TWENTIETH CONGRESS OF THE ) 
REPUBLIC OF THE PHILIPPINES )
First Regular Session 
)
SENATE 
S. NO.
25 JiJL-2 D6:02
Introduced by SEN. WIN GATCHALIAN
AN ACT
AMENDING SECTIONS 8,144, AND 225, AND ADDING A NEW SECTION 263- 
B AND 263-C OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS 
AMENDED, AND FOR OTHER PURPOSES
EXPLANATORY NOTE
According to the 2023 National Nutrition Survey conducted by the Department 
of Science and Technology - Food and Nutrition Research Institute ("DOST-FNRI"), 
the smoking prevalence among adults ages 20 years old and above was 18.5% in 
2021 and significantly increased to 23.2% in 2023.1 Further, the prevalence of 
electronic cigarettes among adolescents ages 10 to 19 increased from 7.5% in 2021 
to 39.9% in 2023,2 a five-fold increase, while prevalence among adults ages 20 to 59 
years old rose from 1.4% in 2021 to 9.9% in 2023.3
The striking increase in smoking prevalence could be attributed to several 
factors, such as the ease of access to these products and the attractiveness of flavored 
vapor products.
Under the Tax Code, nicotine salt or salt nicotine is taxed at PFIP57.33 per 
milliliter ("mL"), while conventional 'freebase' or 'classic' nicotine is taxed at PHP66.15 
per lOmL (or PFIP6.15 per mL). Since the excise tax for nicotine salt is higher, there 
is room for misdeclaration in order to avail of a lower tax rate which can lead to a
1 DOST-FNRI (2024). Halfway Point to 2030: Key Findings of the 2023 National Nutrition Survey - 
Nutritional Status of Adults (20 to 59 years old). 
https://enutrition.fnri.dost.gov.ph/uploads/7_2023_NNS_ADULTS.pdf (date last accessed: May 29, 
2025).
2 Id
3 Id.


decrease in tax collections. Further, since the cost is lower, these products can be sold 
at a lower selling price making it more affordable. In fact, per the Department of Trade 
and Industry, all the Philippine Standard Licenses it has issued only pertain to brands 
containing freebase nicotine.4
The lack of penalties for violation of the flavor ban on vapor products has 
encouraged manufacturers, importers, retailers, and distributors of vapor products to 
sell and market flavored vapor products. It is worth noting that a 2019 study found 
that vaping initiation among young adults is driven by flavored e-cigarettes and 
banning such flavors may reduce vaping initiation.5
Lastly, heated tobacco products ("HTPs") are taxed relatively lower than other 
cigarettes and vapor products, encouraging users to shift to HTPs.
To arrest the increase in smoking prevalence and vape use, there is an urgent 
need to revisit the taxation of these products. Thus, the proposed measure seeks to 
introduce the following:
1. Unitary excise tax for nicotine salt or salt nicotine and conventional 
'freebase' or 'classic' nicotine at PHP66.15 per mL;
2. Imposition of a specific tax on vapor product devices at PHP120.00 per 
device and HTP devices at PHP500.00 per device;
3. Imposition of penalties for the manufacture, importation, sale, distribution, 
and possession of flavored vapor products; and
4. Increase the excise tax rate on HTPs from PHP35.83 to PHP41.00 per pack 
of 20 units or packaging combinations of not more than 20 units.
In view of the foregoing, the passage of this measure is^rnes^ sought.
N GATCHALIAN
4 Transcript of Stenographic Notes on the Public Hearing on the Rising Incidents of Illicit Trade on 
Excisable Products dated January 22, 2025, p. 75.
5 Landry, et. al. (2019). The role of flavors In vaping Initiation and satisfaction among U.S. adults. 
Department of Health and Human Services - U.S.A. Retrieved from 
https://pmc.ncbi.nlm.nih.gov/articles/PMC6903386/pdf/nihms-1537837.pdf (date last accessed: May 
29, 2025).


TWENTIETH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
First Regular Session 
)
25 JlJL-2 P6:02
SENATE 
S. NO. 58
Introduced by Senator Win Gatchalian
AN ACT
AMENDING SECTIONS 8,144, AND 225, AND ADDING A NEW SECTION 263- 
B AND 263-C 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:
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SECTION 1. Section 8 of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"SEC. 8. Duty of the Commissioner to Ensure the Provision and
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Distribution of Forms, Receipts, Certificates, and Appiiances, and the
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Acknowiedgment of Payment of Taxes.
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(A) Provision and Distribution to Proper-Officials. - Any law to the contrary
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notwithstanding, it shall be the duty of the Commissioner, among other things,
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to prescribe, provide, and distribute to the proper officials the requisite licenses;
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internal revenue stamps; unique, secure and non-removable identification
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markings (hereafter called unique identification markings), such as codes or
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stamps, be affixed to or form part of all unit packets and packages and any
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outside packaging of CIGARS AND cigarettes, HEATED TOBACCO


