Question & AnswerQ&A (BIR REVENUE MEMORANDUM CIRCULAR NO. 41-2011)
The main purpose is to clarify the proper tax treatment of locally produced wines, including mango wine, strawberry wine, bugnay wine, and others, for excise tax imposition.
Under Section 142 of the NIRC, wine as an alcoholic product is subject to excise tax.
Section 143 exempts fermented liquors such as tuba, basi, tapuy, and similar fermented liquors which are considered wines made from non-fruits from excise tax.
Wine under Section 142 refers to alcoholic beverages produced by fermentation of fruit juices and are taxable, while fermented liquors under Section 143 refer to beverages brewed from malted grains or non-fruit raw materials like rice wine, which are exempt from excise tax.
Fermented liquors include beer (made from malted cereal grains and hops), as well as rice wine, ginger wine, tuba, basi, and tapuy, which are made from non-fruit raw materials.
Yes, since mango wines are derived from fruits, they are subject to excise tax under Section 142.
No, the deletion of the word 'domestic' in Section 143 ensures that the exemption is not limited to locally produced fermented liquors, but applies generally.
It removed the word 'domestic' from Section 143, widening the exemption to include all fermented liquors classified under that Section regardless of origin.
It defines wine as all alcoholic beverages produced by fermentation without distillation from the juice of any kind of fruit.
Wines made from non-fruit raw materials, such as rice wine, ginger wine, and traditional fermented liquors like tuba, basi, and tapuy, are exempt from excise tax under Section 143.
Revenue officials are requested to give wide publicity to this Circular to ensure proper implementation and compliance.