Law Summary
Definitions
- "ACT": Republic Act No. 10963 (TRAIN Law).
- "Sweetened Beverages (SBs)": Non-alcoholic pre-packaged beverages containing caloric and/or non-caloric sweeteners per FDA standards.
- Categories include sweetened juice drinks, sweetened tea, carbonated beverages, flavored water, energy/sports drinks, powdered drinks, cereal/grain beverages, and other beverages with added sugar.
- "Caloric Sweetener": Sugars such as sucrose, fructose, glucose.
- "High Fructose Corn Syrup (HFCS)": Corn-derived sweet saccharide mixture.
- "Non-Caloric Sweetener": Artificial or chemical sweeteners approved by FDA and Codex, including aspartame, sucralose, saccharin, among others.
Tax Rates and Bases
- Effective January 1, 2018.
- P6.00 per liter for beverages using purely caloric sweeteners, purely non-caloric sweeteners, or a mix.
- P12.00 per liter for beverages using purely HFCS or in combination with other sweeteners.
- Exemptions for beverages using coconut sap sugar and steviol glycosides meeting specified standards.
- Excise tax computed based on volume capacity with illustrative examples provided.
Persons Liable for Payment
- Manufacturers liable for locally manufactured SBs.
- Owners/importers liable for imported SBs.
- Persons in possession of untaxed SBs upon removal liable for excise tax.
- Toll manufacturers, bottlers, and subcontractors are exempt; liability remains with manufacturer or importer.
- Purchasers or transferees of previously tax-exempt SBs who sell to non-exempt persons also liable.
Filing Returns and Payment of Excise Tax
- Local manufacturers must file BIR Form 2200-S and pay excise tax before removal from production.
- Importers must apply for Authority to Release Imported Goods (ATRIG) and pay excise tax before release from customs.
- Excise tax on imported raw materials paid before removal of finished goods from production.
Exclusions from Excise Tax
- All milk products and processed milk (specified Codex standards).
- Soymilk and flavored soymilk without fermentation process.
- 100% natural fruit and vegetable juices without added sugar/sweetener.
- Meal replacement and medically indicated beverages.
- Ground coffee, instant soluble coffee, and powdered coffee.
- FDA determines classification for applicable products.
Transfer of Raw Materials
- Raw materials cannot be removed except for transfer intended for further processing within registered production or toll-manufacturing plants.
- Must be accompanied by an Excise Taxpayer's Removal Declaration (ETRD).
- Raw materials not requiring further processing are subject to excise tax.
Semi-Processed Goods
- Syrups, purees, and concentrates sold for on-site mixing are treated as finished goods for excise tax.
- Excise tax computed using approved formula for equivalent yield in liters.
Excise Tax on On-Premise Consumption
- Excise tax applies to sweetened beverages produced and consumed within the manufacturing premises.
- Must be declared and paid with proper documentation.
Exportation
- Excise tax not required if products are exported under strict conditions:
- Permit secured from BIR.
- Surety bond posted.
- Direct shipment to foreign destination.
- Submission of proof of export within 30 days.
- Proper labeling with export markings.
- Failure to comply results in tax imposition and possible disqualification from future tax-free exports.
Permit to Engage in Business
- Manufacturers and importers must apply for permits with Excise LT Regulatory Division (ELTRD).
- Requirements include surety bond, registration documents, mayor's permit, FDA product registration certificates, and other corporate documents.
Assessment Numbers
- Assigned codes based on entity type: Manufacturer (SB1), Importer (SB I), Toll-Manufacturer (SB T).
- Plant or warehouse location codes appended.
Tolling, Bottling, Sub-Contracting
- Sub-contractors must secure permits and submit plant layout and operational documents.
- Manufacturer/importer and subcontractors file separate permit applications.
- Strict procedures on raw material transfer, production scheduling, issuance of ETRDs.
Administrative Requirements
- Registration of all sweetened beverage brands and variants before production or import.
- Submission of manufacturer/importer sworn statements detailing production, sweetener types, volume, and tax rates.
- Mandatory labeling with manufacturer/importer information, phrases "EXPORTED FROM THE PHILIPPINES" for exported goods, and "FOR EXPORT TO THE PHILIPPINES; TAX AND DUTY PAID" for imports.
- Use of designated BIR forms for returns, removal declarations, and recordkeeping.
- Surety bonds initially set at P100,000, adjusted to twice the tax paid semi-annually.
- Required deployment of revenue officers for supervision of production.
Penalties
- Summary cancellation of business permit for misdeclaration.
- Fines triple the amount of deficiency taxes for corporate violators.
- Criminal liability for individuals violating excise tax provisions.
- Liability extends to aiders and abettors.
- Deportation for non-citizen offenders after sentence served.
FDA Responsibilities
- Since June 1, 2018, FDA requires manufacturers/importers to indicate sweetener types and volume equivalents on labels.
- Conducts post-market surveillance and site inspections.
- Enforces mislabeling penalties under applicable laws.
- Provides government with a summary list of registered sweetened beverages.
Transitory Provisions
- Taxpayers to update registration by August 31, 2018.
- Mandatory permit and ATRIG applications by manufacturers and importers.
- Use of official BIR forms for excise tax filings and removals.
- Compliance deadlines for label information.
Separability Clause
- Invalidity of any provision does not affect the rest of the regulations.
Effectivity
- Regulations effective from January 1, 2018, in line with TRAIN Law implementation.