15 MAY 2012
aera.

Republw of the Phibppines .
HOUSE OF REPRESENTATIVES ~
Quezon City

Friteenth Congress
Secoad Regular Session
2171
COMMITIFF REPORT NO.

: “TS MAY 2012

Submitted by the Commuttez on Ways and Means on _

Re, House Bill No. 5727

ts, in consolidat.on with Hy;
5, 3489, 3466 and 4787

Recommending its approval with amend:
Nos. 2484, 2485, 2687, 3059, 3183, 3332,

Sponsors: Reps. Isidro T. Lagat and joseph Fmulio Aguinakio Abaya

Mr. Speaker

The Committee on Ways and Means to which were referred House E::] No
2484 introduced by Reps, Aumrentado and Aimario, entitled:

“AN ACT PROV:DING FOR AN ADDITIONAL EXCISE | AX
OF TEN PERCENT (10%) ON ALCOHOL PRODUCTS, AMENDING
FOR THE PURPCSE THE NATIONAL INTERNAL REVENUE CODF
OF 1997, AS AMENDED EY RA 9334, 10 GENERATE FUN.S FOR
THE INFORMATION COMMUNICATION TECHNOLOGY (ICTs
PROGRAM OF PUBLIC ELEMENTARY ANID SECONDARY
SCHOOLS AND CONS! HOOL BUILDINGS,
HIRING OF NEW TEACHERS PREFERABLY WITH
PROFICIENCY, ENGLISH, MATH AND SCIENCE MAZORS, ANE
FOR OTHER PURPOSES”,

House Bill No. 2485 introduced by Keps. Aumeniada, Almariv, Aghps
enntled:

“AN ACT PROVIGING FOC AN ADDITIONA! TAX OF P35


PER PACK OF CIGAR AND CIGARETTES, AMENDING FOR THE
PURPOSE THE NATIONAL iNTERNAL REVENUE CODE OF 1997,
AS AMENDED BY RA 9334, FO GENERATE FUNDS FOR THE
PHILHEALTH UNIVERSAL COVERAGE OF INDIGENT FAMILIES,
BARANGAY OFFICIALS. HEALTH AND DAY CARE WORKERS,
AND FOR OTHER PURPOSES”,

Hause Rill No, 2687 introduced by Reps, Limkaichong, Arnaiz, Teves, San Luis, Co,
Batocabe, Carbin, Sarmiento (M.L.) and Guilas, entitled:

“AN ACT RESTRUCTURING THE EXCISE TAX ON
ALCOHOL AND TOBACCO PRODUCTS”,

House Bul No, 3059 introduced by Reps. Mandanas and Puno, entitled

“AN ACT TO PROMOTE EQUITABLE SHARING OF COSTS
AND BENEKITS IN THE ALCOHOL AND TOBACCO INDUSTRY,
AMENDING FOR THE PURPOSE SECTIONS 141, 142, 143 AND 145
OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED",

House Biil No, 3183 introduced by Rep. Suarez, entitled:

"AN ACT AMENDING SECHIONS 141, 142, 143 AND 145 OF
THE NATIONAL iNTERNAL REVENUE CODE OF 1997, AS
AMENDED",

House Bill No. introduced by Reps. Singson (E. Jr), Vergara, Bonoan-David,
Acop, Casalan, De Veneria, Bernas, Batanil, Eriquel, Ortega (V. F), Dalog, Qbillo,
Pingeay, Leonen-Pizzaro, Villarwa, Bulut-Beglang, Ting, Padilla, Albano, Dy, Cua,
Aggabao, Celeste, Yap, Ong, Magsaysay, Farinas, Ortega (F, &) and Singson (R. L.),
entitled:

“AN ACT IN THE EXCISE TAX RATES IMPOSED
ON ALCOHOL AND TOBACCO PRODUCTS, AMENDING FOR THE
PURPOSE SECTIONS 141, 1.42, 143, 144 AND 145 OF THE NATIONAL
INTERNAL REVENUE COD! 997, AS AMENDED",

House Bill No. 3468 introduced by Rep. Abad, entitled:

“AN ACT RESTRUCTURING THE UXCISE TAX ©!
TOBACCO PRODLCTS AND AMENDING FOR THE PURPOSF
PERTINENT SECTIONS OF THE NATIONAL INTERNAL REVENUE
CODE. AS AMENDEIY



House Bilt No 3489 troduced by Rep, Tupas, eatutled:

“AN ACF RESTRUCTURING THE EXCISE TAX ON

' TOBACCO PRODUCIS AND AMENDING FOR THE PURPOSE

PERTINENT SECTIONS GF THE NATIONAL INTERNAL REVENUE
CODE, AS AMENDED",

House Bill No, 3666 introduced by Reps. Javier and Teodorg, entitled:

“AN ACT INCREASING THE EXCISE TAX RATES IMPOSED
ON TOBACCO PRODUCTS AMENDING FOR THE PURPOSE
SECTION 145 OF THE NATIONAL INTERNAL REVENUE CODE OF
1997, AS AMENDED”.

House Bill No. 4787 introduced by Rep. Mandanas entitled:

“AN ACT RESTRUCTURING THE EXCISE TAX ON
DISTILLED SPIRITS, AMENDING FOR THE PURPOSE SECTION 141
OF THE NATIONAL INTERNAL REVENUE CODE OF 1997, AS
AMENDED" and

House Bill No. 5727 introduced by Reps, Abaya, Climaco, Alcala, Limkaichong,
* Gonzalez (F.), Avad, Tupas, Trenas and Apacible, entitled:

“AN ACT RESTRUCTURING THE EXCISE TAX ON
ALCOHOL AND TOBACCO PRODUCTS”

has considered the same and recommends the approval of House Bill No, 5727, in
coesolidation with House Bill Nos, 2484, 2485, 2687, 3059, 3183, 3332, 3465, 3489,
366 and 4787, with the following amendments:

1. On page 3, delete tines 32 to 41
2. On page 4, delete lines 1 to 30 and in liew thereof insert the following:

“SEC 141. Distilled Spits. - On distilled spirits, subject to the
Provisions of Section 133 of this Code, AN EXCISE TAX [there] shall
be collected IN ACCORDANCE WITH THE NET RETAIL PRICE
(EXCLUDING THE EXCIS& TAX AND THR VALUE-ADDED TAX)
PER BOTTLE OF SEVEN HUNDRED FIFCY MILLILITER (750 ML.)
VOLUME CAPACITY EFFECTIVE JANUARY 1, 2013 AS FOLLOWS:

“(A) LESS THAN NINETY PESOS (P90.00) - TWENTY PESGS
(P20.00) PER PROGF LITER:

3


“(B) NINETY PESOS (P9000) UP TO ONE FIFTY PESOS
(P150,00)'- EIGHTY PESOS (P80.00) PER PROOF LITER;
AND

“(C) MORE THAN ONE HUNDRED FIFTY. PRSOS (7150 00) -
THREE HUNDRED TWENTY PESOS (P320.00) PER
PROOF LITER.”

PROVIDED, HOWEVER, THAT ETHYL ALCOHOL
PRODUCED FROM WHATEVER SOURCE OR RAW MATERIALS
SHALL BR TAXED AT TWENTY PESOS (P20.00) PER PROOF LITER:
PROVIDED, FURTHER THAT, IN CASE THE ETHYL ALCOHOL 1S.
SUBSEQUENTLY USED AS A RAW MATERIAL/INGREDIENT IN
THE MANUFACTURE OF ALCOHOLIC BEVERAGES, AN
ADDITIONAL. TAX SHALL BE PAID BY THE MANUFACTURER
THEREOF EQUIVALENT TO THE PIFFERENCE BETWEEN THE
TAX PREVIOUSLY PAID ON THE ETHYL ALCOHOL, AND THE
TAX DUE BASED ON THE NET RETAIL PRICE OF THE ALCOHOL.

