven centavos (P2.47) per
pack; and

Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72) per
pack,

Duly registered or existing brands of cigarettes or new brands thereof packed by
hand shall only be packed in thirties.

(C) Cigarettes Packed by Machine. - There shall be levied, assessed and
collected on cigarettes packed by machine a tax at the rates prescribed below:

(1) If the net retail price (excluding the excise tax and the value-added
tax) is below Five pesos (P5.00) per pack, the tax shall be:

Effective on January 1, 2005, Two pesos (P2.00) per pack;

10


Effective on January 1, 2007, Two pesos and twenty-three
centavos (P2.23) per pack;

Effective on January 1, 2009, Two pesos and forty-seven
centavos (P2.47) per pack; and

Effective on January 1, 2011, Two pesos and seventy-two
* centavos (P2.72) per pack.

(2) If the net retail price (excluding the excise tax and the value-added
tax) is Five pesos (P5.00) but does not exceed Six pesos and fifty centavos
(P6.50) per pack, the tax shall be:

Effective on January 1, 2005, Six pesos and thirty-five centavos
(P6.35) per pack;

Effective on January 1, 2007, Six pesos and seventy-four
centavos (P6.74) per pack;

Effective on January 1, 2009, Seven pesos and fourteen centavos
(P7.14) per pack; and

Effective on January 1, 2011, Seven pesos and fifty-six centavos
(P7.56) per pack.

(3) If the net retail price (excluding the excise tax and the value-added
tax) exceeds Six pesos and fifty centavos (P6.50) but doesnot exceed Ten pesos
(P10.00) per pack, the tax shall be:

Effective on January 1, 2005, Ten pesos and thirty-five centavos
(P 10.35) per pack;

Effective on January 1, 2007, Ten pesos and eighty-eight
centavos (P10.88) per pack;

Effective on January 1, 2009, Eleven pesos and forty-three
centavos (P11.43) per pack; and

Effective on January 1, 2011, Twelve pesos (P12.00) per pack.

(4) If the net retail price (excluding the excise tax and the value-added
tax) is above Ten pesos (P10.00) per pack, the tax shall be:

Effective on January 1, 2005, Twenty-five pesos (P25.00) per
pack;

Effective on January 1, 2007, Twenty-six pesos and six centavos
(P26.06) per pack;

Effective on January 1, 2009, Twenty-seven pesos and sixteen
centavos (P27.16) per pack; and

Effective on January 1, 2011, Twenty-eight pesos and thirty
centavos (P28.30) per pack ]


(B) CIGARETTES PACKED BY HAND. ~ THERE SHALL BE LEVIED, ASSESSED
COLLECTED ON CIGARETTES PACKED BY HAND A TAX AT THE RATES
PRESCRIBED BELOW:

EFFECTIVE JANUARY 1, 2013, THREE PESOS (P3.00) PER PACK;

EFFECTIVE JANUARY 1, 2015, THREE PESOS AND THIRTY CENTAVOS
(P3.30) PER PACK; AND

EFFECTIVE JANUARY 1, 2017, THREE PESOS AND SIXTY-THREE
CENTAVOS (P3.63) PER PACK.

DULY REGISTERED OR EXISTING BRANDS OF CIGARETTES OR NEW BRANDS
THEREOF PACKED BY HAND SHALL ONLY BE PACKED IN THIRTIES.

(C) CIGARETTES PACKED BY MACHINE. - THERE SHALL BE LEVIED, ASSESSED
COLLECTED ON CIGARETTES PACKED BY MACHINE A TAX AT THE RATES
PRESCRIBED BELOW:

(1) IF THE NET RETAIL PRICE (EXCLUDING EXCISE TAX AND VALUE-
ADDED TAX) IS BELOW FIVE PESOS (P5.00) PER PACK, THE TAX SHALL BE:

EFFECTIVE JANUARY 1, 2013, THREE PESOS (P3.00) PER PACK;

EFFECTIVE JANUARY 1, 2015, THREE PESOS AND THIRTY
CENTAVOS (P3.30) PER PACK; AND

EFFECTIVE JANUARY 1, 2017, THREE PESOS AND SIXTY-THREE
CENTAVOS (P3.63) PER PACK.

(2) IF THE NET RETAIL PRICE (EXCLUDING EXCISE TAX AND VALUE-
ADDED TAX) IS_FIVE PESOS (P5.00) BUT DOES NOT EXCEED SIX PESOS AND
FIFTY CENTAVOS (P6.50) PER PACK, THE TAX SHALL BE:

EFFECTIVE JANUARY 1, 2013, EIGHT PESOS (P8.00) PER PACK;

EFFECTIVE JANUARY 1, 2015, EIGHT PESOS AND FORTY-EIGHT
CENTAVOS (P8.48) PER PACK; AND

EFFECTIVE JANUARY 1, 2017, EIGHT PESOS AND NINETY-SEVEN
CENTAVOS (P8.97) PER PACK.

