gov.ph http://www.gov.

ph/2012/12/19/republic-act-no-10351/
Republic Act No. 10351
H. No. 5727
S. No. 3299
Republic of the Philippines
Congress of the Philippines
Metro Manila
Fifteenth Congress
Third Regular Session
Begun and hel d in Metro Manil a, on Monday, the twenty third day of Jul y, two thousand
twel ve.
[REPUBLIC ACT NO. 10351]
AN ACT RESTRUCTURING THE EXCISE TAX ON ALCOHOL AND TOBACCO
PRODUCTS BY AMENDING SECTIONS 141, 142, 143, 144, 145, 8, 131 AND 288 OF
REPUBLIC ACT NO. 8424. OTHERWISE KNOWN AS THE NATIONAL INTERNAL
REVENUE CODE OF 1997, AS AMENDED BY REPUBLIC ACT NO. 9334, AND FOR
OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:
SECTION 1. Section 141 of the National Internal Revenue Code of 1997, as amended by
Republ ic Act No. 9334, is hereby further amended to read as fol l ows:
SEC. 141. Distilled Spirits. On distil l ed spirits, subject to the provisions of Section 133 of
this Code, an excise tax shal l be l evied, assessed and col l ected based on the fol l owing
schedul es:
(a) Effective on January 1, 2013
(1) An ad valorem tax equival ent to fifteen percent (15%) of the net retail price (excl uding
the excise tax and the val ue-added tax) per proof; and
(2) In addition to the ad valorem tax herein imposed, a specific tax of Twenty pesos
(P20.00) per proof l iter.
(b) Effective on January 1, 2015
(1) An ad valorem tax equival ent to twenty percent (20%) of the net retail price (excl uding
the excise tax and the val ue-added tax) per proof; and
(2) In addition to the ad valorem tax herein imposed, a specific tax of Twenty pesos
(P20.00) per proof l iter.
(c) In addition to the ad valorem tax herein imposed, the specific tax rate of Twenty pesos
(P20.00) imposed under this Section shal l be increased by four percent (4%) every year
thereafter effective on January 1, 2016, through revenue regul ations issued by the Secretary
of Finance.
Medicinal preparations, fl avoring extracts, and al l other preparations, except toil et
preparations, of which, excl uding water, distil l ed spirits form the chief ingredient, shal l be
subject to the same tax as such chief ingredient.
This tax shal l be proportional l y increased for any strength of the spirits taxed over proof
spirits, and the tax shal l attach to this substance as soon as it is in existence as such,
whether it be subsequentl y separated as pure or impure spirits, or transformed into any
other substance either in the process of original production or by any subsequent process.
Spirits or distil l ed spirits is the substance known as ethyl al cohol , ethanol or spirits of
wine, incl uding al l dil utions, purifications and mixtures thereof, from whatever source, by
whatever process produced, and shal l incl ude whisky, brandy, rum, gin and vodka, and
other simil ar products or mixtures.
Proof spirits is l iquor containing one-hal f (1/2) of its vol ume of al cohol of a specific
gravity of seven thousand nine hundred and thirty-nine ten thousandths (0.7939) at
fifteen degrees centigrade (15C). A proof l iter means a l iter of proof spirits.
Net retail price shal l mean the price at which the distil l ed spirits is sol d on retail in at
l east five (5) major supermarkets in Metro Manil a, excl uding the amount intended to cover
the appl icabl e excise tax and the val ue-added tax. For distil l ed spirits which are marketed
outside Metro Manil a, the net retail price shal l mean the price at which the distil l ed
spirits is sol d in at l east five (5) major supermarkets in the region excl uding the amount
intended to cover the appl icabl e excise tax and the val ue-added tax.
Major supermarkets, as contempl ated under this Act, shal l be those with the highest
annual gross sal es in Metro Manil a or the region, as the case may be, as determined by the
National Statistics Office, and shal l excl ude retail outl ets or kiosks, convenience or sari-
sari stores, and others of a simil ar nature: Provided, That no two (2) supermarkets in the
l ist to be surveyed are affil iated and/or branches of each other: Provided, finally, That in
case a particul ar distil l ed spirit is not sol d in major supermarkets, the price survey can be
conducted in retail outl ets where said distil l ed spirit is sol d in Metro Manil a or the region,
as the case may be, upon the determination of the Commissioner of Internal Revenue.
