Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
Nineteenth Congress 
Second Regular Session 
House Bill No. 9866
__________________________________________________________________________ 
Introduced by Representative JOEY SARTE SALCEDA 
__________________________________________________________________________ 
AN ACT 
ESTABLISHING A REGULATORY REGIME FOR ELECTRONIC CIGARETTE 
MANUFACTURING, AND FOR OTHER PURPOSES 
EXPLANATORY NOTE 
The e-cigarette industry’s global market size was USD 17.9 billion in 2022, and is 
expected to reach USD 38.6 billion in 2030, with a growth rate of 10.1% during 2022–2030. 
Meanwhile, by 2025, the conventional tobacco sector is expected to decline by 0.6 percent in 
total sales volumes. 
Clearly, substitution effects are already setting in, alongside the proliferation of cheap 
disposable electronic cigarettes. In fact, a US-HHS study in 2019 shows that when the price 
of cigarette pack of 10 hits USD 1.00, people start preferring e-cigarettes more. 
These substitutions effects are having real implications on the collection of tobacco 
excise taxes. 
In fact, tobacco excise tax collections declined from P176 billion in 2021, to P160 
billion in 2022, to potentially just P142 billion in 2023. Further declines are expected if the 
substitution to cheaper electronic cigarettes persists.  
Part of the substitution is due to the tax burden of convention tobacco. Around 72% of 
the total price of a cigarette stick is attributable to tax, while the tax burden on 
imported ‘freebase’ electronic cigarettes is just around 23% -- assuming taxes are paid. 
The problem with imported electronic cigarettes, however, is that the enforcement of 
the excise taxes imposed under the National Internal Revenue Code is difficult. First, 
e-commerce sales of individual devices from abroad are subject to the de minimis 
exemptions under the Customs Modernization and Tariff Act. E-commerce sites also 
continue to misclassify electronic cigarettes as “electronics” or “toys” in their sites. 
Second, electronic cigarettes have been subject to widespread smuggling. Around 1.4 
million pieces of 10 milliliter (ml) disposable vape pods were seized from an October 27 raid 
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in a warehouse storing devices marked “Flava.” Tax authorities have been able to enforce tax 
laws on conventional tobacco better due to the presence of domestic manufacturing companies 
that can be held to account under Philippine laws, and whose premises can be better monitored. 
Finally, because these imported devices are not made in the Philippines, authorities are 
unsure about product safety and quality. Philippine product standards are difficult to enforce 
on these devices.  
Because the proverbial toothpaste is out of the tube, and the shift from conventional 
tobacco to electronic cigarettes has become an inevitability, the government must consider 
alternative policies that will enable it to enforce laws on electronic cigarettes more effectively. 
The presence of an electronic cigarette manufacturer primarily intending to export will help 
address the issue of widespread smuggling of electronic cigarettes while also earning foreign 
currency for the country. 
In view of the foregoing, the approval of this measure is urgently sought. 
JOEY SARTE SALCEDA 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City 
Nineteenth Congress 
Second Regular Session 
House Bill No. 9866 
__________________________________________________________________________ 
Introduced by Representative JOEY SARTE SALCEDA 
__________________________________________________________________________ 
AN ACT 
ESTABLISHING A REGULATORY REGIME FOR ELECTRONIC CIGARETTE 
MANUFACTURING, AND FOR OTHER PURPOSES 
Be it enacted, by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Short Title. – This Act shall be known as the “Electronic Cigarette 
Manufacturing Act.” 
SEC. 2. Declaration of Policy. – The State recognizes the need for a well-regulated 
electronic cigarette industry that meets national and international standards for product quality 
and safety, is able to compete for market share in the global electronic cigarette industry, and 
fulfills its tax and regulatory obligations with Philippine authorities. 
SEC. 3. Definitions. – As used in this Act: 
(a) “Electronic cigarette” refers to any electronic device that simulates the act of
tobacco smoking, and which may or may not contain nicotine: Provided, that the Bureau of 
Product Standards of the Department of Trade and Industry may further define the term or 
create categories under it; 
(b) “Electronic cigarette manufacturer” refers to an entity engaged in the production
or assembly of electronic cigarettes from raw materials or purchased parts and subassemblies; 
SEC. 4. Regulation. – In addition to this Act, the manufacture of electronic cigarettes, 
whether for export markets or for domestic consumption, shall be subject to Republic Act No. 
11900 or the "Vaporized Nicotine and Non-Nicotine Products Regulation Act,” and other 
relevant laws, rules, and regulations.  
SEC. 5. Product Standards. – The Bureau of Product Standards of the Department of 
Trade and Industry shall develop a Philippine National Standard for electronic cigarettes that 
is consistent with international trade standards. The standard shall be periodically updated to 