(3) IF THE NET RETAIL PRICE (EXCLUDING EXCISE TAX AND VALUE-
ADDED TAX) EXCEEDS SIX PESOS AND FIFTY CENTAVOS (P6.50) BUT DOES
NOT EXCEED TEN PESOS (P10.00) PER PACK, THE TAX SHALL BE:

EFFECTIVE JANUARY 1, 2013, TWELVE PESOS AND SIXTY
CENTAVOS (P12.60) PER PACK;

EFFECTIVE JANUARY 1, 2015, THIRTEEN PESOS AND TWENTY-
THREE CENTAVOS (P13.23) PER PACK; AND

EFFECTIVE JANUARY 1, 2017, THIRTEEN PESOS AND EIGHTY-NINE
CENTAVOS (P13.89) PER PACK.

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(4) IF THE NET RETAIL PRICE (EXCLUDING EXCISE TAX AND VALUE-
ADDED TAX) IS ABOVE TEN PESOS (P10.00) PER PACK, THE TAX SHALL BE:

EFFECTIVE JANUARY 1, 2013, TWENTY-NINE PESOS AND FORTY-
NINE CENTAVOS (P28.49) PER PACK;

EFFECTIVE JANUARY 1, 2015, THIRTY PESOS AND SEVENTY-
THREE CENTAVOS (P30.73) PER PACK; AND

EFFECTIVE JANUARY 1, 2017, THIRTY-TWO PESOS AND TWO
CENTAVOS (P32.02) PER PACK.

“Variants of existing brands and variants of new brands of cigarettes which are
introduced in the domestic market after the effectivity of this Act shall be taxed under the
Proper classification thereof based on their suggested, net retail: price: Provided,
however, That such classification shall not, in any case, be lower than the highest
classification of any variant of that brand.

“A.variant of a brand’ shall refer to a brand on which a modifier is prefixed and/or suffixed
to the root name of the brand.

[Duly registered or existing brands of cigarettes or new brands thereof packed by
machine shall only be packed in twenties]

“Any downward reclassification of present categories, for tax purposes, of existing brands
of cigars and cigarettes 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

“New brands, as defined in the immediately following paragraph, shall initially be
classified according to their suggested net retail price

“New brand shall mean a brand registered after the date of effectivity of R.A. No. 8240.

“Suggested net retail price’ shall mean the net retail price at which new brands, as
defined above, of locally manufactured or imported cigarettes 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 determine the correct tax bracket under which a
particular new brand of cigarette, as defined above, shall be classified. After the end of
eighteen (18) months from such validation, the Bureau of intemal Revenue shail
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 under which a particular
new brand of cigarettes shall be classified: Provided, however, That brands of cigarettes
introduced in the domestic market between January 1, 1997 and December 31, 2003
shall remain in the classification under which the Bureau of Internal Revenue has
determined them to belong as of December 31, 2003. Such classification of new brands
and brands introduced between January 1, 1997 and December 31, 2003 shall not be
revised except by an act of Congress.

“Net retail price’, as determined by the Bureau of Internal Revenue through a price survey
to be conducted by the Bureau of Internal Revenue itself, or the National Statistics Office
when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price
at which the cigarette is sold on retail in at least twenty (20) major supermarkets in Metro
Manila (for brands of cigarettes marketed nationally), excluding the amount intended to
cover the applicable excise tax and the value-added tax. For brands which are marketed

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only outside Metro Manila, the ‘net retail price’ shall mean the price at which the cigarette
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.

“The classification of each brand of cigarettes based on its average net retail price as of
October 1, 1996, as set forth in Annex ‘D’, including the classification of brands for the
same products which, although not set forth in said Annex ID’, were registered and were
being commercially produced and marketed on or after October 1, 1996, and which
continue fo be commercially produced and marketed after the effectivity of this Act, shall
remain in force until revised by Congress.

"Manufacturers and importers of cigars and cigarettes 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 cigars and/or cigarettes sold at his establishment for the three-month period
immediately preceding,

“Any manufacturer or importer who, in violation of this Section, knowingly misdeciares or
misrepresents in his or its swom 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 manufacturer or importer of cigars or
cigarettes.

“Any corporation, association or partnership liable for any of the acts or omissions in
violation of this Section shall be fined treble the aggregate 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 fiabie 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. 6. Implementing Rules and Regulations. - The Secretary of Finance shall, upon
the recommendation of the Commissioner of Internal Revenue, promulgate the
necessary rules and regulations for the effective implementation of this Act.

SEC. 7. Separability Clause. - If any of the provisions of this Act is declared invalid by a
competent court, the remainder of this Act or any provision not affected by such
declaration of invalidity shall remain in force and effect.

SEC. 9. Repealing Clause. - All laws, decrees, ordinances, rules and regulations,
executive or administrative orders, and such other presidential issuances as are
inconsistent with any of the provisions of this Act are hereby repealed, amended or
otherwise modified accordingly,

SEC. 10. Effectivity. - This Act shall take effect on January 1, 2013.

Approved,

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