The net retail price shal l be determined by the Bureau of Internal Revenue (B1R) through a
price survey under oath.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
Understatement of the suggested net retail price by as much as fifteen percent (15%) of the
actual net retail price shal l render the manufacturer or importer l iabl e for additional
excise tax equival ent to the tax due and difference between the understated suggested net
retail price and the actual net retail price.
Distil l ed spirits introduced in the domestic market after the effectivity of this Act shal l be
initial l y taxed according to their suggested net retail prices.
Suggested net retail price shal l mean the net retail price at which l ocal l y manufactured
or imported distil l ed spirits are intended by the manufacturer or importer to be sol d on
retail in major supermarkets or retail outl ets in Metro Manil a for those marketed
nationwide, and in other regions, for those with regional markets. At the end of three (3)
months from the product l aunch, the Bureau of Internal Revenue shal l val idate the
suggested net retail price of the new brand against the net retail price as defined herein
and initial l y determine the correct tax on a newl y introduced distil l ed spirits. After the end
of nine (9) months from such val idation, , the Bureau of Internal Revenue shal l reval idate
the initial l y val idated net retail price against the net retail price as of the time of
reval idation in order to final l y determine the correct tax on a newl y introduced distil l ed
spirits.
Al l distil l ed spirits existing in the market at the time of the effectivity of this Act shal l be
taxed according to the tax rates provided above based on the l atest price survey of the
distil l ed spirits conducted by the Bureau of Internal Revenue.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
Manufacturers and importers of distil l ed spirits shal l , within thirty (30) days from the
effectivity of this Act, and within the first five (5) days of every third month thereafter,
submit to the Commissioner a sworn statement of the vol ume of sal es for each particul ar
brand of distil l ed spirits sol d at his establ ishment for the three-month period immediatel y
preceding.
Any manufacturer or importer who, in viol ation of this Section, misdecl ares or
misrepresents in his or its sworn statement herein required any pertinent data or
information shal l , upon final findings by the Commissioner that the viol ation was
committed, be penal ized by a summary cancel l ation or withdrawal of his or its permit to
engage in business as manufacturer or importer of distil l ed spirits.
Any corporation, association or partnership l iabl e for any of the acts or omissions in
viol ation of this Section shal l be fined trebl e the amount of deficiency taxes, surcharges
and interest which may be assessed pursuant to this Section.
Any person l iabl e for any of the acts or omissions prohibited under this Section shal l be
criminal l y l iabl e and penal ized under Section 254 of this Code. Any person who wil l ful l y
aids or abets in the commission of any such act or omission shal l be criminal l y l iabl e in the
same manner as the principal .
If the offender is not a citizen of the Phil ippines, he shal l be deported immediatel y after
serving the sentence, without further proceedings for deportation.
SEC. 2. Section 142 of the National Internal Revenue Code of 1997, as amended by Republ ic
Act No. 9334, is hereby further amended to read as fol l ows:
SEC. 142. Wines. On wines, there shal l be col l ected per l iter of vol ume capacity effective
on January 1, 2013, the fol l owing excise taxes:
(a) Sparkl ing wines/champagnes regardl ess of proof, if the net retail price per bottl e of
seven hundred fifty mil l il iter (750 ml .) vol ume capacity (excl uding the excise tax and the
val ue-added tax) is:
(1) Five hundred pesos (P500.00) or l ess -Two hundred fifty pesos (P250.00); and
(2) More than Five hundred pesos (P500.00) Seven hundred pesos (P700.00).
(b) Stil l wines and carbonated wines containing fourteen percent (14%) of al cohol by
vol ume or l ess, Thirty pesos (P30.00); and
(c) Stil l wines and carbonated wines containing more than fourteen percent (14%) but not
more than twenty-five percent (25%) of al cohol by vol ume, Sixty pesos (P60.00).
