Law Summary
Requirements for Reporting and Penalties for Misrepresentation
- Manufacturers, distributors, and importers must submit sworn sales volume statements every month.
- Misdeclaration or misrepresentation of sales data leads to summary cancellation of permits.
- Corporations violating provisions face fines triple the deficiency taxes assessed.
- Criminal liability imposed on perpetrators and aides under Section 254 of the Code.
- Non-Filipino offenders face deportation after serving sentences.
Restrictions on Sale, Distribution, and Use by Minors
- Sale, distribution, purchase, or use of heated tobacco and vapor products by minors (under 18) prohibited.
- Sellers cannot use ignorance of the minor's age as a defense.
- Penalties aligned with those under Republic Act No. 9211 (Tobacco Regulation Act).
Health Warning Label Requirements
- Unit packets and outer packaging must carry health warnings per Republic Act No. 10643 (Graphic Health Warnings Law).
- Manufacturers/importers given 1 year from effectivity to comply.
- Mandatory labels and packaging compliance enforced 18 months following effectivity.
- Violations penalized similarly to RA 10643.
Excise Tax Rates and Schedules for Products
- Heated tobacco products: P10.00 per pack (20 units) initially, rising 5% annually.
- Vapor products: tiered rates based on milliliter volume ranging from P10 to P50+
- Cigars: 20% ad valorem tax plus P5.00 specific tax, with 5% annual increase on the specific tax starting 2024.
- Cigarettes (hand-packed and machine-packed): rates beginning at P45 per pack (20 units), increasing gradually to P60 by 2023 and 5% annual increases thereafter.
Definitions of Key Terms
- "Cigars": Rolls of tobacco wrapped in leaf tobacco consumed by combustion.
- "Cigarettes": Finely-cut leaf tobacco rolled and wrapped, consumed by combustion.
- "Heated Tobacco Products": Tobacco heated to produce inhalable aerosol without combustion.
- "Vapor Products": Nicotine-containing liquid or gel heated electronically to produce aerosol, including e-liquids and ENDS/ENNDS.
Supervision and Control Over Establishments Producing Excise Tax Goods
- BIR empowered to supervise production establishments.
- Secretary of Finance to prescribe regulations securing sanitary production and revenue protection.
- Appointment of third-party monitors permissible.
Regulations on Apparatus for Manufacture and Sale of Cigarette Components
- Mandatory prior written notice and permits for apparatus used for manufacturing excisable articles.
- Permit required for importation, manufacture, or sale of cigarette paper, tipping paper, or filter tips.
- Records on stocks and transactions required and subject to BIR inspection.
Penalties for Possession and Shipment Violations
- Possession of cigarette papers without authority fined P1.5M to P15M plus imprisonment of 6 to 12 years.
- Shipment or removal under false name or imitation subject to similar fines and imprisonment.
- Unlawful possession or removal of excisable articles without tax payment: escalating fines and imprisonment ranging from P100,000 to P20M and up to 12 years based on value involved.
Selling Below Tax-Combined Price and Other Offenses
- Prohibition on selling heated tobacco and vapor products below combined excise and VAT prices.
- Penalties include fines ten times tax amount (minimum P100,000) and imprisonment 2 to 4 years.
- Similar penalties apply to sale of tobacco products below excise and VAT combined prices.
Offenses Related to Revenue Stamps
- Making, using, or possessing unauthorized dies and stamps punished by fines up to P500M and imprisonment up to 15 years.
- Possession of false/counterfeit stamps carrying heavier penalties depending on cumulative value.
Allocation of Excise Tax Revenues
- Approximately 50% of excise tax revenues from sugar-sweetened beverages, alcohol, tobacco, heated tobacco, and vapor products allocated for Universal Healthcare via PhilHealth (80%) and health program funding (20%) nationwide.
- Special allocation of 5% but not exceeding P4 billion for provinces producing barley and native tobacco for livelihood and infrastructure programs.
- Allocation rules governed by DBM, DOH, DOF, and Philippine Health Insurance Corporation.
Special Financial Support for Virginia Tobacco-Producing Provinces
- Fifteen percent (15%) of excise taxes on Virginia-type cigarettes, capped at P17 billion, allocated to beneficiary provinces.
- Distribution based on volume of Virginia tobacco production.
- Funds used for alternative livelihood, infrastructure, agro-industrial, and tourism development projects benefiting tobacco farmers and workers.
Implementing Rules and Regulations
- DOF, DOH, DBM, and PhilHealth required to promulgate rules within 30 days of effectivity.
Repealing and Separability Clauses
- Repeals conflicting laws and provisions including Section 8 of Republic Act No. 8240.
- Valid provisions remain effective if others declared invalid or unconstitutional.
Effectivity
- The Act takes effect on January 1, 2020 following publication in Official Gazette or newspaper of general circulation.