Legal basis and legislative linkages
- The regulations implement Section 150-B of the NIRC, as amended, on the excise tax on sweetened beverages, introduced by Section 47 of Republic Act No. 10963.
- Section 15 ties penalties to the NIRC enforcement framework under Title X of the NIRC and further provides specific penalty provisions.
- Section 14(f) sets surety bond requirements pursuant to Section 160 of the NIRC.
- Section 5 frames payment and filing duties under the NIRC excise administration rules, including references to Section 130 (A)(2)(3) of the NIRC.
Policy, coverage, and regulated subject
- The regulations govern the levy, assessment, and collection of the specific excise tax on sweetened beverages.
- The regulations define and regulate excise treatment for locally manufactured and imported sweetened beverages and their movements for production, sale, or export.
- The regulations establish compliance requirements for manufacturers, importers, toll manufacturers, and sub-contractors engaged in manufacturing, bottling, packaging, or related processes.
- Food category system references in the regulations use Codex Alimentarius Food Category Descriptors (Codex Stan 192-1995, Rev 2017 or the latest) as adopted by the FDA for classification and exclusions.
Definitions: sweeteners and sweetened beverages
- “Sweetened Beverages (SBs)” are non-alcoholic beverages of any constitution (liquid, powder, or concentrates) that are pre-packaged and sealed under FDA standards and contain caloric and/or non-caloric sweeteners added by manufacturers.
- “Sweetened Beverages (SBs)” include, among others, the following FDA-referenced categories under Codex:
- Sweetened juice drinks;
- Sweetened tea;
- All carbonated beverages;
- Flavored water;
- Energy and sports drinks;
- Other powdered drinks not classified as milk, juice, tea, and coffee;
- Cereal and grain beverages; and
- Other non-alcoholic beverages that contain added sugar.
- “Caloric Sweetener” means a sweet substance including sucrose, fructose, and glucose that produces a certain sweetness.
- “High Fructose Corn Syrup (HFCS)” means a sweet saccharide mixture containing fructose and glucose derived from corn and added to provide sweetness to beverages, including other similar fructose syrup preparations.
- “Non-Caloric Sweetener” means an artificially or chemically processed sweet substance that produces sweetness and can be directly added to beverages, including aspartame, sucralose, saccharin, acesulfame potassium, neotame, cyclamates, and other non-nutritive sweeteners approved by Codex Alimentarius and adopted by the FDA.
Tax rates, tax base, and computation
- Section 3 imposes, effective January 1, 2018, a specific tax on sweetened beverages under Section 150-B of the NIRC, as amended.
- The excise tax is computed per liter of volume capacity and is levied based on the type of sweeteners used:
- PHP 6.00 per liter when using purely caloric sweeteners, purely non-caloric sweeteners, or a mix of caloric and non-caloric sweeteners.
- PHP 12.00 per liter when using purely high fructose corn syrup (HFCS) or in combination with any caloric or non-caloric sweetener.
- Exempt when using purely coconut sap sugar and purely steviol glycosides, subject to specific compliance requirements.
- Coconut sap sugar must comply with the Philippine National Standard (PNS)/Bureau of Agricultural and Fisheries Products Standards (BAFPS) 76:2010 ICS 67.180 or the latest updated standards.
- Steviol glycosides specified must comply with the Joint FAO/WHO Expert Committee on Food Additives (JECFA) specifications.
- The regulations include illustrative computations demonstrating the use of specific tax rate per liter and the conversion from cases/packs/bottles to total volume in liters.
Who pays, liability rules, and exemptions
- Manufacturers of sweetened beverages must pay the excise tax imposed under Section 150-B, Chapter VI, Title VI of the Tax Code, as amended.
- The person having possession of domestically manufactured sweetened beverages removed from the place of production without payment of excise tax must pay the excise tax.
- Owners or importers of sweetened beverages must pay the excise tax imposed under Section 150-B, Chapter VI, Title VI of the Tax Code, as amended.
- The person having possession of imported sweetened beverages removed from customs custody without payment of excise tax must pay the excise tax.
- The excise tax is payable by the owner or importer or by any person found in possession of untaxed sweetened beverages, including any person other than one legally entitled to exemption in the proper case.
- If sweetened beverages are brought or imported tax-free by exempt persons/entities/agencies and are subsequently sold, transferred, or exchanged in the Philippines to non-exempt persons/entities, the purchaser or transferee, owner/possessor is considered the importer and is liable for the excise tax due.
