Question & AnswerQ&A (Republic Act No. 8240)
Republic Act No. 8240 amends Sections 138, 139, 140, and 142 of the National Internal Revenue Code to revise tax rates on distilled spirits, wines, fermented liquors, cigars, and cigarettes and includes other related provisions.
Distilled spirits produced from these materials are taxed at Eight pesos (P8) per proof liter if produced commercially; if produced in a pot still by distillers not producing more than 100 liters a day and with not more than 50% alcohol by volume, the tax is Four pesos (P4) per proof liter.
The tax is based on the net retail price per 750 ml bottle (excluding excise and VAT) as follows: less than P250 = P75 per proof liter; P250 to P675 = P150 per proof liter; above P675 = P300 per proof liter.
'Proof spirits' refers to liquor containing half of its volume of alcohol with a specific gravity of 0.7939 at 15°C. A proof liter means one liter of proof spirits.
They are subject to the same tax rate as the distilled spirits forming the chief ingredient.
Tax rates on wines per liter are: Sparkling wines/champagnes priced at P500 or less are taxed P100; those above P500 are taxed P300; still wines with up to 14% alcohol are taxed P12; still wines with over 14% but not more than 25% alcohol are taxed P24. Fortified wines with over 25% alcohol are taxed as distilled spirits.
Specific tax on fermented liquor like beer depends on net retail price per liter: below P14.50 = P6.15; P14.50 to P22 = P9.15; above P22 = P12.15, excluding specific tax and VAT.
They face summary cancellation or withdrawal of their business permit, fines triple the amount of deficiency taxes, surcharges and interest, and criminal liability under Section 253 of the National Internal Revenue Code. Foreign offenders may be deported after serving the sentence.
Cigars are taxed P1 per cigar; hand-packed cigarettes are taxed P0.40 per pack; machine-packed cigarettes tax varies by net retail price per pack: above P10 = P12, between P6.50 and P10 = P8, between P5 and P6.50 = P5, below P5 = P1.
They must submit a sworn statement of sales volume for each brand within 30 days from the law's effectivity and then within the first 5 days of every month thereafter to the Commissioner of Internal Revenue.
The tax rates took effect on January 1, 1997.
The Oversight Committee monitors and ensures the proper implementation of the Act and is composed of chairmen and members from the Senate and House Committees on Ways and Means.
Fifteen percent (15%) of the incremental revenue is allocated to provinces producing burley and native tobacco and utilized exclusively for projects to improve agricultural quality, income, and livelihood of tobacco farmers.
The remainder of the Act or any unaffected provision remains in full force and effect.
Yes, the rates of tax imposed on distilled spirits, wines, fermented liquors, cigars, and cigarettes are to be increased by 12% on January 1, 2000.