II
SEVENTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIITINES 
)
Second Regular Session 
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‘/f’! I ff of i ,
SENATE
*17 
OCT 23 
AlO :05
SENATE BILL NO. 1605
INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO
AN ACT
INCREASING THE EXCISE TAX ON TOBACCO PRODUCTS AND 
AMENDING FOR THE PURPOSE SECTION 145 OF REPUBLIC ACT 
NO. 8424, OTHERWISE KNOWN AS THE NATIONAL INTERNAL 
REVENUE CODE OF 1997, AS AMENDED BY REPUBLIC ACT NO. 
9334 AND REPUBLIC ACT NO. 10351, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
According to the National Nutrition Sui-vey (NNS) conducted by the 
Food and Nutrition Research Institute (FNRI) of the Department of Science 
and Teclmology, Republic Act No. 10351 otherwise known as the Sin Tax 
Reform Act resulted to decreased smoking prevalence among Filipinos 
from 31% in 2008 to 23% in 2015. This is consistent with the result of the 
2015 Global Adult Tobacco Sui'vey (GATS), which points to the 5.6 
percentage point drop in smoking prevalence, from 28.3% in 2009 to 22.7% 
in 2015. The law has increased quit rales among price-sensitive populations 
such as the poor, the rural folk, and the elderly. Reducing the affordability 
of cigarettes has the biggest effect on deterring to-be smokers from starting 
the habit.
The goal of raising funds for health sector thru Sin Tax Reform Act 
has also been achieved. The health sector budget increased from PhP57 in 
2012 prior to the enactment of the Sin Tax Law to PhP151 billion in 2017.


This has financed the coverage of additional 10.1 million poor families as 
well as 2.8 million elderly under the National Health Insurance Program. It 
has also financed programs related to Millennium Development Goals 
(MDGs). For instance, TB detection rate and treatment success rate 
increased from 174,000 in 2010 to 300,000 in 2015; Facility-based deliveries 
of mothers increased from 43.2% in 2010 to 81% in 2015; Number of 
malaria-free provinces increased from 23 in 2010 to 32 provinces in 2016.
While the excise lax rate on cigarettes will cxMitinue to increase by 4% 
every year beginning 2018, studies show that this will not be enough to 
deter the young and the poor from starting to smoke. Maintaining status 
quo will result in one million more smokers by the end of the 
administration of President Duterte, which is equivalent to 200,000 new 
smokers for every year of delay in further increasing the cigarette excise 
tax. Further despite the significant drop in smoking prevalence, the 
prevalence rate in the Philippines is still high compared to countries in the 
region.
Moreover, additional resources will be needed to fully achieve 
Universal Health Care. For instance, providing an essential health package, 
including outpatient and primary care, for all Filipinos will require at least 
Php 70 billion every year. The country's 1:33,000 doctor-to-patient ratio is 
also still far from the ideal. Much has yet to be done in ensuring that every 
Filipino will have access to quality and affordable health care.
Thus, this bill aims to legislate a tobacco tax reform policy that will 
increase the unitary cigarette excise tax to Php90 by 2018 aiid stipulate a 
9% annual increase in the excise tax, thereafter. This proposal is expected 
to reduce smoking prevalence to 16.6 ?/o , a level that is comparable to 
Singapore's, which is currently the lowest smoking prevalence rate in the 
ASEAN. At this excise tax rate, the number of smokers will be cut by two 
to three million and more lives will be saved from the harms of smoking. 
Cigarette excise tax collection ^vill also increase to an amount that will 
significantly augment funds for health expenditures.
In summary, the proposed measure seeks to adjust prices not only to 
inflation which the current law provides, but also to per capita income 
increase lowanls jirevenling, revenue erosion «ind reducing affcudability 
for health reasons. It also raises the excise tax to a level that will further 
reduce smoking prevalence to 16.6% at tlie same time will generate 
incremental revenue that will contribute to the national government's


higher tax effort target. Further, it implements a unitary tax to limit 
downshifting. The revenues shall be used to sustain funding for the 
realization of the Universal Health Coverage, and shall help maintain 
broader fiscal space and macroeconomic fundamentals for the Philippines.
In view of the foregoing, immediate approval of this bill is earnestly
sought.
■■
JOSEPH VICTOR G. EJERCITO