- Toll manufacturers, bottlers, and other sub-contractors of manufacturers or importers are not subject to excise tax, but the manufacturer or importer is liable to pay the excise tax in such cases.
Filing, payment, and import release mechanics
- For locally manufactured sweetened beverages, a separate return (BIR Form No. 2200-S) is filed for each place of production with the concerned Revenue District Office (RDO) where the Head Office is registered.
- For locally manufactured sweetened beverages, excise tax is paid before removal from the place of production.
- The return and excise tax payment may be made at an authorized agent bank (AAB), revenue collection officer, or duly authorized city or municipal treasurer in the Philippines under Section 130 (A)(2)(3) of the NIRC, as amended.
- For imported sweetened beverages, importers/traders must apply for an Authority to Release Imported Goods (ATRIG) with Excise LT Regulatory Division (ELTRD), BIR National Office, and pay the corresponding excise tax based on the equivalent yield in liters of volume capacity.
- Excise tax on imported finished goods is paid before release from customs custody.
- Excise tax on imported raw materials intended for production is paid before removal of the finished goods from the place of production.
Exclusions from the sweetened beverages excise tax
- Milk products are excluded from the excise tax under Section 150-B, including plain milk, infant formula milk, follow-on milk, growing up milk, powdered milk, ready-to-drink milk, flavored milk, and fermented milk.
- Milk product is defined as products obtained by processing milk that may contain food additives and other ingredients functionally necessary for processing under Codex General Standard for the Use of Dairy Terms (Codex Stan 206-1999).
- Soymilk and flavored soymilk are excluded when the main ingredients are soybean and/or soy derivative(s) (such as soybean flour, soybean concentrates, soybean isolates, or defatted soya) and water, produced without fermentation under Codex Stan CXS 322R-2015.
- One Hundred Percent (100%) Natural Fruit Juices are excluded when they have no added sugar or caloric sweetener; any product with added sugar or sweetener is excisable depending on the kind of sweetener and its corresponding rate under the Act.
- One Hundred Percent (100%) Natural Vegetable Juices are excluded when they have no added sugar or caloric sweetener; any product with added sugar or sweetener is excisable depending on the kind of sweetener and its corresponding rate under the Act.
- Meal Replacement and Medically Indicated Beverages are excluded, including liquids or powders for oral nutritional therapy for persons who cannot absorb or metabolize dietary nutrients from food or beverages, and oral electrolyte solutions for infants and children formulated to prevent dehydration due to illness.
- Ground coffee, instant soluble coffee, and pre-packaged powdered coffee products are excluded.
- Beverage classification is determined by the FDA.
Movements: raw materials, semi-processed goods, consumption
- Manufacturers subject to tax cannot transfer or remove raw materials from the place of production except when the transfer/removal is intended for further processing to other registered production or toll-manufacturing plants, and it is accompanied by an Excise Taxpayer’s Removal Declaration (ETRD).
- Raw materials are the chief substance or ingredient of any constitution (liquid, syrups, powder, concentrates) for production of sweetened beverages.
- Raw materials intended for further processing are not subject to excise tax.
- Raw materials that clearly need only repacking are subject to excise tax even if declared as raw materials.
- Packaging materials and supplies are not raw materials for purposes of the regulations.
- Semi-processed goods (including syrups/puree/concentrates sold to fast food chains where mixed with carbonated water and dispensed) are treated as finished goods subject to excise tax for excise-tax purposes.
- The excise tax for such semi-processed goods is computed using a pre-determined formula to arrive at the equivalent yield in liters, based on the manufacturer’s submitted data approved by the FDA.
- Sweetened beverages produced and consumed within the premises of the manufacturer are subject to excise tax payable by the manufacturer.
- The volume in liters and excise tax due are declared in excise tax returns and paid in the same manner as removals for ordinary removals of excisable sweetened beverages.
- The ETRD (or other prescribed form) for on-premises consumption is issued by the authorized manufacturer representative, attested by the Revenue Officer assigned at the premises.
- The brand name and volume of sweetened beverages consumed within production premises must be separately indicated in the manufacturer’s Official Register Books (ORBs).
Export of tax-free sweetened beverages
- Sweetened beverage products intended for export may be removed from the place of production without prepayment of excise tax if all required conditions are met.
- A permit per shipment must be secured from the BIR