Excise Tax on Wines
- Wine taxed per liter based on type and net retail price:
- Sparkling wines/champagnes: 145.60 if 500; 436.80 if > 500
- Still wines % alcohol or less: 17.47
- Still wines 14%-25% alcohol: 34.94
- Fortified wines (alcohol >25%) taxed as distilled spirits.
- Similar definitions and tax classification rules as distilled spirits.
- Net retail price determined by price surveys.
- Variants and new brands taxed by suggested retail price; no classification can be lower than highest variant.
- Price validations occur after 3 and 18 months of product launch.
- Tax rates increase by 8% every two years from 2007 to 2011.
- Downward reclassification prohibited.
- Quarterly submission of sworn sales volume statements required.
- Penalties for misdeclaration include permit cancellation, fines, criminal liability, and deportation.
Excise Tax on Fermented Liquors
- Tax on beer, lager, ale, porter, and similar liquors except tuba, basi, tapuy:
- Net retail price < P14.50/liter: P8.27/liter
- P14.50 to P22.00/liter: P12.30/liter
P22.00/liter: P16.33/liter
- Fermented liquors brewed and sold in microbreweries/establishments taxed at highest rate.
- Variants and new brands classification as with distilled spirits.
- Net retail price determined through surveys in Metro Manila and regional markets.
- Tax rate increases by 8% every two years starting 2007 to 2011.
- Downward reclassification prohibited.
- Monthly submission of sworn sales volume statements mandated.
- Penalties for misrepresentation include permit cancellation, treble fines, criminal liability, and deportation.
Excise Tax on Tobacco Products
- P1.00 tax per kilogram for tobacco prepared variously except stemmed leaf tobacco used for export or manufacturing.
- Chewing tobacco taxed at P0.79 per kilogram.
- Tax increases by 6% every two years from 2007 to 2011.
- Monthly submission of sworn sales statements required.
- Penalties include permit cancellation, treble fines, criminal liability, and deportation for violations.
Excise Tax on Cigars and Cigarettes
- Cigars taxed on net retail price per cigar:
- 500 or less: 10%
500: 50 plus 15% of excess
- Hand-packed cigarettes taxed per pack (rates increase biennially 2005-2011 from P2.00 to P2.72).
- Machine-packed cigarettes taxed in four price brackets with scheduled increases (2005-2011):
- Below 5.00
- 5.00 to 6.50
- 6.50 to 10.00
- Above 10.00
- Variants taxed based on suggested retail price; classification cannot be lower than highest variant.
- Maximum pack sizes prescribed for hand-packed (thirties) and machine-packed (twenties) cigarettes.
- Downward reclassification prohibited.
- Price validations after 3 and 18 months.
- Monthly submission of sworn sales statements required.
- Penalties include permit cancellation, treble fines, criminal liability, and deportation.
Payment of Excise Taxes on Imported Articles
- Importer or owner liable to pay excise taxes before customs release.
- Buyers of tax-free imported articles later sold to non-exempt persons become importers liable for excise taxes.
- Importations of cigars, cigarettes, distilled spirits, fermented liquors, and wines subject to all taxes even in freeports; government duty-free shops exempt only from duties and must label "duty-free" and "not for resale".
- Mislabeling or resale leads to confiscation and penalties.
- Tax due constitutes a superior lien on the articles.
- Imported articles subject to same excise tax rates as local products.
Disposition of Incremental Revenues from Excise Tax Increases
- Incremental revenues from various laws allocated as follows:
- From Republic Act No. 7660: allocations for mass-socialized housing, community mortgage, land banking, national health insurance, special education fund for education facilities, and special infrastructure fund with allocations for depressed provinces.
- From Republic Act No. 8240: 15% of incremental tobacco excise revenues divided among tobacco-producing provinces to fund cooperative, livelihood, and agro-industrial projects benefiting farmers.
- From excise tax on alcohol and tobacco starting 2005: 2.5% to Philippine Health Insurance Corporation for universal health coverage, 2.5% to Department of Health as a trust fund for disease prevention.
- Earmarking observed for five years starting 2005.
Implementing Rules and Regulations
- Secretary of Finance to promulgate necessary rules upon Internal Revenue Commissioner recommendation.
Separability Clause
- Invalidity of any provision does not affect the rest of the Act.
Repealing Clause
- Laws, decrees, rules, and executive orders inconsistent with this Act are repealed or amended accordingly.
Effectivity
- Act takes effect January 1, 2005.