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PRODUCTS, AND VAPOR PRODUCTS and bottles of distilled spirits; labels 
and other forms; certificates; bonds; records; invoices; books; receipts; 
instruments; appliances and apparatus used in administering the laws falling 
within the jurisdiction of the Bureau. For this purpose, internal revenue stamps, 
or other markings and labels shall be caused by the Commissioner to be printed 
with adequate security features.
Internal revenue stamps, whether of a bar code or fuson design, or other 
markings shall be firmly and conspicuously affixed or printed on each pack of 
cigars and cigarettes, HEATED TOBACCO PRODUCTS, AND VAPOR 
PRODUCTS, and bottles of distilled spirits subject to excise tax in the manner 
and form as prescribed by the Commissioner, upon approval of the Secretary of 
Finance.
To further improve tax administration, CIGARS AND cigarettes, HEATED 
TOBACCO PRODUCTS, VAPOR PRODUCTS, and alcohol manufacturers shall 
be required to install automated volume-counters of packs and bottles to deter 
over-removals and misdeclaration of removals."
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SECTION 2. Section 144 of the National Internal Revenue Code of 1997, as
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amended, is hereby further amended to read as follows:
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"Sec. 144. Tobacco Products, Heated Tobacco Products, and
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Vapor Products. -
X X X
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"(B) Heated Tobacco Products. - There shall be levied, assessed and
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collected on heated tobacco products an excise tax at the rate OF FORTY-
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ONE PESOS (P41.00) PER PACK OF TWENTY (20) UNITS OR PACKAGING


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COMBINATIONS OF NOT MORE THAN TWENTY (20) UNITS, [prescribed 
below:
Effective on Jonuary 1, 2020, Twenty-five pesos (P25.00) per pack of twenty
(20) units or pockoging combinations of not more thon twenty (20) units;
Effective on Januory 1, 2021, Twenty-seven pesos and Fifty centavos (P27.50)
per pack of twenty (20) units or packaging combinations of not more thon twenty
(20) units;
Effective on January 1, 2022, Thirty pesos (P30.00) per pack of twenty (20)
units or packaging combinations of not more than twenty (20) units; ond
Effective on January 1,2023, Thirty-two pesos and fifty centavos (P32.50) per
pack of twenty (20) units or packaging combinations of not more than twenty (20)
units.]
"The rates of tax imposed under this Subsection, shall be increased by five 
percent (5%) every year effective on January 1, [2024] 2026 through revenue 
regulations issued by the Secretary of Finance.
"x X X
(C) HEATED TOBACCO PRODUCT DEVICE. - EFFECTIVE JANUARY 
1, 2026, AN EXCISE TAX EQUIVALENT TO FIVE HUNDRED PESOS 
(P500.00) PER HEATED TOBACCO PRODUCT DEVICE SHALL BE 
IMPOSED.
”[(€)](D) Vapor Products. - There shall be levied, assessed and 
collected on vapor products [an excise tax at the rates prescribed below:]
CONTAINING ANY LIQUID SUBSTANCE, REGARDLESS OF NICOTINE 
CONTENT, INCLUDING NICOTINE-FREE LIQUIDS OR ANY SIMILAR


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PRODUCT, WHETHER CLASSIFIED AS NICOTINE SALT OR SALT 
NICOTINE, OR CONVENTIONAL 'FREEBASE' OR 'CLASSIC' NICOTINE, 
AN EXCISE TAX AT THE RATE OF SIXTY-SIX PESOS AND FIFTEEN 
CENTAVOS (P66.15) PER MILLILITER OR A FRACTION THEREOF.
["(1) Nicotine Satt or Salt Nicotine.—There-shall be levied, assessed and
collected-on any liquid substonce, regardless of nicotine content, including
nicotine-free liquids or-ony similar product, further classified as nicotine salt or
salt nicotine, an excise tax basod-on the following schedules:
"Effective on JofUiary 1, 20207 Thirty seven pesos (P37.00) per milliliter
or a-fraction thereof;
"Effective on January 1, 2021, Forty-two pesos (Pd2.00) per milliliter or a
fraction thereof;
"Effective on January 1, 2022, Forty-seven pesos (P/17.00) per milliliter
or o-fraction thereof; ond-
"Effective on Jonuary 1, 2023, Fifty-two pesos (P52.00) per milliliter or o
fraction thereof.
"Provided, That the rates of tax imposed under this Subsection shall bo
increased' by five percent (5%) every year effective on January 1, 202-1, through
revenue regulations-issued by the Secretary of Rnonce.
"(2) Conventional 'Freebase' or 'Classic' Nicotine.—There shall bo levied,
assessed-and collected on any liquid substance, regardless of nicotine content,
including-nicotino free—liquid or any similar product, further classifiod—as
conventional 'freebase'-or 'classic' nicotine an excise tax-based on the following
schedules:


