12% Excise Tax Increase on Alcohol and Tobacco

The regulations implement the twelve percent (12%) increase of the specific excise tax on distilled spirits, wines, fermented liquors, and cigars and cigarettes packed by machine beginning January 1, 2000.

The increased specific tax rates under Section 141 apply to distilled spirits.
The increased specific tax rates under Section 142 apply to wines.
The increased specific tax rates under Section 143 apply to fermented liquors.
The increased specific tax rates under Section 145 apply to cigars and cigarettes packed by machine.
The regulations apply to products and removals of finished goods subject to excise tax for distilled spirits, wines, fermented liquors, cigars, and cigarettes packed by machine.

Section 1 increases the specific tax rates imposed under Sections 141, 142, 143 and 145 by twelve percent (12%), and provides the new rates effective January 1, 2000.
The regulations also apply a ceiling rule ensuring the new specific tax rate for any existing brand is not lower than the excise tax actually being paid prior to January 1, 2000: “the new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1, 2000.”

For distilled spirits produced from sap of nipa, coconut, cassava, camote or buri palm or from the juice, syrup or sugar of the cane, where such materials are produced commercially in the countries where they are processed:
- The specific tax rate increases from P8.00/proof liter to P8.96/proof liter.
For distilled spirits produced in a pot still by a small distiller or other similar primary distilling apparatus of a distiller producing not more than 100 liters a day containing not more than fifty percent (50%) alcohol by volume:
- The specific tax rate increases from P4.00/proof liter to P4.48/proof liter.
For distilled spirits produced from raw materials other than those above:
- If net retail price per bottle of 750 ml (excluding VAT & Excise) is less than P250.00, the specific tax increases from P75.00/proof liter to P84.0/proof liter.
- If net retail price per bottle of 750 ml (excluding VAT & Excise) is P250.00 up to P675.00, the specific tax increases from P150.00/proof liter to P168.00/proof liter.
- If net retail price per bottle of 750 ml (excluding VAT & Excise) is more than P675.00, the specific tax increases from P300.00/proof liter to P336.00/proof liter.

For sparkling wines/champagne regardless of proof:
- If net retail price per bottle (excluding VAT & Excise) is P500.00 or less, the specific tax increases from P100.00/liter to P112.00/liter.
- If net retail price per bottle (excluding VAT & Excise) is more than P500.00, the specific tax increases from P300.00/liter to P336.00/liter.
For still wines containing 14% of alcohol by volume or less, the specific tax increases from P12.00/liter to P13.44/liter.
For still wines containing more than 14% but not more than 25% of alcohol by volume, the specific tax increases from P24.00/liter to P26.88/liter.

For fermented liquors where net retail price per liter (excluding VAT & Excise) is less than P14.50, the specific tax increases from P6.15/liter to P6.89/liter.
For fermented liquors where net retail price per liter (excluding VAT & Excise) is P14.50 up to P22.00, the specific tax increases from P12.15/liter to P10.25/liter.
For fermented liquors where net retail price per liter (excluding VAT & Excise) is more than P22.00, the specific tax increases from P12.15/liter to P13.61/liter.

For cigars, the specific tax increases from P1.00/cigar to P1.12/cigar.
For cigarettes packed by machine, the specific tax increases based on net retail price per pack (excluding VAT & Excise):
- If net retail price (excluding VAT & Excise) exceeds P10.00 per pack, the specific tax increases from P12.00/pack to P13.44/pack.
- If net retail price (excluding VAT & Excise) is P6.51 up to P10.00 per pack, the specific tax increases from P8.00/pack to P8.96/pack.
- If net retail price (excluding VAT & Excise) is P5.00 to P6.50 per pack, the specific tax increases from P5.00/pack to P5.60/pack.
- If net retail price (excluding VAT & Excise) is below P5.00 per pack, the specific tax increases from P1.00/pack to P1.12/pack.

Section 2 provides guidance showing the excise due when the prescribed new specific rate is lower than the actual specific tax being paid prior to January 1, 2000.
Illustration I states that when the prescribed specific tax due per pack (based on the new rate bracket under Section 145) is lower than the actual specific tax being paid, the actual specific tax being paid applies for excise computation.
Illustration II states that when the new specific tax rate per pack is higher than the actual specific tax rate currently being paid, the excise tax due is computed using the new specific tax rate per pack.

Section 3 establishes transitory guidelines for the effective implementation of the regulations on excisable products.
On January 1, 2000, the BIR must conduct a physical inventory of all finished products for all brands of distilled spirits, wines, fermented liquors, cigars and cigarettes.
The physical inventory on January 1, 2000 must be conducted in the presence of authorized representatives of the concerned manufacturer, who must jointly attest to witnessing and verifying the inventory results by affixing their signatures on the attestation clause in the inventory certificate.
Manufacturers, producers, and importers of distilled spirits, wines, fermented liquors, cigars, and cigarettes packed by machine must submit a duly notarized updated list of existing registered brands showing:
- net wholesale price per case
- Excise Tax
- VAT
- suggested retail price (excluding VAT and Excise Tax)
The updated list must be submitted within ten (10) days from the date of effectivity of these regulations.

Section 4 revokes all existing rules and regulations or parts thereof inconsistent with the provisions of BIR Regulations No. 17-99.
Section 5 provides that BIR Regulations No. 17-99 takes effect on January 1, 2000.
The regulations were adopted by the Secretary of Finance: Edgardo B. Espiritu, with recommending approval by the Commissioner of Internal Revenue: Beethoven L. Rualo.