SEVENTELNTH CONGRESS OF THE 
) 
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
f  ;■ '■ f. 
< ^ r n a i?
''V , !.< ’( D f ' - ' t f  o( f ' f  S- 
! fl<:r)»
SENATE
SENATE BILL NO. 1605
’ 17 
OCT 23 
nm :0 5
RLCliVi ij a,'.
INTRODUCED BY SENATOR JOSEPH VICTOR G. EJERCITO
AN ACT
INCREASING THE EXCISE TAX ON TOBACCO PRODUCTS AND 
AMENDING FOR THE PURPOSE SECTION 14S OF REPUBLIC ACT 
NO. 8424, OTFIERWISE KNOWN AS THE NATIONAL INTERNAL 
REVENUE CODE OF 1997, AS AMENDED BY REPUBLIC ACT NO. 
9334 AND REPUBLIC ACT NO. 10331, AND FOR OTHER PURPOSES
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Be if enacted In/ the Senate and the House of Representatives of the Philippines in 
Congress assendded:
Section 1. Section 145 of the National Internal Revenue Code of 1997, as 
amended by Republic Act No. 10351, is hereby further amended to read as 
follows:
"(B) Cigarettes Packed by Hand. - There shall be levied, assessed and 
collected on cigarettes packed by hand an excise tax based on the 
following schedulejs]:
(1) EFFECTIVE ON JANUARY 1, 2018, THE TAX SHALL BE 
NINETY PESOS (P 90.00) PER PACK;
PROVIDED, THAT, ON JANUARY 1, 2019 AND EVERY YEAR 
THEREAFTER, THE EXCISE TAX RATE PRESCRIBED HEREIN 
SHALL BE ADJUSTED ANNUALLY BY NINE PERCENT (9%). 
THIS IS WITHOUT PREJUDICE TO THE PREROGATIVE OF 
CONGRESS TO INCREASE THE INDEXED RATES IN ORDER 
TO MEET THE SUMPTUARY GOALS OF THE TAX.


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["Effective on Januaiy 1, 2013, Twelve pesos (P12.00) per pack; 
"Effective on January 1, 2014, Fifteen pesos (PI5.00) per pack; 
"Effective on January 1, 2015, Eighteen pesos (P18.00) per 
pack;
"Effective on January 1, 2016, Twenty-one pesos (P21.00) per 
pack; and
"Effective on January 1, 2017, Thirty pesos (P30.00) per pack.
"The rates of tax imposed under this subsection shall be 
increased by four percent (4%) every year* effective on 
January 1, 2018, through revenue regulations issued by the 
Secretary of Finance.]
[Duly registered cigarettes packed by hand shall only be packed 
in twenties and other packaging combinations of not more than 
twenty.]
"Cigarettes packed by hand' shall refer to the manner of 
packaging of cigarette sticks using an individual person's hands 
and not through any other means such as a mechanical device, 
machine or equipment.
"(C) Cigarettes Packed by Machine. - There shall be levied, assessed 
and collected on cigarettes packed by machine a tax at tlie rates 
pre.scribed below:
(1) EFFECriVE ON JANUARY 1, 2018, THE TAX SHALL BE 
NINETY PESOS (P 90.00) PER PACK, REGARDLESS OF BRAND 
OR NET RETAIL PRICE.
PROVIDED, THAT, ON JANUARY 1, 2019 AND EVERY YEAR 
THEREAFTER, THE EXCISE TAX RATE PRESCRIBED HEREIN 
SHALL BE ADJUSTED ANNUALLY BY NINE PERCENT (9%). 
THIS IS WITHOUT PREJUDICE TO THE PREROGATIVE OF 
CONGRESS TO INCREASE THE INDEXED RATES IN ORDER 
TO MEET THE SUMPTUARY GOALS OF THE TAX.
ALL BRANDS OF CIGARETTES EXISTING IN THE MARKET 
AT THE TIME OF THE EFFECTIVITY OF THIS ACT SHALL BE 
CLASSIFIED 
ACCORDINGLY 
FOR 
THE 
PROPER
DETERMINATION 
OF 
THE 
TAX 
LIABILITY 
IN