The rates of tax imposed under this Section shal l be increased by four percent (4%) every
year thereafter effective on January 1, 2014, through revenue regul ations issued by the
Secretary of Finance.
Fortified wines containing more than twenty-five percent (25%) of al cohol by vol ume
shal l be taxed as distil l ed spirits. Fortified wines shal l mean natural wines to which
distil l ed spirits are added to increase their al cohol strength.
Net retail price shal l mean the price at which sparkl ing wine/champagne is sol d on
retail in at l east five (5) major supermarkets in Metro Manil a, excl uding the amount
intended to cover the appl icabl e excise tax and the val ue-added tax. For sparkl ing
wines/champagnes which are marketed outside Metro Manil a, the net retail price shal l
mean the price at which the wine is sol d in at l east five (5) major supermarkets in the
region excl uding the amount intended to cover the appl icabl e excise tax and the val ue-
added tax.
Major supermarkets, as contempl ated under this Act, shal l be those with the highest
annual gross sal es in Metro Manil a or the region, as the case may be, as determined by the
National Statistics Office, and shal l excl ude retail outl ets or kiosks, convenience or sari-
sari stores, and others of a simil ar nature: Provided, That no two (2) supermarkets in the
l ist to be surveyed are affil iated and/or branches of each other: Provided, finally, That in
case a particul ar sparkl ing wine/champagne is not sol d in major supermarkets, the price
survey can be conducted in retail outl ets where said sparkl ing wine/champagne is sol d in
Metro Manil a or the region, as the case may be, upon the determination of the
Commissioner of Internal Revenue.
The net retail price shal l be determined by the Bureau of Internal Revenue through a price
survey under oath.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
Understatement of the suggested net retail price by as much as fifteen percent (15%) of the
actual net retail price shal l render the manufacturer or importer l iabl e for additional
excise tax equival ent to the tax due and difference between the understated suggested net
retail price and the actual net retail price.
Sparkl ing wines/champagnes introduced in the domestic market after the effectivity of
this Act shal l be initial l y tax cl assified according to their suggested net retail prices.
Suggested net retail price shal l mean the net retail price at which l ocal l y manufactured
or imported sparkl ing wines/champagnes are intended by the manufacturer or importer to
be sol d on retail in major supermarkets or retail outl ets in Metro Manil a for those
marketed nationwide, and in other regions, for those with regional markets. At the end of
three (3) months from the product l aunch, the Bureau of Internal Revenue shal l val idate
the suggested net retail price of the sparkl ing wine/champagne against the net retail price
as defined herein and initial l y determine the correct tax bracket to which a newl y
introduced sparkl ing wine/champagne shal l be cl assified. After the end of nine (9) months
from such val idation, the Bureau of Internal Revenue shal l reval idate the initial l y val idated
net retail price against the net retail price as of the time of reval idation in order to final l y
determine the correct tax bracket to which a newl y introduced sparkl ing wine/champagne
shal l be cl assified.
shal l be cl assified.
The proper tax cl assification of sparkl ing wines/champagnes, whether registered before
or after the effectivity of this Act, shal l be determined every two (2) years from the date of
effectivity of this Act.
Al l sparkl ing wines/champagnes existing in the market at the time of the effectivity of this
Act shal l be cl assified according to the net retail prices and the tax rates provided above
based on the l atest price survey of the sparkl ing wines/champagnes conducted by the
Bureau of Internal Revenue.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
Manufacturers and importers of wines shal l , within thirty (30) days from the effectivity of
this Act, and within the first five (5) days of every month thereafter, submit to the
Commissioner a sworn statement of the vol ume of sal es for each particul ar brand of wines
sol d at his establ ishment for the three-month period immediatel y preceding.
Any manufacturer or importer who, in viol ation of this Section, misdecl ares or
misrepresents in his or its sworn statement herein required any pertinent data or
information shal l , upon final findings by the Commissioner that the viol ation was
committed be penal ized by a summary cancel l ation or withdrawal of his or its permit to
engage in business as manufacturer or importer of wines.
