Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2083

Introduced by Representative Junie E. Cua

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 a 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
rates 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 roll
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.

épresentative
Lone District, Quirino


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

0:
HOUSE BILL NO. GE

Introduced by Representative Junie E. Cua

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 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
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 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 (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 commissicn 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 milliliter (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 defi ncy 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
(PS0.60), 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
(P5S0.60), 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.

10


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

1


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

12


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 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 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.

13


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)_ [Ten 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 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 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 his/her 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’.

“Mt 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 mito 10.00 mI Ten pesos (P10.00)
10.01 ml to 20.00 mi Twenty pesos (P20.00)
20.01 ml to 30.00 mI __| Thirty pesos (P30.00)

16



30.01 ml to 40.00 mI ___| Forty pesos (P40.00)
“aos ml to 50.00 ml |Fiftypesos(P50.00) Ci
More than 50.00 ml Fifty pesos (P50.00) plus Ten pesos
| | (10.00) for every additional 10.00 mi]

“(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;

[“(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.

“(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;

7


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
required 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/her 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

18


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

20


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 [.]

(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 in a newspaper of general circulation.

Approved,

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