Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 1026

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
AMENDING SECTIONS 141, 142 AND 143 OF REPUBLIC ACT NO. 8424,
AS AMENDED, OTHERWISE KNOWN AS THE
NATIONAL INTERNAL REVENUE CODE OF 1997

EXPLANATORY NOTE

Alcohol drinking leads to behaviors like drunk driving and domestic violence.
According to the Online National Electronic Injury Surveillance System of the Department of
Health, there were 2,048 vehicular accidents due to alcohol intoxication or 9.2% of the 22,080
transport or vehicular crash-related injury cases in 2015. This increased from 1,295 alcohol-
related accidents in 2013 and 1,272 alcohol-related accidents in 2014. Moreover, excessive
alcohol drinking also leads to diseases like cirrhosis or liver damage and pancreatitis among
others, Further, the World Health Organization (WHO) disclosed that excessive intake of
alcohol killed more than 3 million people in 2016, mostly male. The WHO added around a
third of alcohol-related deaths were a result of injuries, including car crashes and self-harm,
while about one in five were due to either digestive disorders or cardiovascular diseases,

Excise tax on alcohol products only account for an average of 33% of the total alcohol
and tobacco excise tax collections while excise tax on tobacco products account for the
remaining 67% from 2013 — 2016. However, data from the Family Income and Expenditure
Survey (FIES) in 2012 prior to the implementation of the Sin Tax Law, shows alcohol accounts
for 40% of the total alcohol and tobacco expenditure while tobacco accounts for 60% of the
said total. This bill seeks to increase the tax on alcohol products to approximate the 40-60%
sharing of alcohol and tobacco expenditure. Moreover, excise tax collections and the volume
of removals of alcohol products continued to increase even after the implementation of RA
10351. This is an indication that the increase in the rates for alcohol products implemented in
2013 was not enough to reduce the consumption of alcohol.

Republic Act (RA) No. 10351 or the Excise Tax Reform Law on alcohol and tobacco
products was signed in December 2012 and took effect in January 2013. The law had a positive
impact on both fiscal and public health. RA 10351 corrected the long-standing weaknesses of
the tobacco and alcohol excise tax system and increased the rates to reduce the demand for


alcohol and tobacco products. It also raised much needed revenues to fund the Universal Health
Care (UHC) program of the government.

The Excise Tax Reform Law succeeded in attaining its revenue objectives. Since its
implementation in 2013, the government collected Php 242.0 billion in incremental revenue
(CY 2013 — 2016). The incremental revenues derived form RA 10351 were largely earmarked
for UHC. The Department of Health (DOH) budget almost tripled from Php 53.23 billion in
2013 to Php 148.5 billion in 2017 or a growth of 179.0%. A large amount of the incremental
revenues earmarked for health is allocated for premium subsidies for the health insurance of
indigents and senior citizens not covered by the National Health Insurance Program.

This bill seeks to increase the excise tax rates on alcohol products and the indexation
rate to 10% to account for inflation and income. Moreover, it also secks to remove the
distinction on whether fermented liquors are brewed and sold in microbreweries and pubs or
in factories for simpler administration. Also, to further simplify the tax administration on
spirits, the tax shall be based on the basis of volume or per liter and no longer on “per proof
liter.” The incremental revenues that will generated will fund social services and infrastructure
programs of the government.

The excise tax on alcohol should be increased to discourage consumption and to make
the consumers of alcohol bear the cost of the negative effect on other people not consuming
the product.

—

In view of the foregoing, the passage ofthis bill is earnestly sought

<=

JOE SALCEDA


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 43

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
AMENDING SECTIONS 141, 142 AND 143 OF REPUBLIC ACT NO. 8424,
AS AMENDED, OTHERWISE KNOWN AS THE
NATIONAL INTERNAL REVENUE CODE OF 1997

Be it enacted by the Senate and House of Representatives of the Philippines in
Congress assembled:

SECTION 1 Title VI, Chapter III, Excise Tax on Alcohol Products, of the National
Internal Revenue Code (NIRC) of 1997, as amended, is hereby further amended to read as
follows:

“CHAPTER III - EXCISE TAX ON ALCOHOL PRODUCTS:
“SEC. 141. Distilled Spirits. — On distilled spirits, subject to the provisions of

Section 133 of this Code, an excise tax shall be levied, assessed and collected

based on the following schedules:

[*(a) Effective on January 1, 2013

“(1) An ad valorem tax equivalent to fifteen percent (15%) of the net retail
price (excluding the excise tax and the value-added tax) per proof; and

“(2) In addition to the ad valorem tax herein imposed, a specific tax of
Twenty pesos (P20.00) per proof liter.]