Any corporation, association or partnership l iabl e for any of the acts or omissions in
viol ation of this Section shal l be fined trebl e the amount of deficiency taxes, surcharges
and interest which may be assessed pursuant to this Section.
Any person l iabl e for any of the acts or omissions prohibited under this Section shal l be
criminal l y l iabl e and penal ized under Section 254 of this Code. Any person who wil l ful l y
aids or abets in the commission of any such act or omission shal l be criminal l y l iabl e in the
same manner as the principal .
If the offender is not a citizen of the Phil ippines, he shal l be deported immediatel y after
serving the sentence, without further proceedings for deportation.
SEC. 3. Section 143 of the National Internal Revenue Code of 1997, as amended by Republ ic
Act No. 9334, is hereby further amended to read as fol l ows:
SEC. 143. Fermented Liquors. There shal l be l evied, assessed and col l ected an excise tax
on beer, l ager beer, al e, porter and other fermented l iquors except tuba, basi, tapuy and
simil ar fermented l iquors in accordance with the fol l owing schedul e:
Effective on January 1, 2013
(a) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is Fifty pesos and sixty centavos (P50.60) or l ess, the tax shal l be Fifteen
pesos (P15.00) per l iter; and
(b) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shal l be
Twenty pesos (P20.00) per l iter.
Effective on January 1, 2014
(a) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is Fifty pesos and sixty centavos (P50.60) or l ess, the tax shal l be Seventeen
pesos (P17.00) per l iter; and
(b) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shal l be
Twenty-one pesos (P21.00) per l iter.
Effective on January 1, 2015
(a) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is Fifty pesos and sixty centavos (P50.60) or l ess, the tax shal l be Nineteen
pesos (P19.00) per l iter; and
(b) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shal l be
Twenty-two pesos (P22.00) per l iter.
Effective on January 1, 2016
(a) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is Fifty pesos and sixty centavos (P50.60) or l ess, the tax shal l be Twenty-
one pesos (P21.00) per l iter; and
(b) If the net retail price (excl uding the excise tax and the val ue-added tax) per l iter of
vol ume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shal l be
Twenty-three pesos (P23.00) per l iter.
Effective on January 1, 2017, the tax on al l fermented l iquors shal l be Twenty-three pesos
and fifty centavos (P23.50) per l iter.
The rates of tax imposed under this Section shal l be increased by four percent (4%) every
year thereafter effective on January 1, 2018, through revenue regul ations issued by the
Secretary of Finance. However, in case of fermented l iquors affected by the no downward
recl assification provision prescribed under this Section, the four percent (4%) increase
shah appl y to their respective appl icabl e tax rates.
Fermented l iquors which are brewed and sol d at micro-breweries or smal l establ ishments
such as pubs and restaurants shal l be subject to the rate of Twenty-eight pesos (P28.00) per
l iter effective on January 1, 2013: Provided, That this rate shal l be increased by four percent
(4%) every year thereafter effective on January 1, 2014, through revenue regul ations issued
by the Secretary of Finance.
Fermented l iquors introduced in the domestic market after the effectivity of this Act shal l
be initial l y tax cl assified according to their suggested net retail prices.
Suggested net retail price shal l mean the net retail price at which l ocal l y manufactured
or imported fermented l iquor are intended by the manufacturer or importer to be sol d on
retail in major supermarkets or retail outl ets in Metro Manil a for those marketed
nationwide, and in other regions, for those with regional markets. At the end of three (3)
months from the product l aunch, the Bureau of Internal Revenue shal l val idate the
suggested net retail price of the newl y introduced fermented l iquor against the net retail
price as defined herein and initial l y determine the correct tax bracket to which a newl y
introduced fermented l iquor, as defined above, shal l be cl assified. After the end of nine (9)
months from such val idation, the Bureau of Internal Revenue shal l reval idate the initial l y
val idated net retail price against the net retail price as of the time of reval idation in order
to final l y determine the correct tax bracket which a newl y introduced fermented l iquor
shal l be cl assified.