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ACCORDANCE WITH THE SCHEDULE PROVIDED ABOVE 
FOR THE YEAR COMMENCING JANUARY 1, 2018.
["Effective on Januaiy 1, 2013"
(1) If Die net retail price (excluding the excise tax and the 
value-added tax) is Eleven pesos and fifty centavos (PH.50) and 
below per pack, the tax shall be Twelve pesos (P12.00) per pack; 
and
(2) If the net retail price (excluding the excise tax and the 
value-added tax) is more than Eleven pesos and fifty centavos 
(P11.50) per pack, the tax shall be Twenty-five pesos (P25.00) 
per pack.
"Effective on January 1, 2014
"(1) If the net retail price (excluding the excise tax and the 
value-added tax) is Eleven pesos and fifty centavos (PH.50) and 
below per pack, the tax shall be Seventeen pesos (P17.00) per 
pack; and
"(2) If the net retail price (excluding the excise tax and the 
value-added tax) is more than Eleven pesos and fifty centavos 
(PH.50) per pack, the tax shall be Twenty-seven pesos (P27.(X)) 
per pack.
"Effective on January 1, 2015
"(1) If the net retail price (excluding the excise tax and the 
value-added tax) is Eleven pesos and fift}? centavos (PH.50) and 
below per pack, the tax shall be Twenty-one pesos (P21.00) per 
pack; and
"(2) If the net retail price (excluding the excise tax and the 
value-added tax) is more than Eleven pesos and fifty centavos 
(PH.50) per pack, the tax shall be Twenty-eight pesos (P28.00) 
per pack.
"Effective on January 1, 2016
"(1) If the net retail price (excluding the excise tax and the 
value-added tax) is Eleven pesos and fifty centavos (PH.50) and 
below per pack, the tax shall be Twenty-five pesos (P25.00) per 
pack; and


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"(2) If the not retail price (excluding the excise tax and the 
value-added tax) is more than Eleven pesos and fifty centavos 
(P11.50) per pack, the tax shall be Twenty-nine pesos (P29.00) 
per pack.
"Effective on January 1, 2017, the tax on all cigarettes packed by 
machine shall be Thirty pesos (P30.00) per pack. "The rates of tax 
imposed under this subsection shall be increased by four percent 
(4%) every year thereafter effective on Januaiy 1, 2018, through 
revenue regulations issued by the Secretary of Finance."
"Duly registered cigarettes packed by machine shall only be 
packed in twenties and other packaging combinations of not 
more than twenty.
"Understatement of the suggested net retail price by as much as 
fifteen percent (15%) of the actual net retail price shall render tlie 
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.
"Cigarettes introduced in the domestic market after the 
effectivity of this Act shall be initially tax classified according to 
tlieir suggested net retail prices.
If /Suggested net retail price' shall mean the net retail price at 
which 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 newly introduced cigarette 
against the net retail price as defined herein and initially 
determine the correct tax bracket under which a newly 
introduced cigarette 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 under which a newly 
introduced cigarette shall be classified.


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" 'Net retail price' shall mean the price at which the cigarette is 
sold on retail in at least five (5) 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 cigarettes which are marketed only outside 
Metro Manila, the 'net retail price' shah 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 ami the value-added tax.
"Major supermarkets, as contemplated under this Act, shall be 
those with the highest annual gross sales in Metro Manila or tlie 
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 sui-veyed 
are affiliated and/or branches of each other: Provided, finally. 
That in case a particular cigarette is not sold in major 
supermarkets, the price survey can be conducted in retail outlets 
where said cigarette 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 price sui'vey 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.
"The proper tax classification of cigarettes, 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 cigarettes 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 
cigarettes 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


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Congressional Oversight Committee on the Comprehensive Tax 
Reform Program created under Republic Act No. 8240.
"No tobacco products manufactured in the Philippines and 
produced for export shall be removed from their place of 
manufacture or exported without posting of an export bond 
equivalent to the amount of the excise tax due thereon if sold 
domestically: Provided, however. That tobacco products for 
export may be transferred from the place of manufacture to a 
bonded facility, upon posting of a transfer bond, prior to export.
"Tobacco products imported into the Philippines and destined 
for foreign countries shall not be allowed entry without posting a 
bond equivalent to the amount of customs duty, excise and 
value-added taxes due thereon if sold domestically.
„Of the total volume of cigarettes soki in the country, any 
manufacturer and/or .seller of tobacco products must procure at 
least fifteen percent (15%) of its tobacco leaf raw material 
requirements from locally grown source.s, subject to adjustments 
based on international treaty commitments."
"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 
cigars and/or cigarettes sold for the three-month period 
immediately preceding.
"Any maiuifacturer 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 tlie Commissioner that the violation was committed, 
be penalized by a summary cancellation or witlidrawal 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 taxe.s, surcharges and interest 
which may be assessed pursuant to this Section.