[*(b) Effective on January 1, 2015

“(1) An ad valorem tax equivalent to twenty percent (20%) of the net retail
price (excluding the excise tax and the value-added tax) per proof, and

“(2) In addition to the ad valorem tax herein imposed, a specific tax rate of
Twenty pesos (P20.00) per proof liter.


[“(c) In addition to the ad valorem tax herein imposed, the specific tax rate of
‘Twenty pesos (P20.00) imposed under this Section shall be increased by four
percent (4%) every year thereafter effective on January 1, 2016, through revenue
regulations issued by the Secretary of Finance.]

“(A)ERFECTIVE JANUARY 1, 2019

“()AN AD ~—- VALOREM‘ TAX ~—EQUIVALENT ~— TO
TWENTY-TWO PERCENT (22%) OF THE NET RETAIL PRICE
(EXCLUDING THE EXCISE TAX AND THE
VALUE-ADDED TAX) PER PROOF; AND

“(@) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED,
A SPECIFIC TAX OF THIRTY PESOS (P30.00) PER PROOF LITER.

“(B) EFFECTIVE JANUARY 1, 2020

“(JAN AD ~—- VALOREM 'TAX_—EQUIVALENT ~—TO
TWENTY-TWO PERCENT (22%) OF THE NET RETAIL PRICE
(EXCLUDING THE EXCISE TAX AND THE
VALUE-ADDED TAX) PER PROOF; AND

“Q) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED,
A SPECIFIC TAX OF THIRTY-FIVE PESOS (P35.00) PER PROOF
LITER.

“(© EFFECTIVE JANUARY 1, 2021

“()AN AD ~—- VALOREM TAX_~—s EQUIVALENT ~—- TO.
TWENTY-TWO PERCENT (22%) OF THE NET RETAIL PRICE
(EXCLUDING THE EXCISE TAX AND THE
VALUE-ADDED TAX) PER PROOF; AND

“@) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED,
A SPECIFIC TAX OF FORTY PESOS (P40.00) PER PROOF LITER.

“(D) EFFECTIVE JANUARY 1, 2022

“(AN AD ~—- VALOREM TAX_— EQUIVALENT ~—TO
TWENTY-TWO PERCENT (22%) OF THE NET RETAIL PRICE
(EXCLUDING = THE EXCISE TAX AND THE
VALUE-ADDED TAX) PER PROOF; AND

“() IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED,
‘A SPECIFIC TAX OF FORTY-FIVE PESOS (P45.00) PER PROOF LITER.


“(E) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED,
THE SPECIFIC TAX IMPOSED UNDER THIS SECTION SHALL BE
INCREASED BY SEVEN PERCENT (7%) EVERY YEAR THEREAFTER,
EFFECTIVE JANUARY 1, 2023, THROUGH REVENUE REGULATIONS
TO BE ISSUED BY THE SECRETARY OF FINANCE.

“Medicinal preparations, flavoring extracts, and all other preparations, except
toilet preparations, of which, excluding water, distilled spirits form the chief
ingredient, shall be subject to the same tax as such chief ingredient.

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

“Spirits or distilled spirits' is the substance known as ethyl alcohol, ethanol
or spirits of wine, including all dilutions, purifications and mixtures thereof, from
whatever source, by whatever process produced, and shall include whisky,
brandy, rum, gin and vodka, and other similar products or mixtures.

“‘Proof spirits’ is liquor containing one-half (1/2) of its volume of alcohol of a
specific gravity of seven thousand nine hundred and thirty-nine ten thousandths
(0.7939) at fifteen degrees centigrade (15°C). A ‘proof liter’ means a liter of proof
spirits.

