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RECEIVED

~ oATa

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

3036
House Bill No.

Introduced by Representatives John Marvin “Yul Servo” C. Nieto, Edward
Vera Perez Maceda, Dale “Along” R. Malapitan, Eric M. Martinez, and
Rolando M. Valeriano

EXPLANATORY NOTE

Republic Act 10351, popularly known as the Sin Tax Law, was enacted as a
good governance measure primarily designed to spur positive impact on both fiscal
and public health policies of the country. It corrected the long-standing
weaknesses of the tobacco and alcohol excise tax system and increased the rates
with the intent of lowering the demand for tobacco and alcohol products. It also
raised much needed revenues to fund the Universal Health Care (UHC) program of
the government.

The Sin Tax Law has proven to be an unqualified success in terms of
generating revenue. Based on the Bureau of Internal Revenue’s (BIR) data, the
five-year average excise tax collection on sin products prior to the implementation
of the Sin Tax Law was pegged at 50.29 Billion Pesos. However, from the start of
its implementation in 2013 until 2017, the average doubled to a whopping 134.81
Billion Pesos.” In particular, average excise tax collection from tobacco products
jacked up from 28.49 Billion Pesos to 89.30 Billion Pesos and an increase from
21.81 Billion Pesos to 45.51 Billion Pesos from alcohol products.

Since its implementation in 2013, the government collected 323.61 Billion
Pesos in incremental revenues (Table 1). This resulted in an unprecedented
increase in the budget of the Department of Health (DOH) as the incremental
revenues derived from RA 10351 were largely allocated for UHC and health
infrastructure programs. The DOH budget almost tripled from P53.23 Billion in
2013 to P148.5 Billion in 2017, or a growth of 179% (Table 2).

Table 1. Incremental Revenues from Sin Tax Law, 2013-2017

Year Incremental Revenues from Sin
Tax Law (in in Pesos)

2013 __ 51.17
2014. | 50.23 bak
2015 et 73.16
2016 67.46 a
2017 . 81.58

TOTAL 323.61

Source: Certifications submitted by BIR and BOC to DOF, 2013- 2017

} Based on BIR’s GFS Report from 2008 to 2012
2 Based on the Certifications submitted by BIR and BOC to DOF from 2013 to 2017


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Table 2. Annual Budget of the Department of Health, 2013-2017

Year Annual Budget (in Billion
Pesos)

2013 ye} 75)

2014 83.72

2015 86.97

2016 iieind 22763

2017 148.5

Source: DOH |

ual Reports, CY 2013-2016

As mandated by RA 10351, a large amount of the incremental revenues
earmarked for health remains allocated for premium subsidies for the health
insurance of indigents and senior citizens not covered by the National Health
Insurance Program. As a result, PhilHealth almost tripled the coverage of the poor
families from 5.2 Million in 2013 to 14.3 Million by the end of 2017.° With the
expansion of the coverage, the indigent sector, composed of the members and
their dependents, now constitutes 33.03%of the 96.97 Million Filipino beneficiaries
of PhilHealth.

While much has been accomplished through the Sin Tax Law, there is still
room to improve this measure in order to generate more revenues and discourage
unhealthy lifestyles, especially alcohol consumption.

According to the Global Burden of Diseases 2016 study on alcohol
collaborators,* alcohol use is a leading risk factor for global disease burden® and
causes substantial health loss. The health risks associated with alcohol
consumption are cancer, heart disease, diabetes, and cirrhosis - which is one of
the top three burdens of the population. Ultimately, the study revealed that even
“moderate” alcohol consumption does not protect people from diseases. It argued
that alcohol use, regardless of amount, is detrimental to health, and that the risk
of all-cause mortality, and of cancers specifically, rises with increasing levels of
consumption, and the level of consumption that minimizes health loss is zero. It
therefore suggests the need for the revision of alcohol control policies worldwide
and to refocus efforts to lower overall population-level consumption.

Moreover, alcohol drinking tends to result in behaviors like drunk-driving and
domestic violence. Based on the Online National Electronic Injury Surveillance
System of the Department of Health, there were 2,048 vehicular accidents due to
alcohol intoxication or 9.3% of the 22,089 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. It must also be noted that for the
four quarters of 2015, vehicular accidents due to alcohol intoxication remained as
the top reported risk factor.

* philHealth Report submitted to DOF Sin Tax Monitoring Unit

4 Global Burden of Diseases 2016 Alcohol Collaborators. (2018). Alcohol use and burden for 195
countries and territories, 1990-2016: A systematic analysis for the Global Burden of Disease Study
2016. Lancet, 1-21. http://dx.doi.org/10.1016/ S0140-6736(18)31310-2

° Disease burden is the impact of a health problem as measured by financial cost, mortality,
morbidity, or other indicators. It is often quantified in terms of quality-adjusted life years (QALYs) or
disability-adjusted life years (DALYs), both of which quantify the number of years lost due
to disease (YLDs).


