Republic
Act No. 10351 Sin Tax bill
H. No. 5727
S. No. 3299
Republic of the Philippines
Congress of the Philippines
Metro Manila
Fifteenth Congress
Third Regular Session
Begun and held in
Metro Manila, on Monday, the twenty third day of July, two thousand twelve.
[REPUBLIC ACT NO. 10351]
AN ACT RESTRUCTURING THE EXCISE TAX ON ALCOHOL AND TOBACCO
PRODUCTS BY AMENDING SECTIONS 141, 142, 143, 144, 145, 8, 131 AND 288 OF
REPUBLIC ACT NO. 8424. OTHERWISE KNOWN AS THE NATIONAL INTERNAL REVENUE CODE
OF 1997, AS AMENDED BY REPUBLIC ACT NO. 9334, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the
Philippines in Congress assembled:
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. 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 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.
“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.
“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.
“The net retail price
shall be determined by the Bureau of Internal Revenue (B1R) 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.
“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 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 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. 2. Section 142 of
the National Internal Revenue Code of 1997, as amended by Republic Act No.
9334, is hereby further amended to read as follows:
“SEC. 142. Wines. – On
wines, there shall be collected per liter of volume capacity effective on
January 1, 2013, 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 the value-added tax) is:
“(1) 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).
“(b) Still wines and
carbonated wines containing fourteen percent (14%) of alcohol by volume or
less, Thirty pesos (P30.00); 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).
“The rates of tax
imposed under this Section shall be increased by four percent (4%) every year
thereafter effective on January 1, 2014, 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.
“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.
“The net retail price
shall be determined by the Bureau of Internal Revenue 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.
“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 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 classified 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 for each particular
brand of wines 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 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. 3. Section 143 of
the National Internal Revenue Code of 1997, as amended by Republic Act No.
9334, is hereby further amended to read as follows:
“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 (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.
“The rates of tax
imposed under this Section shall be increased by four percent (4%) every year
thereafter effective on January 1, 2018, 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 shah 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 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
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. 4. Section 144 of
the National Internal 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 an excise tax of One peso and seventy-five centavos
(P1.75) effective on January 1, 2013 on each kilogram of the following products
of tobacco:
“(a) Tobacco twisted
by hand or reduced into a condition to be consumed in any manner other than the
ordinary mode of drying and curing;
“(b) Tobacco prepared
or partially prepared with or without the use of any machine or instruments or
without being pressed or sweetened except as otherwise provided hereunder; and
“(c) 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 handling 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, cigarettes, 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, on
each kilogram, One peso and fifty centavos (P1.50) effective on January 1,
2013.
“The rates of tax
imposed under this Section shall be increased by four percent. (4%) every year
thereafter effective on January 1, 2014, through revenue regulations issued by
the Secretary of Finance.
“No tobacco products manufactured in the Philippines and
produced for export shall be removed from their place of manufacture or
exported without posting of an export bond equivalent to the amount of the
excise tax due thereon if sold domestically: Provided, however, That
tobacco products for export may be transferred from the place of manufacture to
a bonded facility, upon posting of a transfer bond, prior to export.
“Tobacco products
imported into the Philippines and destined for foreign countries shall not be
allowed entry without posting a bond equivalent to the amount of customs duty,
excise and value-added taxes due thereon if sold domestically.
“Manufacturers and
importers of tobacco products 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
for each particular brand of tobacco products sold for the three-month period
immediately preceding.
“Any manufacturer or
importer who, in violation of this Section, misdeclares or misrepresents hi 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 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 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. 5. Section 145 of
the National Internal Revenue Code of 1997, as amended by Republic Act No.
9334, is hereby further amended to read as follows:
“SEC. 145. Cigars and Cigarettes. –
“(A) Cigars. – There
shall be levied, assessed and collected on cigars an excise tax in accordance
with the following schedule:
“(1) Effective on
January 1, 2013
“(a) An ad valorem tax
equivalent to twenty percent (20%) of the net retail price (excluding the
excise tax and the value-added tax) per cigar; and
“(b) In addition to the ad valorem tax
herein imposed, a specific tax of Five pesos (P5.00) per cigar.