“ ‘Net retail price’ shall mean the price at which the distilled spirits is sold on
retail in at least five (5) major supermarkets in Metro Manila, excluding the
amount intended to cover the applicable excise tax and the value-added tax. For
distilled spirits which are marketed outside Metro Manila, the ‘net retail price’
shall mean the price at which the distilled spirits is sold in at least five (5) major
supermarkets in the region excluding the amount intended to cover the applicable
excise tax and the value-added tax. THIS SHALL INITIALLY BE
PROVIDED BY THE MANUFACTURER THROUGH A SWORN
STATEMENT AND SHALL BE VALIDATED BY THE BUREAU OF
INTERNAL REVENUE (BIR) THROUGH A PRICE SURVEY.

[“Major supermarkets, as contemplated under this Act, shall be those with the
highest annual gross sales in Metro Manila or the region, as the case may be, as
determined by the National Statistics Office and shall exclude retail outlets or


kiosks, convenience or sari-sari stores, and others of a similar nature: Provided,
That no two (2) supermarkets in the list to be surveyed are affiliated and/or
branches of each other: Provided, finally, That in case a particular distilled spirit
is not sold in major supermarkets, the price survey can be conducted in retail
outlets where said distilled spirit is sold in Metro Manila or the region, as the case
may be, upon the determination of the Commissioner of Internal Revenue. }

“MAJOR SUPERMARKETS, AS CONTEMPLATED UNDER THIS
ACT, SHALL BE THOSE WITH THE HIGHEST ANNUAL GROSS
SALES IN METRO MANILA OR THE REGION, AS THE CASE MAY BE,
AS DETERMINED BY THE BUREAU OF INTERNAL REVENUE (BIR),
AND SHALL EXCLUDE RETAIL OUTLETS OR_ KIOSKS,
CONVENIENCE OR SARI-SARI STORES, AND OTHERS OF A
SIMILAR NATURE: PROVIDED, THAT NO TWO (2) SUPERMARKETS
IN THE LIST TO BE SURVEYED ARE AFFILIATED AND/OR
BRANCHES OF EACH OTHER: PROVIDED, FINALLY, THAT IN CASE
A PARTICULAR DISTILLED SPIRIT IS NOT SOLD IN MAJOR
SUPERMARKETS, THE PRICE SURVEY CAN BE CONDUCTED IN
RETAIL OUTLETS WHERE SAID DISTILLED SPIRIT IS SOLD IN
METRO MANILA OR THE REGION, AS THE CASE MAY BE, UPON
THE DETERMINATION OF THE COMMISSIONER OF INTERNAL
REVENUE.

“The net retail price shall be determined by the Bureau of Internal Revenue
(BIR) through a BIANNUAL price survey under oath.

“The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight Committee
‘on the Comprehensive Tax Reform Program (COCCTRP) created under
Republic Act No. 8240.

“Understatement of the suggested net retail price by as much as fifteen
percent (15%) of the actual net retail price shall render the manufacturer or
importer liable for additional excise tax equivalent to the tax due and difference
between the understated suggested net retail price and the actual net retail price.

“Distilled spirits introduced in the domestic market after the effectivity of this
Act shall be initially taxed according to their suggested net retail prices.


“ ‘Suggested net retail price’ shall mean the net retail price (EXCLUDING
THE EXCISE TAX AND THE VALUE-ADDED TAX) at which locally
manufactured or imported distilled spirits are intended by the manufacturer or
importer to be sold on retail in major supermarkets or retail outlets in Metro
Manila for those marketed nationwide, and in other regions, for those with
regional markets. At the end of three (3) months from the product launch, the
Bureau of Internal Revenue shall validate the suggested net retail price of the new
brand against the net retail price as defined herein and initially determine the
correct tax on a newly introduced distilled spirits. After the end of nine (9)
months from such validation, the Bureau of Internal Revenue shall revalidate the
initially validated net retail price against the net retail price as of the time of
revalidation in order to finally determine the correct tax on a newly introduced
distilled spirits.

[“All distilled spirits existing in the market at the time of the effectivity of
this Act shall be taxed according to the tax rates provided above based on the
latest price survey of the distilled spirits conducted by the Bureau of Internal
Revenue]

“The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight Committee
on the Comprehensive Tax Reform Program created under Republic Act No.
8240.

