Question & AnswerQ&A (Republic Act No. 11346)
Republic Act No. 11346 covers tobacco products, heated tobacco products, and vapor products, as well as sugar-sweetened beverages and alcohol products in relation to excise tax.
The excise tax on heated tobacco products is ten pesos (₱10.00) per pack of twenty (20) units or packaging combinations of not more than twenty (20) units, effective January 1, 2020.
The excise tax rate on heated tobacco products is increased by five percent (5%) every year, effective January 1, 2021, through revenue regulations issued by the Secretary of Finance.
They may be penalized by summary cancellation or withdrawal of their permit to engage in business, a fine treble the amount of deficiency taxes, surcharges and interest, and criminal liability under Section 254 of the National Internal Revenue Code. Non-citizens are subject to deportation after serving the sentence.
The sale, distribution, transfer, purchase, or use of heated tobacco and vapor products by minors is prohibited. A 'minor' refers to any person below eighteen (18) years old. Violations carry penalties under the Tobacco Regulation Act of 2003.
Unit packets and any outside wrapping must carry health warnings compliant with Republic Act No. 10643 (The Graphic Health Warnings Law). Manufacturers and importers have one (1) year from the act's effectivity to comply. After eighteen (18) months, no product can be sold or displayed without proper labeling.
Excise tax rates vary by volume: ₱10 for 0.00 to 10.00 ml, ₱20 for 10.01 to 20.00 ml, ₱30 for 20.01 to 30.00 ml, ₱40 for 30.01 to 40.00 ml, ₱50 for 40.01 to 50.00 ml, and ₱50 plus ₱10 for every additional 10.00 ml over 50.00 ml, effective January 1, 2020.
A fine of ten (10) times the amount of excise and VAT but not less than ₱100,000.00, and imprisonment of not less than two (2) years but not more than four (4) years.
Cigarettes packed by hand are those packaged manually by an individual’s hands, not through any mechanical device, machine, or equipment.
Penalties include fines ranging from ₱100,000.00 to ₱20,000,000.00 and imprisonment terms from 60 days up to twelve (12) years depending on the appraised value of the articles, with higher fines and imprisonment for locally manufactured articles and illegal removal cases.
50% of revenues from sugar-sweetened beverages and alcohol excise taxes go 80% to PhilHealth for Universal Healthcare and 20% to nationwide medical assistance and health facilities. For tobacco, 5% up to ₱4 billion is allocated to tobacco-producing provinces for alternative livelihood and infrastructure programs; 50% is for PhilHealth and health programs. Heated tobacco and vapor products' excise tax revenues are allocated 80% to PhilHealth and 20% to health programs nationwide.
A written permit from the Commissioner is required for importing, manufacturing, or selling these items. Violation or unlawful possession can result in fines ranging from ₱15 million to ₱50 million and imprisonment of 12 to 20 years.
They must submit to the Commissioner, within thirty (30) days from the effectivity of the Act and within the first five (5) days of every month thereafter, a sworn statement of the volume of sales of each brand of tobacco, heated tobacco, or vapor products for the three-month period immediately preceding.
Heated tobacco or vapor products manufactured for export cannot be removed or exported without posting an export bond equivalent to the excise tax due if sold domestically. Transfer to bonded facilities prior to export may be allowed upon posting a transfer bond.
The Act takes effect on January 1, 2020, following its complete publication in the Official Gazette or in at least one newspaper of general circulation.