“(2) In addition to the ad valorem tax
herein imposed, the specific tax rate of Five pesos (P5.00) imposed under this
subsection shall be increased by four percent (4%) effective on January 1, 2014
through revenue regulations issued by the Secretary of Finance.
“(B) Cigarettes Packed by
Hand. - There shall be levied, assessed and collected on
cigarettes packed by hand an excise tax based on the following schedules:
“Effective on January
1, 2013, Twelve pesos (P12.00) per pack;
“Effective on January
1, 2014, Fifteen pesos (P15.00) per pack;
“Effective on January
1, 2015, Eighteen pesos (P18.00) per pack;
“Effective on January
1, 2016, Twenty-one pesos (P21.00) per pack; and
“Effective on January
1, 2017, Thirty pesos (P30.00) per pack.
“The rates of tax
imposed under this subsection shall be increased by four percent (4%) every
year* effective on January 1, 2018, through revenue regulations issued by the
Secretary of Finance.
“Duly registered
cigarettes packed by hand shall only be packed in twenties and other packaging
combinations of not more than twenty.
” ‘Cigarettes packed
by hand’ shall refer to the manner of packaging of cigarette sticks using an
individual person’s hands and not through any other means such as a mechanical
device, machine or equipment.
“(C) Cigarettes Packed by
Machine. – There shall be levied, assessed and collected on
cigarettes packed by machine a tax at the rates prescribed below:
“Effective on January
1, 2013
“(1) If the net retail
price (excluding the excise tax and the value-added tax) is Eleven pesos and
fifty centavos (P11.50) and below per pack, the tax shall be Twelve pesos
(P12.00) 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 (P11.50) per pack, the tax shall be Twenty-five pesos
(P25.00) per pack.
“Effective on January
1, 2014
“(1) If the net retail
price (excluding the excise tax and the value-added tax) is Eleven pesos and
fifty centavos (P11.50) and below per pack, the tax shall be Seventeen pesos
(P17.00) 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 (P11.50) per pack, the tax shall be Twenty-seven pesos
(P27.00) per pack.
“Effective on January
1, 2015
“(1) If the net retail
price (excluding the excise tax and the value-added tax) is Eleven pesos and
fifty centavos (P11.50) and below per pack, the tax shall be Twenty-one pesos
(P21.00) 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 (P11.50) per pack, the tax shall be Twenty-eight pesos
(P28.00) per pack.
“Effective on January
1, 2016
“(1) If the net retail
price (excluding the excise tax and the value-added tax) is Eleven pesos and
fifty centavos (P11.50) and below per pack, the tax shall be Twenty-five pesos
(P25.00) 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 (P11.50) per pack, the tax shall be Twenty-nine pesos
(P29.00) per pack.
“Effective on January
1, 2017, the tax on all cigarettes packed by machine shall be Thirty pesos
(P30.00) per pack.
“The rates of tax
imposed under this subsection shall be increased by four percent (4%) every
year thereafter effective on January 1, 2018, through revenue regulations
issued by the Secretary of Finance.
“Duly registered
cigarettes packed by machine shall only be packed in twenties and other
packaging combinations of not more than twenty.
“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.
“Cigarettes 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 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 Internal
Revenue shall validate the suggested net retail price of the newly introduced
cigarette against the net retail price as defined herein and initially
determine the correct tax bracket under which a newly introduced cigarette
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 under which a newly introduced
cigarette shall be classified.
” ‘Net retail price’
shall mean the price at which the cigarette is sold on retail in at least five
(5) major supermarkets in Metro Manila (for brands of cigarettes marketed
nationally), excluding the amount intended to cover the applicable excise tax
and the value-added tax. For cigarettes which are marketed only outside Metro
Manila, the ‘net retail price’ shah 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.
