Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Part 7

Implementing Guidelines  on the Revised Tax  Rates on Alcohol and Tobacco Products Part 7

SEC.   8.   UNDERSTATEMENT   OF   SUGGESTED   NET   RETAIL   PRICE.   –

The 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.

ILLUSTRATION:

No. 4 – CPI Corp., a cigarette manufacturer, submitted a sworn statement of a cigarette product, “Mirage”, wherein the tax rate to be imposed is P12.00 per pack based on the Suggested Net Retail Price (SNRP), excluding VAT and excise, of P 9.50 per pack. After three months from the date of submission of the sworn statement, the BIR conducted a price survey and found out that the Actual Net Retail Price (ANRP), excluding VAT and excise tax is actually P 12.00 subject to the higher excise tax rate of P 25.00 per pack. The total volume removed by CPI Corp. on the product is 10,000 packs from the time of its removal up to the time of the price survey. Compute the total deficiency excise tax and penalties of CPI Corp., if there are any.

Step 1. Determine whether or not the understatement of the SNRP is equal to or more than 15% of the ANRP

SNRP per Sworn Statement                                            P 9.50

ANRP per Validation                                                      12.00

Difference                                                                     P 2.50
Percentage of understatement

[(P2.50/ P9.50) x 100%]                                                26.32%

Since the understatement of 26.32% is more than 15%, CPI Corp is, therefore, liable to the additional penalty for understatement of suggested net retail price.

Step 2. Compute the deficiency excise and interest

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Tax rate per ANRP                                          P              25.00

Less: Tax Rate paid per SNRP                                    12.00

Deficiency Tax                                                           13.00
Add: Additional Excise Tax

Excise Tax Due on ANRP   25.00

Difference (SNRP-ANRP)       2.50                   27.50

Total adjusted tax due per pack                                  40.50

Multiplied by volume removed                                 10,000

Total Adjusted Deficiency tax due                 P 405,000.00
Add: 20% Interest [P405,000x 20% x

3/12]                                       20,250.00
Total adjusted deficiency excise tax and

interest                                                             P425,250.00

Step 3. Compute the additional penalty to CPI Corp. as a juridical person

Total adjusted deficiency excise tax

and interest                                                     P 425,250.00

Additional penalty as a juridical

entity [P425,250 x 3]                                     P 1,275,750.00

Step 4. Compute the total amount due from CPI Corp.

Total adjusted deficiency excise tax

and interest                                                       P 425,250.00

Additional penalty as a juridical entity

[P425,250 x 3]                                                  1,275.750.00

Total Amount Due                                    P     P 1,701,000.00

Implementing Guidelines  on the Revised Tax  Rates on Alcohol and Tobacco Products Part 7