“Manufacturers and importers of distilled spirits shall, within thirty (30) days
from the effectivity of this Act, and within the first five (5) days of every third
month thereafter, submit to the Commissioner a sworn statement of the volume of
sales AND REMOVALS for each particular brand of distilled spirits sold at his
establishment for the three-month period immediately preceding.

“Any manufacturer or importer who, in violation of this Section, misdeclares
or misrepresents in his or its sworn statement herein required any pertinent data or
information shall, upon final findings by the Commissioner that the violation was
committed, be penalized by a summary cancellation or withdrawal of his or its
permit to engage in business as manufacturer or importer of distilled spirits.

“Any corporation, association or partnership liable for any of the acts or
omissions in violation of this Section shall be fined treble the amount of


deficiency taxes, surcharges and interest which may be assessed pursuant to this
Section.

“Any person liable for any of the acts or omissions prohibited under this
Section shall be criminally liable and penalized under Section 254 of this Code.
Any person who willfully aids or abets in the 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. 142. Wines. — On wines, there shall be collected [per liter of volume
capacity] effective on [January 1, 2013] JANUARY 1, 2019, the following excise
taxes

“(a) Sparkling wines|/champagnes] regardless of proof], if the net retail price
per bottle of seven hundred fifty milliliter (750 ml.) volume capacity (excluding
the excise tax and value-added tax) is}:

[“() Five hundred pesos (P500.00) or less — Two hundred fifty pesos
(P250.00); and

“(2) More than Five hundred pesos (P500.00) — Seven hundred pesos
(P700.00).]

“(1) AN AD VALOREM TAX EQUIVALENT TO FIFTEEN PERCENT
(15%) OF THE NET RETAIL PRICE (EXCLUDING THE EXCISE TAX
AND THE VALUE-ADDED TAX) PER LITER; AND

“(2) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED,
A SPECIFIC TAX OF SIX HUNDRED FIFTY PESOS (P650.00) PER
LITER.

“THE SPECIFIC TAX IMPOSED HEREIN SHALL BE INCREASED
BY SEVEN PERCENT (7%) EVERY YEAR THEREAFTER, EFFECTIVE
ON JANUARY 1, 2020, THROUGH REVENUE REGULATIONS TO BE
ISSUED BY THE SECRETARY OF FINANCE.

“(b) Still wines and carbonated wines containing NOT MORE THAN
fourteen percent (14%) of alcohol by volume, [or less, Thirty pesos (P30.00)]
FORTY PESOS (P40.00) PER LITER; and


“(c) Still wines and carbonated wines containing more than fourteen percent
(14%) [but not more than twenty-five percent (25%)] of alcohol by volume,
[Sixty pesos (P60.00)] EIGHTY PESOS (P80.00) PER LITER

“The rates of tax imposed under this Section shall be increased by [four
percent (4%)] SEVEN PERCENT (7%) every year thereafter effective on
[January 1, 2014) JANUARY 1, 2020, through revenue regulations TO BE
issued by the Secretary of Finance.

“PROVIDED, THAT COOKING WINES CONTAINING A SALT
CONTENT OF NOT LESS THAN 15 G/100 ML SHALL NOT BE
SUBJECT TO THE TAX IMPOSED HEREIN.

[Fortified wines containing more than twenty-five percent (25%) of alcohol
by volume shall be taxed as distilled spirits. 'Fortified wines' shall mean natural
wines to which distilled spirits are added to increase their alcohol strength.]

“ ‘Net retail price’ shall mean the price at which sparkling wine[/champagne]
is sold on retail in at least five (5) major supermarkets in Metro Manila, excluding
the amount intended to cover the applicable excise tax and the value-added tax.
For sparkling wines [/champagnes] which are marketed outside Metro Manila, the
‘net retail price’ shall mean the price at which the wine is sold in at least five (5)
major supermarkets in the region, excluding the amount intended to cover the
applicable excise tax and the value-added tax. THIS SHALL INITIALLY BE
PROVIDED BY THE MANUFACTURER THROUGH A SWORN
STATEMENT AND SHALL BE VALIDATED BY THE BUREAU OF
INTERNAL REVENUE THROUGH A PRICE SURVEY.