PROVIDED, ALSO, THAT, IN CASE OF IMPORTATION OR
LOCAL SALE OF DISTILLED SPIRITS IN CONCENTRATED FORM
AND FLAVORING EXTRACTS FOR USE AS RAW MATERIAL OR
INGREDIENT IN THE PRODUCTION OF ALCOHOLIC
BEVERAGES, THE IMPORTER OR MANUFACTURER THEREOF
SHAL]. DECLARE THE ESTIMATED NET RETAIL PRICE OF THE
ALCOHOLIC BEVERACES. NET CF EXCISE AND VALUE-ADDED
TAXES, FOR PURPOSES OF DETERMINING THE PROPER TAX
CLASSIFICATION OF THE SAID = RAW MATERIAL OR
INGREDIENT; OTHERWISE, THE HIGHFST TAX RATE SHALL BE
IMPOSED THEREON

PROVIDED, FINALL’, THAT, THE RATES OF TAX IMPOSED
UNDER THIS SECTION SHA! BE INCREASED BY RIGHT
PERCENT (8%) EVERY TWO YEARS THEREAITER EFFECTIVE
JANUARY 1, 2015 UNTIL jANUARY 1, 2025, THROUGH REVENUE
REGULATIONS ISSUED BY THR SECRETARY OF FINANCE
On the same page, line 53, put a bracket on the letter “( c)”
. On page §, lines 23 and 33, deiete the open and close brackets

3 On the same page, line 29, after the word “For” insert the words DISTILLED
SPIRITS and delete the word “brands”

4


6. On page 6, after tine 9, insert a new 2aragraph which shail read as fotlows

“DISTILLED SPIRITS 'NTRODUCED IN THE
DOMESTIC MARKET AFTER THE EFFECTIVITY OF THIS
ACT: SHALL BE INITIALLY TAX CLASSIFIED:
‘ACCORDING TO THEIR SUGGESTE]? NET RETAIL
PRICES.”

7. On the same page, line 11, delete the open bracket

8 On the same page, line 12, put 4 bracket on the phrase “new brands, as
defined above, of”

9. On the same page, line 18 after the phrase “to which 2” insert the words
“NEWLY INTRODUCED”

10. On the same page line 19, put brackets on the phrase “particular new brand
of” and “as defined above,”

11. On the same page, line 23, after the phrase “which a” insert the words
NEWLY INTRODUCED aad pur a bracket on the phrase “particular new
brand of”

12. On the same page, line 24, after the word “classified” replace the colon w:th a
period ()) and place an opening bracset (| ) before the word “Provided”

13. On page 7, after fine 3, insert the following paragsaphs:

“THE PROPER TAX CLASSIFICATION OF
DISTILLED SPIRITS, WHETHER REGISTERED BEFORE OR
AfTER THE EFFECTIVITY OF THIS ACT, SHALL BE
DETERMINED EVERY TWO YEARS FROM THE DATE OF
EFFECTIVITY OF TLS ACT.

ALL DISTILLED SPIRITS EXISTING IN JHE
MARKET AT THE TIME OF THE EFFECTIVITY OF THIS
ACT SHALL BE CLASSIFIED ACCORDING TO THE NET
RETAIL PRICES AND THE TAX RA[ES PROVIDED
ABOVE BASED ON THE LATEST PRICK SURVEY OF THE
DISTILLED SPIRITS CONDUCTED BY THE BUREAU OF
INTERNAL REVENUE.”

14, On the same page, delete lines 38 to 44

15, On.page8, delete lines 1 to 27, and :n he thereof insert the following:

5


€
finer of volume cagacity EFE
following taxes

“(@) Sparkling wiaes/. hampagnes regardless of proof, if the
not retail price per BOTTLE OF SEVEN HUNDRED
RIRPY MILLILITER (50 ML.) VOLUME CAPACITY
{exchiding the excise fax and the value-added tax) is:

142. Wines. - On wines, there shall be collected per
IVE JANUARY 1, 2013, the

“(1) Hive hundred pesos (P500.00) or less - TWO
HUNDRED FIFTY PESOS (P250.00) (One
hundred forty-five pesos and sixty centavos
(P1456); and

“42) Five hundred pesos (P500.00) —
NBRED PESOS (P700.00) {Four

SIX pesos and eighty centavos

(P436.80)}

“(b) Still wines AND CARBONATED WINES containing
fourteen percent (14%) of alcohol by volume or fess,
THIRTY PESOS (790.00) [Seventern pesos and forty-
seven centavos (P1747): and

“4 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 (P50.00) [Thirty-four pesos and ninety-four
centavos (P3494) }

PROVIDED, THAT THE RATES OF TAX IMPOSED
UNDER THIS SECTION SHALL. BE INCREASED BY EIGHT
PERCENT (8%) BV YEARS THEREAFTER EFFECTIVE
JANUARY 1, 2015 JANUARY 1, 2025, THROUGH
REVENUE REGULATIONE ED BY THE SECRETARY OF
FINANCE,

“Fortified wines containing more than twenty-five percent
(25%) of alcohol by vonime shall be taxed ay distilled spirits:
PROVIDED, HOWEVER, THAT THE TAX RATE SHALL NOT BE
LOWER THAN EIGHTY PESOS (P80.00) PER PROOF LITER
“Forufied wines’ shail mean: natural wines to which distilled spirits
are added tc increase therr alcohol strength,”

16. On page, line 29, deteie the open bracket

&


19

HAMPAGNI

Gn the sane page, ne
wit the words "SPARKI ING WINES /CHAMPAGNES

Ee PY

put

2) Gn the same page, line 39, delete the close bracket

2b

On page 9, delety fines 12 te 33 and in hea thereof insert the following:

“SPARKUL WINES/CHAMPAGNES
IE RODUCED IN THE DOMESTIC MARKET AFTER THE
BREBCUVITY OF THES ACT SHALL BE INITIALLY TAX
CLASSIFIED ACCORDING (TG THEIR SUGGESTED NET
RETAIL PRICES,

“Suggested aot retail prog’ shail mean the net retail
price at which ftvands, as defined above, of} locally
memufachired or amparted SPARKLING
wines /C HAMPAGNES une intended by the manufacturer or
importer t© te sok! oa retail m major supermarkets or retail
outlets uy Metro Manila for those marketed nationwide, and
an other regions, fur taose with regional markets. At the end
of three (3) moms from the product launch, the Bureau of

ryenuc: shail vahuale the suggested retail price of
ARKLING WINE/CHANPAGNE {brand} against the
ret retail prve asd oan and determine the correct
tax bracket under which A NEWLY INTRODUCED
SPARKLING WINE/CHAMPAGNE [particular new brand
of wine, ax derived pall be classified. After the end
cightoen (18) nusnths trom such validation, the Bureau of
hvternal Revenue shali veldate the initially validated net
retail price agaist he net retail price as of the time of
revalidation in order to finaily determine the correct tax
bracket Which a [partcalac sew brand off NEWLY
INTRODUCE D SPARKLING wine/CHAMPAGNE shall be
classified. ver, That brands of wines
introduced ui the domestic market between January 1, 1997
fer 2}, 2003 shall remain in the classification
rau of iniernal Revenue has determined
theta to belong, as of Devesber 31, 2003. Such classification

hue 32, aiter the phrase “the price at which” insert the

tine 34, after the word “wine” place a slash and the word

racket on the word “brands” and replave it


of new brands and brands introduced between January 1,
1997 and December 31, 2003 shal! not be revised except by
any act of Congress.)

22. On page 10, after line4, insert the following paragraphs

“THE PROPER TAX CLASSIFICATION OF
SPARKLING | WINBS/CHAMPAGNES, — WHETHER
REGISTERED BEFORE OR AFTER THE EFFECTIVItY OF
THIS ACT, SHALL. 8E DETERMINED EVERY TWO YEARS
FROM THE DATE OF EFFECTIVITY OF THIS ACT.

ALL WINES EXISTING [N THE MARKET AT THE
TIME OF THE £FECTIVITY OF THIS ACT SHAI1. BE
CLASSIFIED ACCORDING TO THE NET RETAIL PRICES
AND THE TAX RATES PROVIDED ABOVE BASED ON
THE LATEST PRICE SURVEY OF THE WINES
CONDUCTED BY THE BUREAU OF INTERNAL
REVENUE.”

23. On the same page, delete lines 40 to 45
24. On page 11, delete lines 1 to 3, and :n lieu thereof insert the following:

“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, tapuy and simular
domestic 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 FIFTY PESOS
AND SIXTY CENTAVOS (P50.60) OR LESS, THE
TAX SHALL BE THIRTEEN PESOS AND SEVENTY
RIVE CENTAVOS (P13.75) PRR LITER EFFECTIVE
JANUARY 1, 2013; AND

“(B) IF THE NET RETAIL PRICE (EXCLUDING TRE
BXCISE TAX ANID VALUE-ADDED TAX) PER
LITER OF VOLUME CAPACITY IS MORE THAN
FIFTY PESOS AND SIXTY CENTAVOS (P50.60), FHE
TAX SHALL BE EIGHTEEN PFSOS ANC EIGHTY
CENTAVOS (P1880) PER LITER EFFECTIVE
JANUARY 1, 2013;

g


“PROVIDED, THAT fermented liquors which are brewed
and soid at microbreweries or small establishments such as pubs
and restaurants shalt be subject to the rate OF TWENTY-EIGHT
PESOS (P 28,00) PER LITER EFFECTIVE JANUARY 1, 2013.

