Excise Tax Law on Tobacco and Related Products

Imposes excise tax of P10 per pack of 20 units starting January 1, 2020.
Annual 5% tax increase effective January 1, 2021.
Packaging limited to 20 units or fewer.
Export requires posting of export or transfer bond equal to domestic excise tax.
Imported heated tobacco destined for foreign countries require bond equivalent to domestic taxes.
Monthly sworn sales volume reports mandatory.
Misdeclaration penalties include business permit cancellation, fines, criminal liability, and deportation for foreigners.
Sale to minors prohibited, with penalties per RA 9211.
Health warnings on packaging required, compliance within one year; full compliance by 18 months.

Graduated excise tax rates based on liquid volume effective January 1, 2020, starting at P10 for up to 10ml.
Annual 5% increase from January 1, 2021.
Package labeling of volume mandatory.
Same bonding and reporting requirements as heated tobacco products.
Same penalties as heated tobacco products for violations.
Sale to minors prohibited with RA 9211 penalties.
Health warning requirements and deadlines similar to heated tobacco products.
Acknowledgement of need for further scientific study on health impact.

Cigars: 20% ad valorem plus P5 specific tax per cigar, with 5% annual increase on specific tax starting 2024.
Cigarettes packed by hand and by machine taxed progressively from P45 to P60 per pack (2020-2023) plus 5% annual increase starting 2024.
Packaging limited to 20 units or fewer.
Net retail price defined and subject to BIR validation.
Understatement of net retail price by 15% triggers additional tax liability.
Export and import bonding requirements similar to other tobacco products.
Monthly sworn sales reports mandatory.
Prohibition on selling below combined excise and VAT with heavy fines and imprisonment.
BIR to prescribe minimum cigarette floor price.

Fees for inspection of tobacco products defined by category and quantity ranging from P0.01 to P0.50 per unit or per volume.

Defines cigars, cigarettes, wholesale and retail price.
Defines heated tobacco products as aerosol-producing without combustion, including liquids and gels.
Defines vapor products as nicotine-containing e-liquids or gels heated mechanically to produce aerosol.

BIR empowered to supervise establishments producing excisable articles.
Secretary of Finance to issue related rules, possibly involving third-party monitoring.

Written information and permit required before removal, setup, dismantling, or transfer of manufacturing apparatus.
Permit required for import, manufacture, or sale of apparatus and cigarette papers.
Seller and buyer must keep detailed records subject to BIR inspection.

Unlawful possession of cigarette paper and similar materials carries fines P1.5M to P15M and prison of 6-12 years.
Shipment under false brand or imitation likewise penalized with similar fines and imprisonment.

Graduated fines and incarceration based on appraised value from P100,000 to P20M fines and 60 days to 12 years prison.
For locally manufactured products, minimum fine of P1M and imprisonment 5-8 years.
First offense for unlawful removal carries fine of at least P50M and imprisonment 5-8 years.
Mere unexplained possession is penalized.

Fine of 10 times the taxes but no less than P100,000, and 2 to 4 years imprisonment.
Tax classification disputes resolved by Secretary of Finance.

Acts involving unauthorized manufacture, use, possession, or tampering of stamps subject to fines up to P500M and 5-15 years imprisonment.
Possession exceeding P50M value triggers maximum penalties.
Possession under P10,000 penalized with fine only.

Violations regarding unpermitted apparatus or materials penalized with fines P15M to P50M and 12-20 years imprisonment.

50% of excise tax from sugar-sweetened beverages and alcohol allocated: 80% to PhilHealth for Universal Health Care, 20% for medical assistance and health facilities nationwide.
Tobacco excise tax revenues divided: 5% (up to P4B) to tobacco-producing provinces for alternative livelihoods and infrastructure; 50% to PhilHealth (80%) and health assistance (20%).
Heated tobacco and vapor product excise revenues allocated: 80% PhilHealth, 20% local health programs.
DBM to issue allocation rules within 180 days.

15% of excise taxes on Virginia-type cigarettes (max P17B) allocated to provinces meeting production threshold.
Funds used for livelihood, cooperative, agro-industrial, infrastructure, tourism, and financial assistance projects.
Direct remittance mandated.