Net retail price shal l mean the price at which the fermented l iquor is sol d on retail in at
l east five (5) major supermarkets in Metro Manil a (for brands of fermented l iquor
marketed national l y), excl uding the amount intended to cover the appl icabl e excise tax and
the val ue-added tax. For brands which are marketed outside Metro Manil a, the net retail
price shal l mean the price at which the fermented l iquor is sol d in at l east five (5) major
supermarkets in the region excl uding the amount intended to cover the appl icabl e excise
tax and the val ue-added tax.
Major supermarkets, as contempl ated under this Act, shal l be those with the highest
annual gross sal es in Metro Manil a or the region, as the case may be, as determined by the
National Statistics Office, and shal l excl ude retail outl ets or kiosks, convenience or sari-
sari stores, and others of a simil ar nature: Provided, That no two (2) supermarkets in the
l ist to be surveyed are affil iated and/or branches of each other: Provided, finally, That in
case a particul ar fermented l iquor is not sol d in major supermarkets, the price survey can
be conducted in retail outl ets where said fermented l iquor is sol d in Metro Manil a or the
region, as the case may be, upon the determination of the Commissioner of Internal
Revenue.
The net retail price shal l be determined by the Bureau of Internal Revenue (BIR) through a
price survey under oath.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
Understatement of the suggested net retail price by as much as fifteen percent (15%) of the
actual net retail price shal l render the manufacturer or importer l iabl e for additional
excise tax equival ent to the tax due and difference between the understated suggested net
retail price and the actual net retail price.
Any downward recl assification of present categories, for tax purposes, of fermented
l iquors dul y registered at the time of the effectivity of this Act which wil l reduce the tax
imposed herein, or the payment thereof, shal l be prohibited.
The proper tax cl assification of fermented l iquors, whether registered before or after the
effectivity of this Act, shal l be determined every two (2) years from the date of effectivity of
this Act.
Al l fermented l iquors existing in the market at the time of the effectivity of this Act shal l be
cl assified according to the net retail prices and the tax rates provided above based on the
l atest price survey of the fermented l iquors conducted by the Bureau of Internal Revenue.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
Every brewer or importer of fermented l iquor shal l , within thirty (30) days from the
effectivity of this Act, and within the first five (5) days of every month thereafter, submit to
the Commissioner a sworn statement of the vol ume of sal es for each particul ar brand of
fermented l iquor sol d at his establ ishment for the three-month period immediatel y
preceding.
Any brewer or importer who, in viol ation of this Section, misdecl ares or misrepresents in
his or its sworn statement herein required any pertinent data or information shal l , upon
final findings by the Commissioner that the viol ation was committed, be penal ized by a
summary cancel l ation or withdrawal of his or its permit to engage in business as brewer or
importer of fermented l iquor.
Any corporation, association or partnership l iabl e for any of the acts or omissions in
viol ation of this Section shal l be fined trebl e the amount of deficiency taxes, surcharges
and interest which may be assessed pursuant to this Section.
Any person l iabl e for any of the acts or omissions prohibited under this Section shal l be
criminal l y l iabl e and penal ized under Section 254 of this Code. Any person who wil l ful l y
aids or abets in the commission of any such act or omission shal l be criminal l y l iabl e in the
same manner as the principal .
If the offender is not a citizen of the Phil ippines, he shal l be deported immediatel y after
serving the sentence, without further proceedings for deportation.
SEC. 4. Section 144 of the National Internal Revenue Code of 1997, as amended by Republ ic
Act No. 9334, is hereby further amended to read as fol l ows:
SEC. 144. Tobacco Products. There shal l be col l ected an excise tax of One peso and
seventy-five centavos (P1.75) effective on January 1, 2013 on each kil ogram of the fol l owing
products of tobacco:
(a) Tobacco twisted by hand or reduced into a condition to be consumed in any manner
other than the ordinary mode of drying and curing;
(b) Tobacco prepared or partial l y prepared with or without the use of any machine or
instruments or without being pressed or sweetened except as otherwise provided
hereunder; and
(c) Fine-cut shorts and refuse, scraps, cl ippings, cuttings, stems and sweepings of tobacco
except as otherwise provided hereunder.