PROVIDED, FURTHER, THAT THE RATES OF VAX
IMPOSED UNDER THIS SECTION SHALI. BE INCREASED
BY EIGHT PERCENT (8%) EVERY TWO YEARS
THEREAFTER EFFECTIVE. JANUARY 1, 2015 UNTIL
JANUARY 4, 2025, THROUGH REVENUE REGULATIONS
ISSUED BY THE SECRETARY OF FINANCE. IIOWEVER,
IN CASE OF FERMENTED 1{QUORS AFFECTED BY THE
“NO DOWNWARD RECLASSIFICATION” PROVISIONS
PRESCRIBED UNDER THIS SECTION, THE 8% INCREASE
SHALL APPLY TO THEIR RESPECTIVE APPLICABLE TAX
RATES.

25, On the same page, delete lines 42 to 45
26. On page 12, delete lines 1 to 17, and. in lieu thereof insert the following:

“FERMENTED LIQUORS INTRODUCED IN THE
DOMESTIC MARKET AFTER THE EFFECTIVITY OF THIS
ACT SHALL BE INITVALLY TAX CLASSIFIED
ACCORDING TO THEIR SUGGESTED NET RETAIL
PRICES.

“Suggested net retail prive’ shall mean the net retaih
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 guilers in Metro Manila for those
marketed nationwide, and in other regions, for those with
regional markets, At the end of three (3) months from the
product launch, the Bureau of Internal Revenue shall
validate the suggested net retail price of the NEWLY
INTRODUCED FERMENTED LIQUOR [brand] against the
net retail price as defined herein: and determine the correct
tax bracket to which a NEWLY INTRODUCED [particular
new brand of] fermented liquor, as defined above, shall be
classified. After the end of the eighteen (18) months from
such vatidation, the Burean of Internal Revenue shall
revalidate the initially validaced net retail price against the
net retail price as of the ume of revalidation in order to

2


Wy determune the correct tax bracket which a NEWLY
KODUCRE {particular new brand off fermented
liquor{s] shalt be 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
, 2008 shall not be revised except by an act of Congress.)

27, Om page 12, lines 19 and 50, delete the open and close brackets

28. On the same page. line 44, delete the opening bracket

29, On page 13, lune J, pur a bracket on the phrase “ol existing brands”
and add the letter “S” to the word “liquor”

30. On the same page, tine 3, delete the closing bracket
31. On the samme page, after {une 3, add the foilowing:

"THE PROPER TAX CLASSIFICATION OF
TERMENTED ORS, WHETHER = REGISTERED
BREORE OR AFTER THE EFFECTIVITY OF THIS ACT,
SHALL BE DEPERMINED EVERY TWO YEARS KROM
THE DATE OF EFFECTIVITY OF THIS ACL.

ALL FERMENTED i.JQUORS EXISTING IN THE
MARKET AT THE TIME OF THE EFFECYIVITY OF THIS
ACT SHALE BE CLASSIFIED ACCORDING TO THE NET
RETAIL PRIUS AND THE TAX RATES PROVIDED
ABOVE BASED ON THE LATEST PRICE SURVEY OF THE
PURMENTED LKQUORS CONDUCTED BY THE BUREAU
OF INTERNAL REVENUE.”

32, On the same page, delete fines 37 to 39, and in liew thereof usert the
foitowing:

SFC. 14t. Fobacco Products, - There shali be

a tax oF {One peso (F1,00}] ONE PESO AND
SEVENTY FIVE CENT AVOS (P1.75) on each kilogram of the
following products of tobacco:

colle. tes

43. On page 14, dojete lines 22 to 25, and in lieu thereot insert the following

lo


1a tobacrs specials prepared for chewing, 50 as to
be unsuitable for use in any other manner, on each kilogram,
is ataves (PO.79] ONE PESO AND FIFTY
NTAVOS (1.500

34. On the same pags, detete nes 3) to 36, and in Lieu thereof insert the
following:

“PROVIDED, THAT THE RATES OF TAX IMPOSED
UNDER THIS SFCTION SHALL BE INCREASED BY EIGHT
PERCENT (8%) EVERY TWO YEARS THEREAFTER
WEFECTIVE JANUARY 1, 2015 UNTIL JANUARY L, 2025,
THROUGH REVENUE REGULATIONS iSSUED BY THE
SECRETARY OF FINANCE.

On page 15, delete lines 29 10 46

36. On page 16, delete lines 1 to 32, and in fiew thercof insert the
following;

(A) Cigar here shall be levied, assessed and
collected on cigars fan ad valorcin tax based on the re
price] A TAX OF ONE HUNDRED FIPTY PESOS (F150.00)
per cigar. [(exclucing the excise tax and the value-added tax)
in accordance with the following schedule]

(1) Tf the net reiad price per cigar is Five hundred
pesos, (P500.00) or less, ten percent (10%); and}

[(2) IF the net retail price per cigar 1s (excluding the
excise lax and the value-added tax) is more than
Five hundred pews — (P500.00), Fifty pesos
(P50.0%} ples Giteen percent (15%) of the net
reiail price in excess of Five hundred pesos
(P500.005 "|

PROVIDED, {HAL THE RATE OF TAX [MPOSED
UNDER THIS SUBSECTION SHALL &E INCREASED BY
EIGHT PERCENT (8%) EVERY TWO YEARS THEREAFTER
EFFECTIVE JANUARY |, 2025 UNTIL JANUARY 1, 2025,
THROUGH REVENUE REGULATIONS ISSUED BY THE
SECRETARY OF FINANCE



(8) Cigarettes Packed by Hand. - There shall be
levied, assesséd and collected on cigarettes packed by hand
@ tax of SEVEN PESOS AND FIFTY SIX CENTAVOS (P 7.50)
per pack EFFECTIVE JANLARY 1, 2013, THE TAX RATE
SHALL. BE INCREASED TC TWELVE PESOS (P12,00) 2FR
PACK EFFECTIVE JANUARY 1, 2014

PROVIDED, THAT THE RATE OF TAX IMPOSED
UNDER THIS SUBSFCTION SHALL BE INCREASED BY
EIGHT PERCENT (8%) EVERY FWO YEARS THEREAFTER
EFFECTIVE JANUARY 1, 2315 UNTIL JANUARY 1, 2025,
THROUGH REVENUE REGULATIONS ISSUED BY THE
SFCRETARY OF FINANCE.

Duly registered for existing brands of] cigarettes [or
new 31 brands thereof} packed by hand shall only be packed
in thirties AND NO OTHER PACKAGING
COMBINATIONS.

37, On page 17, delete lines 1 to 48

38. On page 18, delete lines 1 and 2, and in lieu thereof insert the
following

“(© Cigarettes Packed by Machine. - ‘There shell be
levied, assessed and collected on cigarettes packed oy
machine a tax at the rates prescribed below:

KEFECTIVE ON:| ANUARY 1, 2013

(1) IF THE NET RETAIL PRICE (EXCLUDING THF
EXCISE TAX AND THE VALUE-ADDED TAX) IS
ELEVEN PESOS AND FIFTY CENTAVOS
(P1150) AND BELOW PER PACK, THE TAX
SHALL. BE TWELVE ?ESOS (1712.00) PER PACK;
AND

(2) IF THE NET RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX} |S
MORE THAN ELEVEN PESOS AND FIFTY
CENTAVOS (P2150) PER PACK, THE TAX
SHALL BE TWENTY EIGHT PESOS AND
THIRTY CENT AVOS (P23.30) PER PACK;

EFFECTIVE ON JANUARY 1, 2014


(Q) IF THE NET RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX) iS.
ELEVEN PESCS AND — FIFTY CENTAVOS
(P1150) AND BELOW PER PACK, THE 1AX
SHALL BF TWENTY TWO PESOS (P22.C0) 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 (P1150) PER PACK, THE TAX
SHALL Bé THIRTY PESOS (P30.00) PER PACK;

PROVIDED, THAT THE RATES OF TAX IMPOSED
UNDER THIS SUBSECTION SHALL BE INCREASED BY
EIGHT PERCENT (8%) EVERY TWO YEARS THEREAFTER
BFRECTIVE JANUARY 1, 2015 UNTIL JANUARY 1, 2025,
THROUGH REVENUE REGULATIONS ISSUED BY THE
SECRETARY OF FINANCE. HOWEVER, IN CASE OF
CIGARETTES AFFECTED BY THE “NO DOWNWARD
RECLASSIFICATION” PROVISIONS PRESCRIBED UNDER
THIS SECTION, THE 8% INCREASF SHALL APPLY TO
THEIR RESPECTIVE APPLICABLE TAX RATES.

