QuestionsQuestions (EXECUTIVE ORDER NO. 960)
EO No. 960 was issued to add an ad valorem tax on cigarettes in addition to the existing specific tax, to provide built-in flexibility to price changes and avoid frequent adjustments of specific tax rates/bases.
Cigarettes are subject to (1) the specific tax under Section 149(b) of the National Internal Revenue Code (NIRC) and (2) an ad valorem tax added under the new Chapter IV (Section 186-A).
It is equivalent to ten percent (10%) of the manufacturer’s or importer’s gross selling price, net of specific tax, of cigarettes to be removed from production or released from customs custody.
It is paid at the same time as the specific tax when the cigarettes are removed from the place of production or released from customs custody.
The manufacturer or importer is responsible, as the ad valorem tax is paid by the manufacturer or importer at the same time as the specific tax.
The wholesale price at which different brands are sold at wholesale in the factory or importer’s establishment (or through sales agents) to the public determines the tax due. If sold in another establishment owned or where the seller has an interest, that other establishment’s wholesale price controls.
The tax base shall be determined by the cost of manufacture or importation plus all expenses incurred until the cigarettes are finally sold by the manufacturer or importer.
They must file a sworn statement with the Commissioner showing the different brands and their corresponding wholesale prices, and also the cost of manufacture/importation plus expenses incurred (or to be incurred) until finally sold.
They must file on the date or dates designated by the Commissioner and as often as required.
No. It is unlawful to sell at wholesale at a price in excess of the one specified without previous written notice to the Commissioner.
The sworn statement must be accompanied by verified sales invoices of the manufacturer of the cigarettes and the consular invoice issued by a Philippine Consul, if available at the place of origin or shipment.
Every pack must bear the inscription "FOR EXPORT TO THE PHILIPPINES".
Upon discovery, the violator may be penalized by summary cancellation or withdrawal of his permit to engage in business as a manufacturer or importer of cigarettes.
If the violator is an alien, he shall be liable for deportation.
The wholesale price subject to ad valorem tax shall in no case be less than the prevailing wholesale price exclusive of the specific tax registered with the Bureau of Internal Revenue prior to the effectivity of the Order.
The Minister of Finance, upon recommendation of the Commissioner of Internal Revenue, shall promulgate the necessary rules and regulations.
It took effect on September 1, 1984.