[Major supermarkets, as contemplated under this Act, shall be those with the
highest annual gross sales in Metro Manila or the region, as the case may be, as
determined by the National Statistics Office and shall exclude retail outlets or
kiosks, convenience or sari-sari stores, and others of a similar nature: Provided,
‘That no two (2) supermarkets in the list to be surveyed are affiliated and/or
branches of each other: Provided, finally, That in case a particular sparkling
wine/champagne is not sold in major supermarkets, the price survey can be
conducted in retail outlets where said sparkling wine/champagne is sold in Metro
Manila or the region, as the case may be, upon the determination of the

Commissioner of Internal Revenue.]


“MAJOR SUPERMARKETS, AS CONTEMPLATED UNDER THIS
ACT, SHALL BE THOSE WITH THE HIGHEST ANNUAL GROSS
SALES IN METRO MANILA OR THE REGION, AS THE CASE MAY BE,
AS DETERMINED BY THE BUREAU OF INTERNAL REVENUE (BIR),
AND SHALL EXCLUDE RETAIL OUTLETS OR KIOSKS,
CONVENIENCE OR SARI-SARI STORES, AND OTHERS OF A
SIMILAR NATURE: PROVIDED, THAT NO TWO (2) SUPERMARKETS
IN THE LIST TO BE SURVEYED ARE AFFILIATED AND/OR
BRANCHES OF EACH OTHER: PROVIDED, FINALLY, THAT IN CASE
A PARTICULAR SPARKLING WINE IS NOT SOLD
IN MAJOR SUPERMARKETS, THE PRICE SURVEY CAN
BE CONDUCTED IN RETAIL OUTLETS WHERE SAID SPARKLING
WINE IS SOLD IN METRO MANILA OR THE REGION, AS THE CASE
MAY BE, UPON THE DETERMINATION OF THE COMMISSIONER OF
INTERNAL REVENUE.

“The net retail price shall be determined by the Bureau of Internal Revenue
through a BIANNUAL price survey under oath.

“The methodology and all pertinent documents used in the conduct of the

latest price survey shall be submitted to the Congressional Oversight Committee
on the Comprehensive Tax Reform Program created under Republic Act No.
8240.

“Understatement of the suggested net retail price by as much as fifteen
percent (15%) of the actual net retail price shall render the manufacturer or
importer liable for additional excise tax equivalent to the tax due and difference
between the understated suggested net retail price and the actual net retail price.

“Sparkling wines[/champagnes} introduced in the domestic market after the
effectivity of this Act shall be initially tax classified according to their suggested
net retail prices.

“!Suggested net retail price’ shall mean the net retail price (EXCLUDING
THE EXCISE TAX AND THE VALUE-ADDED TAX) at which locally
manufactured or imported sparkling wines[/champagnes] are intended by the
manufacturer or importer to be sold on retail in major supermarkets or retail
outlets in Metro Manila for those marketed nationwide, and in other regions, for
those with regional markets. At the end of three (3) months from the product


launch, the Bureau of Internal Revenue shall validate the suggested net retail price
of the sparkling wine[/champagne] against the net retail price as defined herein
and initially determine the correct tax bracket to which a newly introduced
sparkling wine[/champagne] shall be classified. After the end of nine (9) months
from such validation, the Bureau of Internal Revenue shall revalidate the initially
validated net retail price against the net retail price as of the time of revalidation
in order to finally determine the correct tax bracket to which a newly introduced
sparkling wine[/champagne] shall be classified.

“The proper tax classification of sparkling wines|/champagnes}, whether
registered before or after the effectivity of this Act, shall be determined every
two (2) years from the date of effectivity of this Act.

[All sparkling wines/champagnes existing in the market at the time of the
effectivity of this Act shall be taxed according to the net retail prices and the tax
rates provided above based on the latest price survey of the sparkling
wines/champagnes conducted by the Bureau of Internal Revenue.]

“The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight Committee
on the Comprehensive Tax Reform Program created under Republic Act No.
8240.

“Manufacturers and importers of wines shall, within thirty (30) days from the
effectivity of this Act, and within the first five (5) days of every month thereafter,
submit to the Commissioner a sworn statement of the volume of sales AND
REMOVALS for cach particular brand of wine[s] sold at [his] THEIR
establishments for the three-month period immediately preceding.

“Any manufacturer or importer who, in violation of this Section, misdeclares
or misrepresents in his or its sworn statement herein required any pertinent data or
information shall, upon final findings by the Commissioner that the violation was
committed be penalized by a summary cancellation or withdrawal of his or its
permit to engage in business as manufacturer or importer of wines.