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"Effective on January 1, 2020, Forty-five pesos (P45.00) per ten (10)
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milliliters or d fraction thereof;
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"Effective en Januar/ 1, 2021, Fifty pesos (P50.00) per ten (10) milliliters
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or 0 fraction thereof;
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"Effective on Januory 1, 2022, Fifty-five pesos (P55.00) per ten (10)
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milliliters of-a fraction thereof; and
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"Effective on Jonuary 1,2023, Sixty pesos (P60.00) per ton (10) rmililiters
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or 0 froction thereof.]
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"Provided, That the rates of tax imposed under this Subsection shall be
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increased by five percent (5%) every year effective January 1, [2024] 2026,
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through revenue regulations to be issued by the Secretary of Finance.
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"x X X
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"Unit packets and any outside wrapping of vapor products and other similar
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products shall carry a health warning compliant with Republic Act No. 10643,
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otherwise known as 'The Graphic Health Warnings Law' AND INTERNAL
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REVENUE STAMPS UNDER THIS CODE.
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"x X X /7
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(E) VAPOR PRODUCT DEVICE. - EFFECTIVE JANUARY 1, 2026, AN
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EXCISE TAX EQUIVALENT TO ONE HUNDRED TWENTY PESOS (P120.00)
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PER VAPOR PRODUCT DEVICE, INCLUDING DISPOSABLE, REFILLABLE,
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OR OTHER SIMILAR DEVICE, SHALL BE IMPOSED.
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SEC. 3. Section 225 of the National Internal Revenue Code of 1997, as amended,
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is hereby further amended to read as follows:
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SEC. 225. When Property to be Sold or Destroyed. -


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Distilled spirits, liquors, cigars, cigarettes, HEATED TOBACCO 
PRODUCTS, VAPOR PRODUCTS, other manufactured products of tobacco, 
and all apparatus used in or about the illicit production of such articles may, 
upon forfeiture, be destroyed by order of the Commissioner, when the sale of 
the same for consumption or use would be injurious to public health or 
prejudicial to the enforcement of the law.
"X X X."
SEC. 4. A new Section 263-B shall be introduced in the National Internal
10 Revenue Code of 1997, as amended. The new Section 263-B shall read as follows:
SEC. 263-B. MANUFACTURING, IMPORTING, SELLING, OR 
DISTRIBUTION OF FLAVORED VAPOR PRODUCTS. - ANY PERSON WHO 
MANUFACTURES, IMPORTS, SELLS, OR DISTRIBUTES VAPOR 
PRODUCTS WITH FLAVORING OTHER THAN PLAIN TOBACCO OR PLAIN 
MENTHOL IN VIOLATION OF SECTION 144 (C) OF THIS CODE SHALL BE 
PUNISHED WITH A FINE OF NOT LESS THAN ONE MILLION FIVE 
HUNDRED THOUSAND PESOS (Pl,500,000.00) BUT NOT MORE THAN 
FIFTEEN MILLION PESOS (P15,000,000.00) AND IMPRISONMENT FOR 
A TERM OF NOT LESS THAN SIX (6) YEARS AND ONE (1) DAY BUT NOT 
MORE THAN TWELVE (12) YEARS.
SEC. 5. A new Section 263-C shall be introduced in the National Internal
22 Revenue Code of 1997, as amended. The new Section 263-C shall read as follows:
SEC. 263-C. UNLAWFUL POSSESSION OF FLAVORED VAPOR 
PRODUCTS. - IT SHALL BE UNLAWFUL FOR ANY PERSON TO HAVE IN


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HIS POSSESSION VAPOR PRODUCTS WITH FLAVORING OTHER THAN 
PLAIN TOBACCO OR PLAIN MENTHOL WHICH ARE PROHIBITED UNDER 
SECTION 144 (C) OF THIS CODE. ANY PERSON WHO HAS BEEN FOUND 
GUILTY UNDER THIS SECTION SHALL BE SUBJECT TO THE FOLLOWING 
PENALTIES:
(i) 
ON THE FIRST OFFENSE, A FINE OF ONE HUNDRED 
THOUSAND PESOS (PlOO,000.00);
(ii) 
ON THE SECOND OFFENSE, A FINE OF THREE HUNDRED 
THOUSAND PESOS (P300,000.00); AND
(iii) 
ON THE THIRD OFFENSE, A FINE OF FIVE HUNDRED 
THOUSAND PESOS (P500,000.00) OR IMPRISONMENT OF NOT LESS 
THAN ONE (1) MONTH AND ONE (1) DAY BUT NOT MORE THAN SIX (6) 
MONTHS.
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SEC. 6. If any provision of this Act is declared unconstitutional or invalid,
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other parts or provision hereof not affected thereby shall continue to be in full force
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and effect.
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SEC. 7. All laws, orders, issuances, circulars, rules and regulation or parts
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thereof, which are inconsistent with the provisions of this Act are hereby repealed or
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modified accordingly.
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SEC. 8. This Act shall take effect after fifteen (15) days following its complete
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publication in the Official Gazette or in a newspaper of general circulation.
Approved,