39. On page 19, line 20, put an opening bracket {|} before the word “Variant”
40 On the same page, line 25, put a closing bracket ( }) after the period (3
41. On the same page, line 27, put an opening bracket ( {) before the word “A”

42, On the same page, line 28, put a closing bracket (] } a(ter the period (.

43. On the same page, delete lines 30 to 36, and in liew thereof insert
following

“Duly registered [or existing brands of] cigarettes jor
new brands thereof] packed by machine’ shall only be
packed in twenties AND NO OTHER PACKAGING
COMBINATIONS.”

44, On the same page, line 40, puta bracket on the phrase“, of existing brands”

45, On the same page, bracket lines 44 up to the end of line 45


iow!

page 20, line I, put as opening bracket ¢[} before the word.”

47. On the same page, fine 2, pul a losing bracket (]) after the period (3

ihe same page, delet lines 4 te 40, and in lieu thereof insert the following:

“1G. INTRODUCED IN THE DOMFSTIC
MARKEY AFTER Th FECUIVITY OF THIS ACY SHALL
BE INTHALLY TAX CLASSIFIED ACCORDING TO THEIR
SUCGESTED NEY RETAIL PRICES.

ested not retail price’ shall mean the net retail
price at s [new brands, as defined above, of] locally
manufactured oF imparted ergarettes are imended by the
maauéactirer uf unaporier to be sold on retail in: major
Supermarkets or cota outlets in Metro Manila for those
marketed nationwide, and in other regions, for those with
regional markels, Ab 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
INTRODUCE CIGARELTE {brand} agaist ihe net retail
price as defined herein and determine the correct tax bracket
unde whieh a SEWLY «NTRODUCKI [particuiar new
brand off cigarettel, as defined above, shall be classified,
Atter the end ou eighteen (18) months from such validation,
the Bureau of internal Revenue shall revalidate the initially:
validated el retail price against the net retail price as ot the
time of revalidation in order to finally determine the correct
tax bracket under which a NBWLY INTRODUCED
[particular new brand off igarette[s} shall be classified. [
Provided, however, That brands of cigarettes introduced in
the domeste market between January 1, 1997 and December
31, 2003 shall remain im the classification under which the
Bureau of Internal Kevenue has determined them to belong
as of December 34, 2003. Such classification of new brands
and brands introduced between January 1, 1997 and
Devember 31, 2008 shail not be revised except by an act of
Congress)

‘Net retai price’, as determined by the Bureau of
Internat Revenue through a price survey to be conducted by
the Bureau of internal Revenue itself, or the National
Statistics Office when deputized for |the} this purpose by
the Bureau cf Internat Revenue, shall mean the price at
winch the cigarette 15 sofd on retail in al jeast wwenty (20)



arkets in Metro Manila (for brands of
cogarettes marketed nationally}, excluding the amount
intended to cover the applicable excise tax and value-added
KETTES fbrands] which are marketed only
oviside Metro Manila. the ‘net retail price’, shall mean the
price at which the cigarette is sold in at feast five (3) major
supermarkets 1 the region excluding the amount imtended
lo cover the applicable excise tax and the value-added tax

49, On page 21, after line 4, insert the following paragraphs

“THE TAX CLASSIFICATION OF
CIGARETTES, ETHER REGISTERED BEFORE OR
AFTER TH ECTIVITY OF THIS ACT, SHALL BE

D

ERMINED EVERY 1WO YEARS FROMTHE DATE OF
ECTIVITY OF THIS ACT.

ALL CIGARETTES EXISTING IN THE MARKET AT
THE TIME OF THE BBEECTIVITY OF THIS ACT SHALL BE
CLASSIFIED ACCORDING TO THE NET RETAIL PRICES
AND THE TAX RATES PROVIDED ABOVE BASED ON
THE LATEST PRICE SURVSY OF CIGARETTES
CONDUCTED BY THE BUREAU OF INTERNAL
REVENUE”

5C. On the same page, line 9, put a bracket on the phrase “each pariicuiar brand
of

5h. On page 24. delete linws 9 to 13 and in hew thereof insert the following:

“THE \ING BALANCE OF THE
iNCREME) a IN EXCESS OF THE
AMOUNT ALLOCATED UNDER R.A. NO, 8240 SHALE BE
NANCE THE UNIVERSAL HEALTH CARE
PROGRAM OF FHE GOVERNMENT, THE ANNUAL
REQUIREMENTS OF WHICH SHALL BE DETERMINED
BY THE DEPART MENT OF HEALTH.”

52 On the sane page, deiew

5 Bros

53. On page 25, delet: ins 192 and in heu thereof insert the following:
“SECTION 10. Implementing Rules and Regulations,

~ The Secretary of Finance shall, upen the recomniendation

of the Commssioner ot Internal Revenue, and in



consultation with the Department of Health, promulgate the
necessary rules and regulalions for the offect
implementation of this Act, NOT LATER THAN
HUNDRED EIGHTY (183) DAYS UPON THR
OF THIS ACT.

and with Reps. Abaya, Climaco, Au menlado, Almario, Limkaichong, Arna.z, Suarez,
Bingson (E. Jr), Abad, Tupas, Ungab, Aghipay, Cullas, Teves San Luis Co,
Batocabe, Gerbin, Sarmiento (ML. Villarica, Ong, Alcala, Gonzalez, Trenas and
Apacible, as authors thetvut

The Committee has also considered Subcommittee Report No. 6 as submitted:
by the Subcommittes on National Interaal Revenue

Respectéully submitted,

GAB

Chairtnan
Committee on Ways and Means

THE HONORABLESPEAKER:
HOUSE OF REPRESENTATIVES
QUEZON CITY


FACT SHEET

House Bill No. 5727
(As amended, in consolidation with House Bill Nos. 2484, 2485
2687, 3059, 3183, 3332, 3465, 3489, 3666 and 4787 }

AN ACT RESTRUCTURING THE EXCISE TAX ON ALCOHOL AND
TOBACCO PRODUCTS

Introduced by: REP, JOSEPH EMILIO AGUINALDO ABAYA
Referred to the Committee on Ways and Means
Committee Chairperson: Rep. ISIDRO T. UNGAB

OBJECTIVES

* To restructure the excise tax on alcohol and tobacco products by adopting an
excise fax system that is easier to administer and would address the problem
of unfair tax treatment across various todacco and alcohol products:

» To simplify the tax structure for both products by shifting from the multi-tiered
tax classification to a more uniform tax scheme for each category of alcohol
(distilled spirits, wines and fermented liquors) and tobacco products (tobacco,
cigar and cigarettes)

* To generate additional revenue to fund the universal health program of the
government

KEY PROVISIONS.

«Simplifies the basis of excise taxation for alcohol products, which is based on
per proof liter for distilled spirits, per titer of volume capacity for wines and
fermented liquors;

* Simplifies the basis of excise taxation on tobacco products: (1) cigars - per
cigar; (2) cigarettes packed by hand - per pack; and (3) cigarettes packed by
machine — per pack;

» Provides for the following excise tax rates in accordance with the net retait
price (excluding the excise tax and the value-added tax) effective January 1,
2013:

1. On Distilled Spirits, three-tier tax rates of Php 20.00, Pho 80.00 and
Php 320.00

2. On Wines, a two-tier tax schedule for sparkling wines/champagnes, of
Php 250.00 and Php 700.00, and for still and carbonated wines, a t.so-
tier tax rate depending on the a cohol content -- for those containing


14% of alcohol by volume or less, a tax of Php 30,00 and for those
containing more than 14% but not more than 25% of alcohol by
volume, Php 60.00,

3. On Fermented Liquors, a two-tier tax rates of Php'13.75 and Php18.80.
and;

4, On tobacco products, Php 1.75 and Php 1.50; Cigars, Php 150.00;
Cigarettes packed by hand, Php 7.56 (effective January 1, 2013) and
Php12.00 (effective January 1, 2014) and Cigarettes packed by
machine, Php 12.00 and Php 28.30 (effective January 1, 2013) and P
22.00 and P 30.00 (effective January 1, 2014);

Provides an 8% increase in the excise tax rates every two years effective
vanuary 1, 2015 until January 1, 2025 for distitied spirits, wines, fermented
liquors, tobacco products, cigars and cigareties through revenue regulations
issued by the Secretary of Finance;

Removes the price/brand classification freeze on alcohoi and tobacco
products;

Allocates the incremental revenues from the excise tax on tobacco products
fer the provinces producing burley and native tobacco in accordance with the
volume of tobacco leaf production to promote economically viable alternative
programs for tobacco farmers and workers; and

Provides additional funding for the universal health care program of
government.