“Any corporation, association or partnership liable for any of the acts or
omissions in violation of this Section shall be fined treble the amount of
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. 143. Fermented Liquors. ~ 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 similar fermented liquors in accordance with the
following schedule:

[“Effective on January 1, 2013

“a) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the
tax shall be Fifteen pesos (P15.00) per liter, and

“(b) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60),
the tax shall be Twenty pesos (P20.00) per liter.]

['Effective on January 1, 2014

“(a) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the
tax shall be Seventeen pesos (P17.00) per liter; and

“(b) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60),
the tax shall be Twenty-one pesos (P21.00) per liter.]

[“Effective on January 1, 2015

“(a) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the
tax shall be Nineteen pesos (P19.00) per liter; and

“(b) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60),
the tax shall be Twenty-two pesos (22.00) per liter.]

[“Effective on January 1, 2016


“(a) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is Fifty pesos and sixty centavos (PS0,60) or less, the
tax shall be Twenty-one pesos (P21.00) per liter; and

“(b) If the net retail price (excluding the excise tax and the value-added tax)
per liter of volume capacity is more than Fifty pesos and sixty centavos (PS0.60),
the tax shall be Twenty-three pesos (P23.00) per liter.]

(“Effective on January 1, 2017, the tax on all fermented liquors shall be
‘Twenty-three pesos and fifty centavos (P23.50) per liter.]

“EFFECTIVE ON JANUARY 1, 2019, THE TAX ON ALL
FERMENTED LIQUORS SHALL BE TWENTY-EIGHT PESOS (P28.00)
PER LITER.

“EFFECTIVE ON JANUARY 1, 2020, THE TAX ON ALL
FERMENTED LIQUORS SHALL BE THIRTY-TWO PESOS (P32.00) PER
LITER.

“EFFECTIVE ON JANUARY 1, 2021, THE TAX ON ALL
FERMENTED LIQUORS SHALL BE THIRTY-FOUR PESOS (P34.00)
PER LITER.

“EFFECTIVE ON JANUARY 1, 2022, THE TAX ON ALL
FERMENTED LIQUORS SHALL BE THIRTY-SIX PESOS (P36.00) PER
LITER.

“THE SPECIFIC TAX RATES IMPOSED HEREIN SHALL BE
APPLIED TO ALL FERMENTED LIQUORS REGARDLESS IF
MANUFACTURED IN FACTORIES OR SOLD AND BREWED AT
MICRO-BREWERIES OR SMALL ESTABLISHMENTS SUCH AS PUBS
AND RESTAURANTS.

“The rates of tax imposed under this Section shall be increased by [four
percent (4%)] SEVEN PERCENT (7%) every year thereafter effective on
[January 1, 2018,] JANUARY 1, 2023, through revenue regulations issued by the
Secretary of Finance. [However, in case of fermented liquors affected by the ‘no
downward reclassification’ provision prescribed under this Section, the four
percent (4%) increase shall apply to their respective applicable tax rates.]

[“Fermented liquors which are brewed and sold at micro-breweries or small
establishments such as pubs and restaurants shall be subject to the rate of Twenty-
eight pesos (P28.00) per liter effective on January 1, 2013: Provided, That this


rate shall be increased by four percent (4%) every year thereafter effective on
January 1, 2014, through revenue regulations issued by the Secretary of Finance.]

[Fermented liquors introduced in the domestic market after the effectivity of
this Act shall be initially tax classified according to their suggested net retail
prices.]

[* ‘Suggested net retail price’ shall mean the net retail price at which locally
manufactured or imported fermented liquor are intended by the manufacturer or
importer to be sold on retail in major supermarkets or retail outlets in Metro
Manila for those marketed nationwide, and in other regions, for those with
regional markets, At the end of three (3) months from the product launch, the
Bureau of Internal Revenue shall validate the suggested net retail price of the
newly introduced fermented liquor against the net retail price as defined herein
and initially determine the correct tax bracket to which a newly introduced
fermented liquor, as defined above, shall be classified. After the end of nine (9)
months from such validation, the Bureau of Internal Revenue shall revalidate the
initially validated net retail price against the net retail price as of the time of
revalidation in order to finally determine the correct tax bracket to which a newly
introduced fermented liquor shall be classified. ]

[* ‘Net retail price’ shall mean the price at which the fermented liquor is sold
on retail in at least five (5) major supermarkets in Metro Manila (for brands of
fermented liquor marketed nationally), excluding the amount intended to cover
the applicable excise tax and the value-added tax. For brands which are marketed
outside Metro Manila, the ‘net retail price’ shall mean the price at which the
fermented liquor is sold in at least five (5) major supermarkets in the region
excluding the amount intended to cover the applicable excise tax and the value-
added tax.]

