Excise Tax on Distilled Spirits
- Introduces a combined ad valorem and specific tax on distilled spirits from 2020 to 2024 with specified rates increasing yearly.
- Ad valorem tax is 22% of net retail price excluding excise and VAT per proof.
- Specific tax increases from P42 to P66 per proof liter over five years.
- Post-2024, specific tax increases by 6% annually.
- Definitions for spirits, proof spirits, proof liter, net retail price, and major supermarkets are clarified.
- Price surveys conducted biannually by BIR; understatements penalized.
- Manufacturers must submit quarterly sworn sales statements.
Excise Tax on Wines
- Fixed excise tax of P50.00 per liter, effective January 1, 2020.
- The tax rate increases by 6% annually starting 2021.
- Monthly submission of sales volume sworn statements by producers/importers required.
Excise Tax on Fermented Liquors
- Taxes beer, ale, porter, and other fermented liquors at rates increasing from P35 to P43 per liter between 2020 and 2024.
- Annual increase of 6% from 2025 onwards.
- Monthly sworn sales volume reporting mandated.
- Misdeclaration subject to permit cancellation by the Commissioner of Internal Revenue.
Excise Tax on Tobacco, Heated Tobacco, and Vapor Products
- Heated tobacco taxed starting at P25 per pack of 20 units in 2020, increasing annually with 5% hike from 2024.
- Vapor products excise tax differentiated between nicotine salt and conventional nicotine, with graduated rates increasing annually and 5% increase from 2024.
- Selling these products to persons under 21 is prohibited with fines and imprisonment.
- FDA tasked to regulate manufacture, importation, advertising, packaging, and ban flavorings (except plain tobacco/menthol).
- Manufacturers must submit monthly sworn sales reports.
- BIR to issue minimum floor price regulations inclusive of excise and VAT.
Definitions Related to Vapor Products
- Vapor products defined as electronic nicotine/non-nicotine delivery systems (ENDS/ENKDS) with specified components.
- Coverage applies regardless of nicotine content.
Supervision Over Excise Taxed Product Production
- Bureau of Internal Revenue tasked with supervising establishments producing excisable articles.
- Rules may include appointing third parties to monitor production and removal processes.
- Internal revenue officers have authority to inspect premises with court orders.
Offenses Related to Possession and Selling of Excise Taxed Articles
- Possession of imported excise-taxed articles without payment results in fines and imprisonment based on appraised value.
- Selling heated tobacco or vapor products below combined excise and VAT invites high fines and imprisonment between 4-6 years.
- Possession of false, counterfeit, or recycled tax stamps entails fines from P10 million to P500 million and imprisonment of 5-15 years, with harsher penalties for possession exceeding P50 million.
Disposition of Excise Tax Revenues
- 50% excise tax revenue on sweetened beverages allocated as per existing law.
- 100% excise tax revenue from alcohol, heated tobacco, and vapor products is allocated as:
- 60% for implementation of Universal Health Care Act (RA No. 11223).
- 20% for medical assistance and Health Facilities Enhancement Program nationwide.
- 20% for Sustainable Development Goals (SDGs) with targets determined by NEDA.
- Allocation based on collection from second fiscal year preceding the current year.
Joint Congressional Oversight Committee on Illicit Trade on Excisable Products
- Composition: Chairpersons of Senate and House Committees on Ways and Means as co-chairs plus six members from each chamber.
- Duties include reviewing BIR and Bureau of Customs programs on illicit trade, requiring agency reports, holding public hearings, deputizing enforcement agencies, and performing investigatory functions.
- Supported by a secretariat co-headed by service directors of the Committees on Ways and Means.
Reporting and Transparency
- Agencies involved in Universal Health Care and SDGs must submit annual detailed expenditure reports to the Congressional Oversight Committee by first week of August.
- Reports are published in the Official Gazette and agencies’ websites.
Implementing Rules and Regulations
- Secretary of Finance to promulgate necessary rules upon recommendation of the Commissioner of Internal Revenue for effective implementation.
Legal Provisions
- Separability clause ensures unaffected provisions remain valid if any part is declared unconstitutional.
- Repealing clause nullifies inconsistent laws, decrees, and regulations.
- Effectivity set for January 1, 2020, upon publication.
This comprehensive amendment significantly updates excise taxes on alcohol, tobacco, heated tobacco, vapor products, defines regulatory and enforcement frameworks, sets penalties, revenue use, and oversight mechanisms in line with public health policies.