Stemmed l eaf tobacco, tobacco prepared or partial l y prepared with or without the use of
any machine or instrument or without being pressed or sweetened, fine-cut shorts and
refuse, scraps, cl ippings, cuttings, stems, midribs, and sweepings of tobacco resul ting from
the handl ing or stripping of whol e l eaf tobacco shal l be transferred, disposed of, or
otherwise sol d, without any prepayment of the excise tax herein provided for, if the same
are to be exported or to be used in the manufacture of cigars, cigarettes, or other tobacco
products on which the excise tax wil l eventual l y be paid on the finished product, under such
conditions as may be prescribed in the rul es and regul ations promul gated by the Secretary
of Finance, upon recommendation of the Commissioner.
On tobacco special l y prepared for chewing so as to be unsuitabl e for use in any other
manner, on each kil ogram, One peso and fifty centavos (P1.50) effective on January 1, 2013.
The rates of tax imposed under this Section shal l be increased by four percent. (4%) every
year thereafter effective on January 1, 2014, through revenue regul ations issued by the
Secretary of Finance.
No tobacco products manufactured in the Phil ippines and produced for export shal l be
removed from their pl ace of manufacture or exported without posting of an export bond
equival ent to the amount of the excise tax due thereon if sol d domestical l y: Provided,
however, That tobacco products for export may be transferred from the pl ace of
manufacture to a bonded facil ity, upon posting of a transfer bond, prior to export.
Tobacco products imported into the Phil ippines and destined for foreign countries shal l
not be al l owed entry without posting a bond equival ent to the amount of customs duty,
excise and val ue-added taxes due thereon if sol d domestical l y.
Manufacturers and importers of tobacco products shal l , within thirty (30) days from the
effectivity of this Act, and within the first five (5) days of every month thereafter, submit to
the Commissioner a sworn statement of the vol ume of sal es for each particul ar brand of
tobacco products sol d for the three-month period immediatel y preceding.
Any manufacturer or importer who, in viol ation of this Section, misdecl ares or
misrepresents hi his or its sworn statement herein required any pertinent data or
information shal l , upon final findings by the Commissioner that the viol ation was
committed, be penal ized by a summary cancel l ation or withdrawal of his or its permit to
engage in business as manufacturer or importer of cigars or cigarettes.
Any corporation, association or partnership l iabl e for any of the acts or omissions in
viol ation of this Section shal l be fined trebl e the amount of deficiency taxes, surcharges
and interest which may be assessed pursuant to this Section.
Any person l iabl e for any of the acts or omissions prohibited under this Section shal l be
criminal l y l iabl e and penal ized under Section 254 of this Code. Any person who wil l ful l y
aids or abets in the commission of any such act or omission shal l be criminal l y l iabl e in the
same manner as the principal .
If the offender is not a citizen of the Phil ippines, he shal l be deported immediatel y after
serving the sentence, without further proceedings for deportation.
SEC. 5. Section 145 of the National Internal Revenue Code of 1997, as amended by Republ ic
Act No. 9334, is hereby further amended to read as fol l ows:
SEC. 145. Cigars and Cigarettes.
(A) Cigars. There shal l be l evied, assessed and col l ected on cigars an excise tax in
accordance with the fol l owing schedul e:
(1) Effective on January 1, 2013
(a) An ad valorem tax equival ent to twenty percent (20%) of the net retail price (excl uding
the excise tax and the val ue-added tax) per cigar; and
(b) In addition to the ad valorem tax herein imposed, a specific tax of Five pesos (P5.00)
per cigar.
(2) In addition to the ad valorem tax herein imposed, the specific tax rate of Five pesos
(P5.00) imposed under this subsection shal l be increased by four percent (4%) effective on
January 1, 2014 through revenue regul ations issued by the Secretary of Finance.