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reflect advancements in the global and local electronic cigarette industry, as well as the 
requirements of trading partners. 
SEC. 6. Electronic cigarette manufacturing for export. – The manufacturing site or 
premises of electronic cigarette manufacturers that produce electronic cigarettes intended for 
export shall be treated as a separate customs territory governed under the Philippine Economic 
Zone Authority:  
Provided, that the electronic cigarette manufacturer’s export and domestic sales shall 
be conducted through separate corporations: Provided further, that domestic sales shall be 
subject to all applicable taxes under the National Internal Revenue Code, as amended. 
SEC. 7. Fiscal incentives for e-cigarette export. – For the free flow of goods into these 
premises, the importation of capital equipment, raw materials, accessories, and spare parts 
required for the manufacture and subsequent export of electronic cigarettes by electronic 
cigarette manufacturers shall be exempt from duties, and its local purchases shall be value-
added tax (VAT) zero-rated. 
The export sales corporation of the electronic cigarette manufacturer shall be entitled 
to an Income Tax Holiday of seven (7) years, and may elect to be under the Enhanced 
Deductions or Special Corporate Income Tax (SCIT) regime for a period of ten (10) years 
under Title XIII of the National Internal Revenue Code, as amended.  
During the period of availment of the income tax holiday and SCIT or enhanced 
deductions, the electronic cigarette manufacturer shall be exempt from all local taxes, fees, and 
charges: Provided, that during the income tax holiday or enhanced deductions period, the 
electronic cigarette manufacturer shall pay a tax of two percent (2%) of total sales, which shall 
be collected by the Philippine Economic Zone Authority and remitted to the Local Government 
Unit where the electronic cigarette manufacturer is located. 
The fiscal incentives of the export sales corporation of the electronic cigarette 
manufacturer may be extended by the President for a period of up to forty (40) years consistent 
with Section 301 of the National Internal Revenue Code when the following conditions are 
satisfied: 
(1) The project has a comprehensive sustainable development plan with clear inclusive
business approaches, and high level of sophistication and innovation; and
(2) Minimum investment capital of Fifty billion pesos (P50,000,000,000.00) or its
equivalent in US dollars, or a minimum direct local employment generation of at
least ten thousand (10,000) within three (3) years from the issuance of the certificate
of entitlement: Provided, that the exercise of the President’s power to extend the
fiscal incentives of electronic cigarette manufacturers shall not require prior
recommendation from the Fiscal Incentives Review Board.
The domestic sales corporation of the electronic cigarette manufacturer shall not be 
precluded from applying for fiscal incentives it may be eligible for.   


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The Department of Trade and Industry and other relevant investment promotion 
agencies shall extend export marketing and promotion support to export sales corporations of 
electronic cigarette manufacturers. 
 
SEC. 8. Customs and tax enforcement. – To ensure customs protection and 
enforcement, there shall be a permanent customs control or customs office at the perimeter of 
the electronic cigarette manufacturer’s premises. Points of exit from the manufacturing 
premises and towards the Philippine customs territory shall be subject to monitoring and 
inspection by the Bureau of Customs and other law enforcement agencies.  
 
There shall also be a revenue officer on premise from the Bureau of Internal Revenue, 
positioned at points of exit and at offices and warehouses for domestic sales, to monitor and 
enforce tax laws on domestic sales of electronic cigarettes. 
 
SEC. 9. Special visas. – The Philippine Economic Zone Authority shall issue the 
following visas: 
 
“(1) Special skills visa for foreign nationals who possess highly specialized skills as 
determined to be necessary or strategic by the Authority in the operation of electronic cigarette 
manufacturer;  
 
“(2) Executive working visa for foreign nationals holding executive positions, 
including presidents, vice-presidents, treasurers, managers, or their equivalents, and to non-
resident aliens employed in supervisory, technical, and advisory positions in the electronic 
cigarette manufacturer. 
 
The Authority and the Bureau of Immigration shall formulate the necessary guidelines 
for the submission and approval of applications, the extent of allowed activities under the visa, 
and the rules for monitoring of visa grantees under this Section: Provided, that the visa 
application shall be sponsored by the electronic cigarette manufacturer. “ 
 
SEC. 10. Implementing Rules and Regulations (IRR). –  Within ninety (90) days from 
the effectivity of this Act, the Department of Trade and Industry, the Department of Finance, 
and the Philippine Economic Zone Authority shall promulgate the rules and regulations to 
effectively implement the provisions of this Act. 
 
SEC. 11. Separability Clause. – If any provision or part hereof is held invalid or 
unconstitutional, the remainder of the law or the provision not otherwise affected shall remain 
valid and subsisting. 
 
SEC. 12. Repealing Clause. – Except as otherwise expressly provided in this Act, all 
other laws, decrees, executive orders, proclamations and administrative regulations or parts 
thereof inconsistent herewith are hereby repealed or modified accordingly. 
 
SEC. 13. Effectivity Clause. – This Act shall take effect fifteen (15) days after its 
publication in at least two (2) national newspapers of general circulation. 
 
Approved,