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According to the 2018 National Tax Research Center Review of Excise
Taxation of Sin Products, RA 10351 was only successful in lowering the demand of
wines and fermented liquors during the first 2-3 years of implementation.
However, during its 4°"-5" year (2016-2017), an increase in the demand of alcohol
was apparent. At the same time, while there was a decrease in demand for wines
and fermented liquors, the demand for distilled spirits during the same time frame
was generally on an uptrend®. The NTRC therefore suggests that the higher taxes
imposed on alcohol was ineffective in curbing alcohol consumption and as such,
there is a need to increase taxation on such in order to lower its consumption.

Meanwhile, consistent with the aforementioned NTRC review, the Food and
Nutrition Research Institute (FNRI) 2015 Clinical and Health Survey revealed that
for the years 2013-2015, there was a significant decrease in the number of alcohol
drinkers among adolescents aged 10-19 years old and adults aged 20 years and
over. However, despite such decrease for the age group 20 years old and above,
FNRI data shows that the percentage of alcohol drinkers in 2015 was still
significantly higher than that of the baseline year 2008 (Figure 1).

Moreover, the study revealed that an average of five out of 10 (50%) of the
adults surveyed were engaged in binge drinking (Figure 2), a behavior that could
lead to a myriad of health problems such as cardiovascular and liver diseases,
neurological damage, poor control of diabetes, unintentional and intentional
injuries, alcohol poisoning, and sexual dysfunction (Center for Disease Control and
Prevention, 2017)’. Moreover, an alarming fact that the FNRI found is that even
though the legal age for drinking alcoholic beverages in the Philippines is 18 years
old, three in ten (27.0%) of adolescents aged 16-17 years were found to already
have consumed alcoholic beverages.

Figure 1. Trend in the proportion of current alcohol drinkers among adults,
20 years old and over, Philippines, 1998-2015

40 449,

|
|
5 |
£ |
H |
u |
|
|

Year

Source: 2015 FNRI Clinical and Health Survey

Figure 2. Prevalence of binge drinking among currently drinking
adults (those who reported drinking alcoholic beverages in the past
30 days), 20 years old and over, by age group

© Demand growth rates are based on volume of removals of alcohol, or the transfer from factory to
warehouse, as per BIR data in NTRC Excise Tax Study.
7 In 2015 FNRI Clinical and Health Survey


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| 6 ba

Pee5 489
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| 2
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2039 00 69 270
ae nee

Source: 2015 FNRI Clinical and Health Survey

A factor that may have contributed to the relapse of alcohol consumption is
that it remains to be affordable. The Action for Economic Reforms (AEF) contends
that the increase in minimum wage during the years succeeding the
implementation of Sin Tax Law offsets the increase in alcohol prices, making them
still affordable to the public. These are clear manifestations of the excise tax
scheme'’s failure to deter the consumption of alcohol.

Given alcohol’s harmful health effects, socially-detrimental externalities, and
the apparent uptrend in demand despite higher taxes; there is an indisputable
need to review and recalibrate the Sin Tax Law, particularly on its provisions on
the excise tax on alcohol products.

This bill seeks to increase the excise tax rates on alcohol products and the
indexation rate to 10% to account for inflation and income. It likewise seeks to
remove the distinction on whether fermented liquors are brewed and sold in
microbreweries and pubs or in factories for simpler administration.

The excise tax imposed on tobacco, which is also a “sin” product, has
already increased through the TRAIN Law (Republic Act 10963), with the same
aim of decreasing the consumption of such products. This representation believes
that the upward adjustment on the alcohol excise tax rates contained in this bill
will also be an effective measure to curb alcohol consumption. At the same time,
the incremental revenues it will generate will also boost the government's budget
for its Universal Health Care program.

As such, it is high time that we, as legislators, take urgent and proper
action. Thus, the passage of this bill is earnestly sought.

JOH JARVIN/“YUL SERVO” C. NIETO Aud VERA Tha MACEDA

DALE “ALONG” ee CAIorT AN poo

ROLANDO O 7


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

House Bill No. aE

Introduced by Representatives John Marvin “Yul Servo” C. Nieto, Edward
Vera Perez Maceda, Dale “Along” R. Malapitan, Eric M. Martinez, and
Rolando M. Valeriano

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
session assembled:

SECTION 1. This Act shall be known as the “Alcohol Excise Tax Law.”

SECTION 2. Chapter III of the National Internal Revenue Code of 1997 (NIRC), as
amended, is hereby amended, which shall 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) per proof liter imposed under this Section shall be


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increased by four percent (4%) every year thereafter effective on January 1,
2016, through revenue regulations issued by the Secretary of Finance.]

(A) EFFECTIVE ON JANUARY 1, 2020
(1) AN AD VALOREM TAX EQUIVALENT TO TWENTY-FIVE PERCENT
(25%) 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 FORTY PESOS (P40.00) PER PROOF LITER.

(B) EFFECTIVE ON JANUARY 1, 2021

(1) AN AD VALOREM TAX EQUIVALENT TO TWENTY-FIVE PERCENT
(25%) 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 FORTY-FIVE PESOS (P45.00) PER PROOF LITER.