“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
cigarette is not sold in major supermarkets, the price survey can be conducted
in retail outlets where said cigarette 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 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.
“The proper tax
classification of cigarettes, 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 cigarettes
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 cigarettes 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.
“No tobacco products manufactured in the Philippines and
produced for export shall be removed from their place of manufacture or
exported without posting of an export bond equivalent to the amount of the
excise tax due thereon if sold domestically: Provided, however, That
tobacco products for export may be transferred from the place of manufacture to
a bonded facility, upon posting of a transfer bond, prior to export.
“Tobacco products
imported into the Philippines and destined for foreign countries shall not be
allowed entry without posting a bond equivalent to the amount of customs duty,
excise and value-added taxes due thereon if sold domestically.
“Of the total volume
of cigarettes sold in the country, any manufacturer and/or seller of tobacco
products must procure at least fifteen percent (15%) of its tobacco leaf raw
material requirements from locally grown sources, subject to adjustments based
on international treaty commitments.
“Manufacturers and
importers of cigars and cigarettes 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
for cigars and/or cigarettes sold 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 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 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. 6. Section 8 of
Republic Act No. 8424 or the National Internal Revenue Code, as amended, is
hereby further amended to read as follows:
“SEC. 8. Duty of the Commissioner to
Ensure the Provision and Distribution of Forms, Receipts, Certificates, and
Appliances, and the Acknowledgment of Payment of Taxes. -
“(A) Provision and Distribution to
Proper-Officials. – Any law to the contrary notwithstanding, it
shah be the duty of the Commissioner, among other things, to prescribe,
provide, and distribute to the proper officials the requisite licenses;
internal revenue stamps; unique, secure and nonremovable identification
markings (hereafter called unique identification markings), such as codes or
stamps, be affixed to or form part of all unit packets and packages and any
outside packaging of cigarettes and bottles of distilled spirits; labels and
other forms; certificates; bonds; records; invoices; books; receipts;
instruments; appliances and apparatus used in administering the laws falling
within the jurisdiction of the Bureau. For this purpose, internal revenue
stamps, or other markings and labels shall be caused by the Commissioner to be
printed with adequate security features.
“Internal revenue
stamps, whether of a bar code or fuson design, or other markings shall be
firmly and conspicuously affixed or printed on each pack of cigars and cigarettes
and bottles of distilled spirits subject to excise tax in the manner and form
as prescribed by the Commissioner, upon approval of the Secretary of Finance.
“To further improve
tax administration,’ cigarette and alcohol manufacturers shall be required to
install automated volume-counters of packs and bottles to deter over-removals
and misdeclaration of removals.”
SEC. 7. 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. –
“x
x x
“The provision of any special or general law to the contrary
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 all applicable taxes, duties, charges,
including excise taxes due thereon. This shall apply to cigars and cigarettes,
distilled spirits, fermented liquors and wines brought directly into the duly
chartered or legislated freeports of the Subic Special Economic and Freeport
Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone
and Freeport, created under Republic Act No. 7922; and the Zamboanga City
Special Economic Zone, created under 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 Act Nos. 9400 and 9593, importations of cigars and cigarettes,
distilled spirits, fermented liquors and wines made directly by a
government-owned and operated duty-free shop, like the Duty-Free Philippines
(DFP), shall be exempted from all applicable duties only: x
x x
“x x
x
“Articles confiscated
shall be destroyed using the most environmentally friendly method available 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.
“x
x x.”
SEC. 8. Section 288,
subsections (B) and (C) of the National Internal Revenue Code of 1997, as
amended by Republic Act No. 9334, is hereby further amended to read as follows:
“(B) Incremental Revenues from
Republic Act No. 8240. – Fifteen percent (15%) of the
incremental revenue collected from the excise tax on tobacco products under R.
A. No. 8240 shall be allocated and divided among the provinces producing burley
and native tobacco in accordance with the volume of tobacco leaf production.