RELATED LAWS:

Republic Act No, 9334, otherwise known as “An Act Increasing The Excise
Tax Rates Imposed on Alcohol and Tobacco Products, And Amending For
The Purpose Sections 131, 141, 142, 143, 144, 145 and 288 Of The National
Internal Revenue Code of 1997, As Amended,” and

Republic Act No, 8424, otherwise known as the National Internal Revenue
Cade of 1997, as amended.


a Republic of the Philippines
2 HOUSE OF REPRESENTATIVES
3 uezon City, Metro Manila
4
8 FIFTEENTH CONGRESS
6 Second Reguiar Session
7
8 House
9 seein
0
1: introduced by HON, JGSEPH EMILIO AGUINALDO ABAYA
12
a ee
4
1s EXPLANATORY NOTE
16

47 The expanding breadth and deeth of the country's social and economic
1a development agende put growing pressure on government financial
19 resources, The existing revenue base of government is limited in its
20 capability to provide substantial revenues to meet such pressure. The
mM intty’s deficit fiscal postion is exposed to the possibility of further
22 deteoration.

3

24 To botrow more in carder to finance the deficit is a luxury the
25 government cannot afford much longer. This is not to mention that rising
26 deficit can resutt in a downgrade in the country’s credit rating that would
27 make borrowing an expensive option, Borrowing will onty lead to
22 heightened fiscal risks, Clearly, the couritry needs to rely more on its own
29 resources. It is for this reason that this bill aims to enhance the revenue-
36 © generating potential of the tax system by proposing to restructure the
3 ise taxes on alcoho! ang tobacco products,

31 ex
a2

33° However, it is not only out of the desire to generate more revenues that
34 we seek to restructure the excise tax on these products. Its design is aiso
35 fipe for a m overhat in order to make the structure simple, fair and
36 responsive to the objectives of gevernment

v

38 We remain commitled to keep the specific form of excise taxation of
38 alcoho! and tetazeo products because it is easier to administer and it
40 intematizes the negative externalities of alcohol drinking and tobacco
44 smoking

42

AR

the current mul

ate specific structure of the excise tax on tobacco

J hol products, this bill would like to move to a much simpler
45 structure by adopting a unitary rate, With a unitary rate, problems
46 atterdant to the current structure, such as unfair tax treatment between
47 and among tobacco and aicchol products, will be addressed. A unitary
48 fate will lend the tax structure more revenue-productive since it wii avoid

a


ag oi

teastaxed brand of tobacco and alcohol
products,

The bill approaches the cefurm in a more pragmatic manner by Proposing
to unify the excise tax ratvs in phases in aspects where a one- time
ation proves foo abrupt It is proposed that @ three-year transition
period be observed in unifying the excise tax rates on cigarettes and
cistiled spirils. The tex structure for fermented liquor will be immediately
unified on the first year of the reform.

An essential feature of this proposal is the automatic adjustment of the
tax rates using the relevant NSO-established tobacco and alcohol
indexes. The adjusiment wil ailew the specific tax rates to track inflation,
hus, mainiaining the bucyancy of the revenues from this source.

The proposed structure under this bill is expected to yield additional
reverues of PGO bition. The bill provides for the continued sharing by
tobacco farmers from incremental revenues but for purposes different
from: the existing intentions, More importantly, however, the bill proposes
to direct incremental revenues towards augmenting the funds for the
universa: health care program of the government.

Cooperation fron Congress has always been critical in moving the
country's development agenda forward. in this period of even more
uncertainty brought by grobalized economies as weil as the
evolving fiscal challenges such as energy and environmental -related
concems, working together becomes even more imperative. This bill is
the author's humbie contrisution to this call for cooperation.

From the foregoing, the passage of this bill is eamestly sought.

oe
rau ABAYA



eNaneene

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42

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

FIFTEENTH CONGRESS.
‘Second Regular Session
S727
House Bill No.

Introduced by HON. JOSEPH EMILIO AGUINALDO ABAYA

AN ACT
RESTRUCTURING THE EXCISE TAX ON ALCOHOL AND TOBACCO
PRODUCTS.

SECTION 1. Section 141 of the National Internal Revenue Code of
1997, as amended by Republic Act No. 9334, is hereby further amended
to read as follows:

“SEC 141. Distifled Spirits. - On distilled spirits, there shall
be collected, subject to the provisions of Section 133 of this Code,
excise taxes IN ACCORDANCE WITH ALCOHOL CONTENT as
follows:

(a) 46% ALCOHOL BY VOLUME AND LESS
January 1, 2012 — P42.00 PER PROOF
LITER January 1, 2013 — P80.00 PER
PROOF LITER January 1, 2014 -- P150.00

PER PROOF LITER


PROVIDED, THAT, ON THE FOURTH YEAR
AND EVERY YEAR THEREAFTER, THE EXCISE
TAX RATES PRESCRIBED HEREIN SHALL BE
ADJUSTED TO ITS PRESENT VALUE USING AN
APPROPRIATE PRICE INDEX FOR ALCOHOLIC
DRINKS, AS PUBLISHED BY THE NATIONAL
STATISTICS OFFICE {NSO).”

(b} MORE THAN 45% ALCOHOL BY VOLUME —
January 1, 2012 ~ P317.45 PER PROOF LITER
January 1, 2013 — P233.73 PER PROOF LITER
January 1, 2014 -- P150.00 PER PROOF LITER

PROVIDED, THAT, ON THE FOURTH YEAR
AND EVERY YEAR THEREAFTER, THE EXCISE
TAX RATES PRESCRIBED HEREIN SHALL BE
ADJUSTED TO ITS PRESENT VALUE USING AN
APPROPRIATE PRICE INDEX FOR ALCOHOLIC
DRINKS, AS PUBLISHED BY THE NATIONAL
STATISTICS OFFICE (NSO).”

a) If produced from the sap of nipa, coconut, cassava, camote, or
burt palm or form 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 fiter, Eleven pesos and sixty-five
centavos (P11.65)}

['b) If produced from raw materials other than those enumerated in
the preceding paragraph, the tax shall be in accordance with the net retail

per bottle of seven hundred fifty milliliter (750 mi.) volume capacity
{excluding the excise tax and the value-added tax) as follows’]

T'(1) Less than two hundred and fifty pesos (P250.00) ~ One
hundred twenty six pesos (P128.00) per proof fter;]

[(2) Two hundred and fifty pesos (P250.00) up to Six hundred and
seventy-five pesos (P75.00) ~ Two hundred fifty-two pesos (P252.00),
per proof liter; and}

(3) More than Six hundred and seventy-five pesos (P675.00) —
Five hundred four pesos (P504,00), per proof liter.}

(c) Medicinal preparations, flavoring extracts, and all other
4


preparations, except toilet preparations, of which, excluding
water, distilled spirits form the chief ingredient, shail be
subject to the same tax as such chief ingredient.

“This tax shail be proportionaity increased for any strength of the
spirits taxed over proof spirits, and the tax shall attach to this substance
a8 soon as it Is in existence as such, whether it be subsequently
separated as pure or impure spirits, or transformed into any other
substances either in the process of original production or by any
subsequent process.

“Spirits or distilled spirits’ is the substance known as ethyl alcoho!,
ethanol or spirits of wine, including ail 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 of
mixtures.

“Proof Spirits’ is liquor containing one-half (1/2) of its volume of
alcohal 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 intemal
Revenue through a price survay 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 Intemal 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 distitied 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.]

I Variants of existing brands and variants of new brands which are
introduced ini the domestic market after the effectively of this Act shail be
taxed under the proper classification thereof based on their suggested
net retail price: Provided, howaver, 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 modifter is
prefixed and/or suffixed to the root name of the brand.)