(C) EFFECTIVE ON JANUARY 1, 2022

(1) AN AD VALOREM TAX EQUIVALENT TO TWENTY-FIVE PERCENT
(25%) 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 FIFTY PESOS (P50.00) PER PROOF LITER.

(D) EFFECTIVE ON JANUARY 1, 2023

(1) AN AD VALOREM TAX EQUIVALENT TO TWENTY-FIVE PERCENT
(25%) 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 FIFTY-FIVE PESOS (P55.00) PER PROOF LITER.

(E) IN ADDITION TO THE AD VALOREM TAX HEREIN IMPOSED, THE
SPECIFIC TAX IMPOSED UNDER THIS SECTION SHALL BE INCREASED BY
TEN PERCENT (10%) EVERY YEAR THEREAFTER EFFECTIVE ON JANUARY
1, 2023, THROUGH REVENUE REGULATIONS 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.


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‘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 (150C). 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 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 BUREAU OF INTERNAL REVENUE (BIR) [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.

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.


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‘Suggested net retail price’ shall mean the price (excluding the value added tax
and the excise 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, 2020, the following excise taxes:


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(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:

(1) Five Hundred Pesos (P500.00) or less - [Two Hundred Fifty Pesos
(P250.00)] THREE HUNDRED THIRTY-FIVE PESOS (P335.00);
AND,

(2) More than Five Hundred Pesos (P500.00) - [Seven Hundred Pesos
(P700.00)] NINE HUNDRED THIRTY-SEVEN PESOS (P937.00).

(b) Still wines and carbonated wines containing fourteen percent (14%) of
alcohol by volume or less, [Thirty Pesos (P30.00)] FORTY PESOS
(P40.00); 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).

The rates of tax imposed under this Section shall be increased by [four percent
(4%)] TEN PERCENT (10%) every year thereafter effective on January 1, [2014]
2021, through revenue regulations issued by the Secretary of Finance.

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 BUREAU OF INTERNAL REVENUE [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.


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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 price (excluding VAT and excise 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 each particular brand of wines sold at his establishment for the
three-month period immediately preceding.


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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 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 similar domestic 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,


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(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 (P22.00) 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 (P50.60) 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
(P50.60), 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, 2020, THE TAX ON ALL FERMENTED LIQUORS
REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD AND BREWED
AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS SUCH AS PUBS AND
RESTAURANTS SHALL BE FORTY PESOS (P40.00) PER LITER.

EFFECTIVE ON JANUARY 1, 2021, THE TAX ON ALL FERMENTED LIQUORS
REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD AND BREWED
AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS SUCH AS PUBS AND
RESTAURANTS SHALL BE FORTY-FIVE PESOS (P45.00) PER LITER.

EFFECTIVE ON JANUARY 1, 2022, THE TAX ON ALL FERMENTED LIQUORS
REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD AND BREWED
AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS SUCH AS PUBS AND
RESTAURANTS SHALL BE FIFTY PESOS (P50.00) PER LITER.

EFFECTIVE ON JANUARY 1, 2023, THE TAX ON ALL FERMENTED LIQUORS
REGARDLESS IF MANUFACTURED IN FACTORIES OR SOLD AND BREWED
AT MICRO-BREWERIES OR SMALL ESTABLISHMENTS SUCH AS PUBS AND
RESTAURANTS SHALL BE FIFTY-FIVE PESOS (P55.00) PER LITER.

The rates of tax imposed under this Section shall be increased by [four percent
(4%)] TEN PERCENT (10%) every year thereafter effective on January 1, [2018]
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


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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


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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 the 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.

SECTION 2. Section 288 of Republic Act 8424, or the National Internal Revenue
Code of 1997, as last amended by Republic Act No. 10963, shall read as follows:

(A) x x x


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“(B) xxx
“(C) xxx
“(D) xx x
“(E) xx x
“(F) xxx

“(G) INCREMENTAL REVENUES FROM THE ALCOHOL EXCISE TAX
LAW. - ONE HUNDRED PERCENT (100%) OF THE INCREMENTAL
REVENUES FROM THIS ACT SHALL BE AUTOMATICALLY
APPROPRIATED TO THE UNIVERSAL HEALTH CARE.

SECTION 3. Repertorial Requirements. - The Interagency Committee created
under Republic Act 10963 shall submit to the President of the Senate of the
Philippines, the Speaker of the House of Representatives, the Senate Committee
on Finance, and House Committee on Appropriations a detailed report on the
expenditure of the amounts earmarked hereon copy furnished to the chairpersons
of the Committee on Ways and Means of both houses of Congress. The report shall
likewise be posted on the official websites of the agencies concerned.

SECTION 4. Implementing Rules and Regulations. - The Secretary of Finance
shall, upon the recommendation of the Commissioner of THE BUREAU OF
Internal Revenue, promulgate the necessary rules and regulations for the effective
implementation of this Act.

SECTION 5. Repealing Clause. - All laws, decrees, executive orders, rules and
regulations or parts thereof which are contrary to or inconsistent with this Act are
hereby repealed, amended or modified accordingly.

SECTION 6. Effectivity. - This Act shall take effect upon its publication either in
the Official Gazette or in a newspaper of general circulation.

Approved,