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"Any person liable for any of the acts or omissions prohibited 
under this Section shall he 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 he 
deporled immetlialely after sei*ving the sentence, without further 
proceedings for deportation."]
'(D) The following provisions shall be applicable for this Section:
a. Duly registered or existing brands of cigarettes or new brands 
thereof shall only be packed in twenties and other packaging 
combinations of not more than twenty.
b. Variants of existing brands and variants of new brands of 
cigarettes which are introduced in the domestic market after the 
effecti\’it}' 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.
'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 brand' shall mean a brand registered after the date of the 
effectivity of this Act.
c. 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.
d. 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 fe:>r additional excise tax 
equivalent to the tax due and difference between the understated 
suggested net retail price and tlie actual net retail price.


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Cigarettes 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 
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 other regions, 
for those with regional markets. At the of three (3) months from 
the product launch, the Bureau of Internal Revenue shall validate 
tlie suggested retail price as defined herein and determine the 
correct tax bracket to which a particular new brand of cigarette, 
as defined above shall be classihed. After the end of eighteen (18) 
months from such validation, the Bureau of Internal Revenue 
shall revalidate the initially validated not 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.
'Net retail price' shall mean the price at which the cigarette is sold 
on retail in at least five (5) 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 cigarettes which are marketed only outside Metro 
Manila, the 'net retail price' shah 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 lax.
"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 cigarette is not sold in major 
supermarkets, the price survey can be conducted in retail outlets 
where said cigarette is sold in Metro Manila or the region, as the 
case may be, upon the determination of the Commissioner of 
Internal Revenue.


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"The net retail price shall be determined by the Bureau of Internal 
Revenue 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 
Conj’ressional Oversight Committee on the Comprehensive Tax 
Reform Program created under Republic Act No. 8240.
"The proper tax classification of cigarettes, 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 cigarettes existing in the market at the time of the effectivity 
of this Act shall be classified according to tlie net retail prices and 
tlie tax rates provided above based on the latest price survey of 
cigarettes conducted by the Bureau of Internal Revenue.
"The methodology and all pertinent documents used in the 
conduct of the latest price sui*vey shall be submitted to the 
Congressional Oversight Committee on the Comprehensive Tax 
Reform Program created under Republic Act No. 8240.
No tobacco products manufactured in the Philippines and 
produced for export shall be removed from their place of 
manufacture or exported without posting of an export bond 
equivalent to tlie amount of the excise tax due thereon if sold 
domestically; Provided, however. That tobacco products for 
export may be transferred from the place of manufacture to a 
bonded facility, upon posting of a transfer bond, prior to export.
b. Tobacco products imported into the Philippines and destined for 
foreign countries shall not be allowed entiy without posting a 
bond equivalent to the amount of customs duty, excise and value- 
adtled taxes due thereon if sold domestically.
c. Of the total volume of cigarettes sold in the country, any 
manufacturer and/or seller of tobacco products must procure at 
least fifteen percent (15%) of its tobacco leaf raw material 
requirements from locally grown sources, subject to adjustments 
based on international treaty commitments.
a.


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d. 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 third month thereafter, submit to 
the Commissioner a sworn statement of the volume of sales for 
each particular brand of cigars and/or cigarettes sold for the 
three-month period immediately preceding.
e. 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 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 cigars or cigarettes.
f. 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.
g. Any pers(.)n 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.
h. If the offender is not a citizen of the Philippines, he shall be 
deported immediately after seiving the sentence, without further 
proceedings for deportation."
Section 2; Implvmctitiiig Rules ami 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 not later than sixty (60) days upon the 
effectivity of tliis Act.
Section 3: Separalfility 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.
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Section 4: 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.
Section 5: Effectivity. - This Act shall take effect upon its publication in a 
newspaper of general circulation.
Approval,
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