It New brands, as defined in the immediately following paragraph,
5


shall initially be classified according to their suggested net retail price.
Wilful 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 R.A. No. 8240.)

[' ‘Suggested net retait price’ shail mean the net retail price at
which new brands, as defined above, of locally manufactured or imported
distilled spirils 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 Intemal Revenue shalt validate the suggested net retail price
as defined herein and determine the correct tax bracket to which a
particular new brand of disti#fed spirits, 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 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 shalt remain in the classification under
which the Bureau of intemal 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 increase by
eight percent (8%) every two years starting on January , 2007.]

TT Any downward reclassification of present categories, for tax
purposes, of existing brands of distiled spirits duly registered at the time
of 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

6


commercially produced aad marketed on or after October 1, 1996, and
which continue to b2 commercialy produced and marketed after the
effectivity of this Act, shali remain in force until revised by Congress.)

“Manufacturers and importers of distilled spirits shail, within thirty
(30) days from the etfectivity 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 distilled of
spirits sold at his estabiichment 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 shalt, upon final findings
by the Commissioner that the violation was committed, be penalized by a
summary cancellation of withdrawal of his of 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 shali 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 omission prohibited under
this Section shall be criminally tiable and penalized under Section 254 of
this Code Any person wno willfully aids or abets in the commission of
any such act or omission shait be criminally liable in the same manner as.
the principal

“It 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 intemal Revenue Code cf

(1997). 2s amended by Republic Act No. 9334, is hereby further
amended te read as follows

“SEC. 142. Wines. - On wines, there shall be collected per
ter of volume capacity. the following taxes effective January 1,
2032:

*{a) Sparing wines/champagnes regardiess of proot {, if the
Net retail price per vottie (excluding the excise tax and the value-
added tax) is:] ~ THREE HUNDRED PESOS (300.00);


["(3) Five hundred pesos (P500.00) or less — One hundred
forty-five pesos and sixty centavos (P145.60); and]

['(2) More than Five hundred pesos (P500.00) — Four
hundred thirty-six pesos and eighty centavos (P436.80)]

I") Stil wines containing fourteen percent (14%) of alcoho!
by volume or less, Seventeen pesos and forty-seven centavos
(P47.47)], and]

['(.¢ ) Stil Wines containing more than fourteen percent
(14%) but not more than twenty-five percent (25%) of alcoho! by
volume, {Thirty-four pasos and ninety-four centavos (P34.94).}

“{b) STILL WINES, REGARDLESS OF PROOF — FIFTY
PESOS (P50.00)

PROVIDED, THAT, EVERY YEAR THEREAFTER, THE
EXCISE TAX RATES PRESCRIBED HEREIN SHALL BE
ADJUSTED TO ITS PRESENT VALUE USING AN PPROPRIATE
PRICE INDEX FOR ALCOHOLIC DRINKS, AS PUBLISHED BY
THE NATIONAL STATISTICS OFFICE (NSO)."

“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 distifed spirits are added to increase their
alcohol strength.

["Net retail price’, as determined by the Bureau of Internal Revenue
through a price survey to be conducted by the Bureau of intemal
Revenue itself, or the National Statistics Office when deputized for the
purpose by the Bureau of Internal Revenue, shal! mean the price at which
wine is sold on retail in at least ten (10) major supermarkets in Metro
Manila, exciuding 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 spirits
is sold in at ieast 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 shail 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’ shail 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 retail price."]

[' ‘New brand’ shall mean a brand registered after the date of
effectivity of R.A. No. 8240.7]

{" ‘Suggested net retail price’ shail mean the net retail Price at
which new brands, as defined above, of locally manufactured or
imported wines are intended by the manufacture 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 Intemal Revenue shall validate
the suggested 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 wine, as defined above,
shall be classified. After the end of eighteen (18) months from such
validation, the Bureau of Internal Revenue shall validate the initially
validated net retail price against the net retai! price as of the time of
revalidation in order to finally determine the correct tax bracket
which a particular new brand of wines shail be classified: Provided.
however, That brands of wines introduced in the domestic market
between January 1, 1997 and December 31, 2003 shal! 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, 1897 and December 31, 2003 shail not be revised
except by any act of Congress]

{The sates of tax imposed under this Section shall be increased by
eight percent (8%) every two years starting on January 1, 2007
until January 1, 2011.]

[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 hereof, 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’,

3


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 after the effectivity of
this Act, shail remain in force until revised by Congress.]

“Manufacturers and importers of wines shail, 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 wines.
sold at his establishment for the three month period immediatety
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 shail be criminally liable and penalize 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 Intemal Revenue Code of

(1997), as amended by Republic Act No. 9334, i hereby further
amended to read as follows:

“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, tepuy and
similar fermented fiquors [in accordance with the following
schedule] AN EXCISE TAX EQUIVALENT TO TWENTY-FIVE
PESOS (P25.00) PER LITER EFFECTIVE JANUARY 1, 2012

10


PROVIDED, THAT, EVERY YEAR THEREAFTER, THE EXCISE
TAX RATE PRESCRIBED HEREIN SHALL BE ADJUSTED TO
ITS PRESENT VALUE USING AN APPROPRIATE PRICE INDEX
FOR ALCOHOLIC DRINKS, AS PUBLISHED BY THE NATIONAL
STATISTICS OFFICE (NSO)}."

(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}

[(b) If the net retail price (excluding the excise tax and 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 shalt be
Twetve pesos and thirty centavos (P'12.30) per liter:)

f(c ) 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}

[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.)

[Fermented liquors which are brewed and sold at microbreweries
or small establishments such a8 pubs and restaurants shail be subject to
the rate in paragraph (c) hereaf }

[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 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

fermented fiquor are intencied by the manufacturer or importer to be sold

on retail in major supermarkets oF retail outfets in Metro Manila for those
. i


32
33

35
36
a7
38

39

aL

Rae

marketed nationwide, and in other regions, for those with regional
markets. At the end of three (3) months from the product launch, the
Buseau of Intemal Revenue shall validate the suggested net retail price of
the new brand against the net retait price as defined herein and
determine the correct tax bracket to which a particular new brand of
fermented liquor, as defined above, shai be classified. After the end of
the eighteen (18) months from such validation, the Bureau of Intemal
Revenue shall revalidate the initially validated net retait 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 Rquors
shall be classified: Provided, however, That brands of fermented fiquors
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 lassification 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 Intemal
Revenue through a price survey to be conducted by the Bureau of
Infernal Revenue itself, or the National Statistics Office when deputized
for the purpose of Bureau of Intemial Revenue, shall mean the price at
which the fermented liquor is sold on retail in at least twenty (20) major
supermarkets in Metro Manita(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 sotd in at least five (5) major supermarkets in the
tegion excluding the amount intended to cover the applicable excise tax
and the value-added tax}

[‘Tha classification of each brand of fermented quor based on its
average net retail price as of October 1, 1996, as set forth in Annex 'C’,
oluding 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 shail be increased by
eight percent (8%) every two years starting on January 1, 2007 until
January 4, 2011]

[Any downward reclassification of present categories, for tax

a2


Purposes, of existing brands of fermented liquor duly registered at the
time of the effectivity of this Act which wilt reduce the tax imposed herein,
or the payment thereof, shail 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 swom 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
misdeciares of misrepresents in his or its swom 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 liquor.

“Any corporation, association of partnership liable for any the acts
or omissions in violation of this Section shail 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 Intemal Revenue Code of
(1997), as amended by Republic Act No. 9334, is hereby further
amended to read as follows:

“SEC. 144. Tobacco Products. - There shall be collected a
tax of [One peso (P1.00)] TWO PESOS AND FIFTY CENTAVOS
(P2.50) on each kilogram of the following products of tobacco:

a) Tobacco twisted by hand or reduced into a condition
to be consumed in any mannet other than the ordinary mode of
drying and curing;
b) Tobacco prepared or partially prepared with or without
2B


the use of any machine or instruments or without being pressed or
sweetened except as otherwise provided hereunder, and

¢) — 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 handing 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,
cagarettes, 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, EFFECTIVE JANUARY 1,
2042, on each kilogram, [Seventy-nine centavos {P0.79)} ONE
PESO AND EIGHTY-SEVEN CENTAVOS (P1.87).