The fund shall be exclusively utilized for programs 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 including, but not
limited to, high-value crops, spices, rice, corn, sugarcane, coconut, livestock
and fisheries;
“(2) Programs that
will provide financial support for tobacco farmers who are displaced or who cease
to produce tobacco;
“(3) Cooperative
programs to assist tobacco farmers in planting alternative crops or
implementing other livelihood projects;
“(4) Livelihood
programs and projects that will promote, enhance, and develop the tourism
potential of tobacco-growing provinces;
“(5) Infrastructure
projects such as farm to market roads, schools, hospitals, and rural health
facilities; and
“(6) Agro-industrial
projects that will enable tobacco farmers to be involved in the management and
subsequent ownership of projects, such as post-harvest and secondary processing
like cigarette manufacturing and by-product utilization.
“The Department of
Budget and Management, in consultation with the Department of Agriculture,
shall issue rules and regulations governing the allocation and disbursement of
this fund, not later than one hundred eighty (] 80) days from the effectivity
of this Act.
“(C) Incremental Revenues from the
Excise Tax on Alcohol and Tobacco Products. –
“After deducting the
allocations under Republic Act Nos. 7171 and 8240, eighty percent (80%) of the
remaining balance of the incremental revenue derived from this Act shall be
allocated for the universal health care under the National Health Insurance
Program, the attainment of the millennium development goals and health
awareness programs; and twenty percent (20%) shall be allocated nationwide,
based on political and district subdivisions, for medical assistance and health
enhancement facilities program, the annual requirements of which shall be
determined by the Department of Health (DOH).”
SEC. 9. Transitory Provision. –
A special financial support for displaced workers in the alcohol and tobacco
industries shall be allocated and included in the appropriations under the
Department of Labor and Employment (DOLE) to finance unemployment alleviation
program; and to the Technical Education and Skills Development Authority
(TESDA) to finance the training and retooling programs of displaced workers, to
be included in the General Appropriations Acts for the Fiscal Years 2014 to
2017.
SEC. 10. Annual Report. – The
Department of Budget and Management (DBM), the Department of Agriculture (DA),
the Department of Health (DOH) and the Philippine Health Insurance Corporation
(PhilHealth) shall each submit to the Oversight Committee, created under
Republic Act No. 8240, a detailed report on the expenditure of the amounts
earmarked in this Section on the first week of August of every year. The
reports shall be simultaneously published in the Official Gazette and in the agencies’ websites.
SEC. 11. Congressional Oversight
Committee. – The composition of the Congressional Oversight
Committee, created under Republic Act No. 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
annual reports from the DBM, DA, DOH, DOLE, PhilHealth and TESDA, the Committee
shall review and ensure the proper implementation of this Act as regards the expenditures
of the earmarked funds.
Starting the third
quarter of Calendar Year 2016, the Committee is mandated to review the impact
of the tax rates provided under this Act.
SEC. 12. Implementing Rules and
Regulations. – The Secretary of Finance shall, upon the
recommendation of the Commissioner of Internal 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.
SEC. 13. 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.
SEC. 14. 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.
SEC. 15. Effectivity. – This
Act shall take effect upon its publication in a newspaper of general
circulation.
Approved,
(Sgd.) JUAN PONCE ENRILE
President of the Senate
|
(Sgd.) FELICIANO BELMONTE JR.
Speaker of the House
of Representatives
|
This Act which is a
consolidation of House Bill No. 5727 and Senate Bill No. 3299 was finally
passed by the House of Representatives and the Senate on December 11, 2012.
Approved: DEC 19
2012
(Sgd.) EMMA LIRIO-REYES
Secretary of the Senate
|
(Sgd.) MARILYN B. BARUA-YAP
Secretary General
House of Representatives
|
(Sgd.) BENIGNO S. AQUINO III
President of the Philippines
Republic Act No. 10351 RA 10351 Sin Tax Bill