[*Major supermarkets, as contemplated under this Act, shall be those with the
highest annual gross sales in Metro Manila or the region, as the case may be, as
determined by the National Statistics Office, and shall exclude retail outlets or
kiosks, convenience or sari-sari stores, and others of a similar nature: Provided,
That no two (2) supermarkets in the list to be surveyed are affiliated and/or
branches of each other: Provided, finally, That in case a particular fermented
liquor is not sold in major supermarkets, the price survey can be conducted in
retail outlets where said fermented liquor is sold in Metro Manila or the region, as


the case may be, upon the determination of the Commissioner of Internal
Revenue.]

[The net retail price shall be determined by the Bureau of Internal Revenue
(BIR) through a price survey under oath.]

[The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight Committee
on the Comprehensive Tax Reform Program created under Republic Act No.
8240.]

[Understatement of the suggested net retail price by as much as fifteen
percent (15%) of the actual net retail price shall render the manufacturer or
importer liable for additional excise tax equivalent to the tax due and difference
between the understated suggested net retail price and the actual net retail price.)

[“Any downward reclassification of present categories, for tax purposes, of
fermented liquors duly registered at the time of the effectivity of this Act which
will reduce the tax imposed herein, or the payment thereof, shall be prohibited.]

[*The proper tax classification of fermented liquors, whether registered
before or after the effectivity of this Act, shall be determined every two (2) years
from the date of effectivity of this Act.]

[All fermented liquors existing in the market at the time of the effectivity of
this Act shall be classified according to the net retail prices and the tax rates
provided above based on the latest price survey of the fermented liquors
conducted by the Bureau of Internal Revenue.]

[The methodology and all pertinent documents used in the conduct of the
latest price survey shall be submitted to the Congressional Oversight Committee
on the Comprehensive Tax Reform Program created under Republic Act No.
8240]

“Every brewer or importer of fermented liquor shall, within thirty (30) days
from the effectivity of this Act, and within the first five (5) days of every month
thereafter, submit to the Commissioner a sworn statement of the volume of sales
AND REMOVALS for each particular brand of fermented liquor sold at his
establishment for the three-month period immediately preceding.

“Any brewer or importer who, in violation of this Section, misdeclares or
misrepresents in his or its sworn statement herein required any pertinent data or
information shall, upon final findings by the Commissioner that the violation was


committed, be penalized by a summary cancellation or withdrawal of his or its
permit to engage in business as brewer or importer of fermented liquor.

“Any corporation, association or partnership liable for any of the acts or
omissions in violation of this Section shall be fined treble the amount of
deficiency taxes, surcharges and interest which may be assessed pursuant to this
Section

“Any person liable for any of the acts or omissions prohibited under this
Section shall be criminally liable and penalized under Section 254 of this Code.
Any person who willfully aids or abets in the commission of any such act or
omission shall be criminally liable in the same manner as the principal.

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

SEC. 2. Implementing Rules and Regulations, ~The Secretary of Finance shall, upon

rules and regulations for the effective implementation of this Act.

the recommendation of the Commissioner of Internal Revenue, promulgate the necessary

SEC.3. Separability Clause. — If any provision of this Act shall be held

force and effect.

unconstitutional or invalid, the other provisions not otherwise affected shall remain in full

SEC. 4. Repealing Clause. ~ All laws, decrees, executive orders, rules and regulations

amended or modified accordingly.

or parts thereof which are contrary to or inconsistent with this Act are hereby repealed,

SEC. 5. Effectivity. — This Act shall take effect on January 1, 2019 after its complete

publication either in the Official Gazette or in a newspaper of general circulation.

Approved,