['The rates of tax imposed under this Section shall be increased by
six pescent (6%) every twa years starting on January 1, 2007 until
danuary 1, 2011.7]

PROVIDED, THAT ON JANUARY 1, 2013 AND EVERY YEAR
THEREAFTER, THE EXCISE TAX RATES PRESCRIBED HEREIN
SHALL BE ADJUSTEO ANNUALLY TO THEIR PRESENT VALUE
USING AN APPROPRIATE PRICE INDEX FOR TOBACCO
PRODUCTS, AS PUBLISHED BY THE NATIONAL STATISTICS
OFFICE (NSO).”

Manufacturers and importers of tobacco products shail, 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 tobacco products sold
{at their estabtishment] for the three-month period immediately preceding.

Any manufacturer or importer who, in violation of this Section,

14


knowingly misdeclares and misrepresents in his or its swom statement
herein required any pertinent data or information shall, upon discovery,
be penalized by @ summary cancellation of withdrawal of his or its permit
to engage in business as manufacturer or importer of cigar and
cigarettes.

Any corporation, association of 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 omission prohibited under
this Section shalt be criminally Hable 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. 5. Section 145 of the National Intemal Revenue Code of

mended by Republic Act No, 9334, is hereby further amended
fo read as follows:

“SEC. 145. Cigars and Cigarettes.

A) Cigars. - There shall be levied, assessed and collected
on cigars [an ad valorem tax based an the retail price] A TAX
OF TWO HUNDRED PESOS (P200.00) per cigar.
[(excluding the excise tax and the value-added tax) in
accordance with the following schedule:]

(71) If the net retait price per cigar is Five hundred
pesos, (P500.00) or less, ten percent (10%); and]

['2) If the net retail price per cigar is (excluding the
excise tax and the value-added tax) is more than Five
hundred pesos (P500.00), Fifty pesos (P50.00) plus
fifteen percent (15%) of the net retail price in excess
of Five hundred pesos (P500.00).]

PROVIDED, THAT ON JANUARY 1, 2013 AND EVERY
YEAR THEREAFTER, THE EXCISE TAX RATE PRESCRIBED
HEREIN SHALL BE ADJUSTEO ANNUALLY TO iTS PRESENT

15


VALUE USING AN APPROPRIATE PRICE INDEX FOR
TOBACCO PRODUCTS, AS PUBLISHED BY THE NATIONAL
STATISTICS OFFICE (NSO).”

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

EFFECTIVE ON JANUARY 1, 2012, FOURTEEN PESOS
(P14.00} PER PACK:

EFFECTIVE ON JANUARY 1, 2013, TWENTY TWO PESOS,
(P22.00) PER PACK:

EFFECTIVE ON JANUARY 1, 2014, THIRTY PESOS
(P30.00) PER PACK.

“PROVIDED, THAT ON JANUARY 1, 2015 AND EVERY YEAR
THERAFTER, THE EXCISE TAX RATE PRESCRIBED HEREIN
SHALL BE ADJUSTED ANNUALLY TO [TS PRESENT VALUE
USING AN APPROPRIATE PRICE INDEX FOR TOBACCO
PRODUCTS, AS PUBLISHED BY THE NATIONAL STATISTICS
OFFICE (NSO).”

Duly registered of existing brands of cigarettes or new brands
thereof packed by hand shall only be packed in thirties. ANY
BRAND NOT PACKED IN THIRTIES SHALL BE PROHIBITED
AND SUBJECTED TO PENALTIES PROVIDED UNDER THIS
ACT, WITHOUT PREJUDICE TO OTHER ADMINISTRATIVE OR
CRIMINAL PENALTIES THAT MAY BE IMPOSED ON THE
MANUFACTURER, IMPORTER AND DISTRIBUTOR OF THE
SAID BRAND.

[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]

16


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

EFFECTIVE ON JANUARY 1, 2012-

(1) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE
TAX AND THE VALUE-ADDED TAX) 1S TEN PESOS.
{P10.00) AND BELOW PER PACK, THE TAX SHALL
BE FOURTEEN PESOS (14.00) PER PACK;

(2) IF THE NET RETAIL PRICE (EXCLUDING THE EXCISE
TAX AND THE VALUE-ADDED TAX) IS MORE THAN
TEN PESOS (P10.00) PER PACK, THE TAX SHALL
BE THIRTY PESOS (P30.00) PER PACK;

EFFECTIVE ON JANUARY 1, 2013-

(1) SF THE NEY RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX) IS TEN
PESOS (P10.00) AND BELOW PER PACK, THE TAX
SHALL BE TWENTY-TWO PESOS (P22.00) PER
PACK;

(2) tF THE NET RETAIL PRICE (EXCLUDING THE
EXCISE TAX AND THE VALUE-ADDED TAX) iS
MORE THAN TEN PESOS (P10.00) PER PACK, THE
TAX SHALL BE THIRTY PESOS (P30.00) PER
PACK;

EFFECTIVE ON JANUARY 14, 2014, THE TAX
SHALL BE THIRTY PESOS (P30.00) PER PACK,

PROVIDED, THAT ON JANUARY 1, 2015 AND EVERY YEAR
THEREAFTER, THE EXCISE TAX RATE PRESCRIBED HEREIN
SHALL BE ADJUSTED ANNUALLY TO ITS PRESENT VALUE
USING AN APPROPRIATE PRICE INDEX FOR TOBACCO
PRODUCTS, AS PUBLISHED BY THE NATIONAL STATISTICS
OFFICE (NSO).”

ALL BRANDS OF CIGARETTES EXISTING IN THE MARKET AT

THE TIME OF THE EFFECTIVITY OF THIS ACT SHALL BE

CLASSIFIED = ACCORDINGLY FOR THE PROPER
v


OV anvewne

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31
32

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35
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7

39

41
42

a3

a5

DETERMINATION OF THE TAX LIABILITY IN ACCORDANCE
WITH THE SCHEDULE PROVIDED ABOVE.

['(1) If the net retait price (excluding the excise tax and the value-
added tax) is below Five pesos (P5.00) per pack, the tax shalt be:]

[Effective on January 1, 2008, Two pesos (P2.00) per pack;

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

[Effective on January 1, 2009, Two pesos and forty-seven
centavos (P2.47) pet 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
(P8.35) 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]

['Etfective on January 1, 2011, Seven pesos and fifty-six centavos
(P7.58) per pack]

["(@) If the net retail price (excluding the excise tax and the 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 on January 1, 2005, Tan pesos and thirty-five centavos
(P10.35) 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, Twetve pesos (P12.00) per pack.

I'(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
(P.26.06 per pack:]

[Effective on Jenuary 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 )

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
Gassification 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 rect name of the brand,

Duly registered or existing brands of cigarettes or new brands
thereof packed by machine shall onty be packed in twenties. ANY
BRAND NOT PACKED IN TWENTIES SHALL BE PROHIBITED AND
SUBJECTED TO PENALTIES PROVIDED UNDER THIS ACT,
WITHOUT PREJUDICE TO OTHER ADMINISTRATIVE OR CRIMINAL
PENALTIES THAT MAY BE IMPOSED ON THE MANUFACTURER,
IMPORTER AND DISTRIBUTOR OF THE SAID BRAND.

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,
‘shail intially be classified according to their suggested net retail price.

19


wCOVanuvaw ne

“New brand” shall mean a brand registered after the date of
effectivity of [R.A No. 8240] THIS ACT.

“Suggested net retail price shail mean the net retail price at which
ew 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 Intemal 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
‘cgerette, as defined above, shail be classified. After the end of eighteen
(18) months trom 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 particular new brand of cigarettes shall be
Gassified. [: 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 Sureau of Intemal
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 Intemal Revenue
through a price survey to be conducted by the Bureau of intemal
Revenue itself, or the National Statistics Office when deputized for [the]
this purpose by the Bureau of Intemal Revenue, shall mean the price at
which the cigarette is sold on retail in at least twenty (20) major
‘Supermarkets in Metro Manita (for brands of cigarettes marketed
nationally), excluding the amount intended to cover the applicable excise
tax and value-added tex. For brands which are marketed only outside
Metro Manila , the ‘net reta’ 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 MAJOR SUPERMARKETS SHALL BE THOSE
WITH THE HIGHEST TOTAL GROSS SALES IN METRO MANILA OR
THE REGION, AS THE CASE MAY BE, AS DETERMINED BY THE
NATIONAL STATISTICS OFFICE.

[The classification of each -brand of cigarettes based on the
average net retail price as of October 1, 1996, as set forth in the Annex
‘D’, including the classification of brands for the same products which,

20


although not set forth in said Annex 'D’, were registered and were being
commercially produced and marketed on or after October 1, 1996, and
which continue to be commerciaily produced and marketed after the
effectively of this Act, shall remain in force until revised by Congress.]

Manufacturers snd importers of cigars and cigarettes shail, within
thirty (30) days from the effectivity of this Act, and within the first five (5)
days of every month thereatter, submit to the Commissioner a swom
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 misdectares 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
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 omission prohibited under
this Section shall be criminally lable and penalized under Section 254 of
this Cede. Any person who wilfully aids or abets in the commission of
any such act or omission shall be criminally fable in the same manner as
the principal.

If the offender is not a citizen of the Philippines, he shail be
deported immediately after serving the sentence, without further
proceedings for deportation.”

Section 6. Section 131, Subsection A of the National Internal Revenue
Code of 1997, as amended by Republic Act No. 9334, is hereby further
amended as follows:

“SEC. 131. Payment of Excise Taxes on Imported Articles. —
(A) Xxx
Xxx
The provision of any special or general law to the contrary
a


notwithstanding, the importation of cigars and cigarettes,
distilled spirits, fermented liquors and wines into the
Philippines, even if destined for tax and duty-free shops,
shall be subject to ali applicable taxes, duties, charges,
including excise taxes due thereon. This shall apply to cigars
and cigarettes distiled spirits, fermented liquors and wines
brought directly into the duly chartered or legislated freaports
of the Subic Special Economic and Freeport Zone, created
under Republic Act No. 7227; the Cagayan Special
Economie Zone and Freeport, created under the Republic
Act No. 7922; and the Zamboanga City Special Economic
Zone, created Republic Act No. 7903, and such other
freeports as may hereafter be established or created by law;
Provided, further, that NOTWITHSTANDING THE
PROVISIONS OF REPUBLIC ACTS 9400 AND 9593,
importations of cigars and cigarettes, distitled spirits,
fermented liquors and wines made directly by a government-
owned-and-operated duty-free shop, like the Outy-free
Philippines (DFP), shall be exempted from ali applicable
duties ony; x x x

Xxx

Articles confiscated shall be DESTROYED USING THE MOST
ENVIRONMENTALLY FRIENDLY METHOD AVAILABLE.
[disposed of in accordance with the rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation of
the Commissioners of Customs and Internal Revenue, upon
consultation with the Secretary of Tourism and General-manager
of the Philippine Tourism Authority.]

Section 7. Section 288, subsections b and ¢ of the National Intemal
Revenue Code of 1997, as amended by Republic Act No. 9334 is hereby
further amended to read as follows:

*(B) incremental Revenues fram Republic Act No. 8240. - Fifteen percent
(15%) of the incremental revenue collected from the excise tax on
tobacco products under R.A. No. 8240 shail 6a allocated and divided
among the provinces producing buriey and native tobacco in accordance
with the volume of tobacco leaf production. The fund shall be exclusivety

2


win a ene

cre
12
2B
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8
16
7

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utlized for programs [in pursuit of the following objectives] TO
PROMOTE ECONOMICALLY VIABLE ALTERNATIVES FOR TOBACCO
FARMERS AND WORKERS SUCH AS:

(1) PROGRAMS THAT WILL PROVIDE iNPUTS, TRAINING, AND
OTHER SUPPORT FOR TOBACCO FARMERS WHO SHIFT TO
PRODUCTION OF AGRICULTURAL PRODUCTS OTHER THAN
TOBACCO,

(2) PROGRAMS THAT WILL PROVIDE FINANCIAL SUPPORT FOR
TOBACCO FARMERS WHO ARE DISPLACED OR WHO CEASE
TO PRODUCE TOBACCO VOLUNTARILY.

(3) COOPERATIVE PROGRAMS TO ASSIST TOBACCO FARMERS
IN PLANTING ALTERNATIVE CROPS OR IMPLEMENTING
OTHER LIVELIHOOD PROJECTS,

(1) Cooperative projects that wil enhance better quality of agricuttural
products and increase income and productivity of farmers;"]

{(2) Livelihood projects, particularly the development of altemative
farming system to enhance farmer's income; and]

(3) Agro-industrial projects that will enable tobacco farmers to be
involved in the agement and subsequent ownership of projects, such

@8 post-harvest secondary processing fike cigarette manufacturing
and by-product utilization. ]

“The Department of Budget and Management, in consultation with the
DEPARTMENT OF AGRICULTURE [Oversight Committee created under
‘said R.A, No. 8240], shail issue {the corresponding] rules and regulations
governing the allocation and disbursement of this fund, NOT LATER
THAN ONE HUNDRED EIGHTY (180) DAYS FROM THE EFFECTIVITY
OF THIS ACT.

{C) tneremental Revenues from the Excise Tax on Alcohol and
Tobacco Products. -

I(1) Two and a half percent (2.5%) of the incremental revenue from the
excise tax on alcohol and tobacco praducts starting January 2005 shalt
be remitted diractly to the Philippine Health insurance Corporation for the
purpose of meeting and sustaining the goal of universal coverage of the
National Health insurance Program; and]

2B


[(2) Two and a half percent (2.5%) of the incremental revenue from the
excise tax on alcohot and tobacco products starting January 2005 shat
be credited to the account of the Department of Health and constituted as
a trust fund for its disease prevention program]

['The earmarking provided under this provision shall be observed for five
(5) years starting from January 2005."]

“A PORTION OF THE INCREMENTAL REVENUES FROM THIS ACT
SHALL BE ALLOCATED TO FINANCE THE UNIVERSAL HEALTH
CARE PROGRAM, THE AMOUNT OF WHICH SHALL BE COMPUTED
ON THE BASIS OF THE ANNUAL REQUIREMENT OF THE SAID
PROGRAM AS DETERMINED BY THE DEPARTMENT OF HEALTH.”

SECTION 8. ANNUAL REPORT- THE DEPARTMENT OF
BUDGET AND MANAGEMENT, THE DEPARTMENT OF
AGRICULTURE, THE PHILIPPINE HEALTH INSURANCE
CORPORATION, AND THE DEPARTMENT OF HEALTH SHALL EACH
SUBMIT TO THE OVERSIGHT COMMITTEE CREATED UNDER R.A.
8240 A DETAILED REPORT ON THE EXPENDITURE OF THE
AMOUNTS EARMARKED THIS SECTION, ON THE FIRST WEEK OF
AUGUST OF EVERY YEAR. THE REPORTS SHALL BE
SIMULTANEOUSLY PUBLISHED IN THE OFFICIAL GAZETTE AND
THE AGENCIES’ WEBSITES.

SECTION 9. OVERSIGHT COMMITTEE - THE COMPOSITION
OF THE OVERSIGHT COMMITTEE CREATED UNDER R.A. 8240
SHALL INCLUDE THE AGRICULTURE AND HEALTH COMMITTEE
CHAIRPERSONS OF THE SENATE AND THE HOUSE OF
REPRESENTATIVES, AS PART OF THE FOUR (4) MEMBERS TO BE
APPOINTED FROM EACH HOUSE.

UPON RECEIPT OF THE AGENCIES' ANNUAL REPORTS, THE
COMMITTEE SHALL REVIEW THEM AND ENSURE THE PROPER
iMPLEMENTATION OF THIS ACT AS REGARDS THE EXPENDITURES
OF THE EARMARKED FUNDS.

SECTION 10. Implementing Rules and Regulations. - The
Secretary of Finance shall, upon the recommendation of the
Commissioner of intemal Revenue, [and in consultation with the
Department of Health} promulgate the necessary rules and regulations
for the effective implementation of this Act, NOT LATER THAN ONE
HUNDRED EIGHTY (180) DAYS UPON THE EFFECTIVITY OF THIS
ACT. THE RULES AND REGULATIONS TO BE PROMULGATED

24


UNDER SECTION 6 HEREOF SHALL FORM AN INTEGRAL PART OF
THE IMPLEMENTING RULES AND REGULATIONS.

SECTION 11. 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. SECTION 12. Repealing Clause. - All laws, decrees,
ordinances, rules and regulations, executive or administrative orders, and
such other presidential issuances that are inconsistent with any of the
Provisions of this Act are hereby repealed, amended or otherwise
modified accordingly.

SECTION 13. Eifectivity. - This Act shall take effect fiteen (15)
days after its publication in a newspaper of general circulation.

Approved

25