(B) Cigarettes Packed by Hand. - There shal l be l evied, assessed and col l ected on cigarettes
packed by hand an excise tax based on the fol l owing schedul es:
Effective on January 1, 2013, Twel ve pesos (P12.00) per pack;
Effective on January 1, 2014, Fifteen pesos (P15.00) per pack;
Effective on January 1, 2015, Eighteen pesos (P18.00) per pack;
Effective on January 1, 2016, Twenty-one pesos (P21.00) per pack; and
Effective on January 1, 2017, Thirty pesos (P30.00) per pack.
The rates of tax imposed under this subsection shal l be increased by four percent (4%)
every year* effective on January 1, 2018, through revenue regul ations issued by the
Secretary of Finance.
Dul y registered cigarettes packed by hand shal l onl y be packed in twenties and other
packaging combinations of not more than twenty.
Cigarettes packed by hand shal l refer to the manner of packaging of cigarette sticks
using an individual persons hands and not through any other means such as a mechanical
device, machine or equipment.
(C) Cigarettes Packed by Machine. There shal l be l evied, assessed and col l ected on
cigarettes packed by machine a tax at the rates prescribed bel ow:
Effective on January 1, 2013
(1) If the net retail price (excl uding the excise tax and the val ue-added tax) is El even pesos
and fifty centavos (P11.50) and bel ow per pack, the tax shal l be Twel ve pesos (P12.00) per
pack; and
(2) If the net retail price (excl uding the excise tax and the val ue-added tax) is more than
El even pesos and fifty centavos (P11.50) per pack, the tax shal l be Twenty-five pesos
(P25.00) per pack.
Effective on January 1, 2014
(1) If the net retail price (excl uding the excise tax and the val ue-added tax) is El even pesos
and fifty centavos (P11.50) and bel ow per pack, the tax shal l be Seventeen pesos (P17.00)
per pack; and
(2) If the net retail price (excl uding the excise tax and the val ue-added tax) is more than
El even pesos and fifty centavos (P11.50) per pack, the tax shal l be Twenty-seven pesos
(P27.00) per pack.
Effective on January 1, 2015
(1) If the net retail price (excl uding the excise tax and the val ue-added tax) is El even pesos
and fifty centavos (P11.50) and bel ow per pack, the tax shal l be Twenty-one pesos (P21.00)
per pack; and
(2) If the net retail price (excl uding the excise tax and the val ue-added tax) is more than
El even pesos and fifty centavos (P11.50) per pack, the tax shal l be Twenty-eight pesos
(P28.00) per pack.
Effective on January 1, 2016
(1) If the net retail price (excl uding the excise tax and the val ue-added tax) is El even pesos
and fifty centavos (P11.50) and bel ow per pack, the tax shal l be Twenty-five pesos (P25.00)
per pack; and
(2) If the net retail price (excl uding the excise tax and the val ue-added tax) is more than
El even pesos and fifty centavos (P11.50) per pack, the tax shal l be Twenty-nine pesos
(P29.00) per pack.
Effective on January 1, 2017, the tax on al l cigarettes packed by machine shal l be Thirty
pesos (P30.00) per pack.
The rates of tax imposed under this subsection shal l be increased by four percent (4%)
every year thereafter effective on January 1, 2018, through revenue regul ations issued by the
Secretary of Finance.
Dul y registered cigarettes packed by machine shal l onl y be packed in twenties and other
packaging combinations of not more than twenty.
Understatement of the suggested net retail price by as much as fifteen percent (15%) of the
actual net retail price shal l render the manufacturer or importer l iabl e for additional
excise tax equival ent to the tax due and difference between the understated suggested net
retail price and the actual net retail price.
Cigarettes introduced in the domestic market after the effectivity of this Act shal l be
initial l y tax cl assified according to their suggested net retail prices.
Suggested net retail price shal l mean the net retail price at which l ocal l y manufactured
or imported cigarettes are intended by the manufacturer or importer to be sol d on retail in
major supermarkets or retail outl ets in Metro Manil a for those marketed nationwide, and
in other regions, for those with regional markets. At the end of three (3) months from the
product l aunch, the Bureau of Internal Revenue shal l val idate the suggested net retail price
of the newl y introduced cigarette against the net retail price as defined herein and initial l y
determine the correct tax bracket under which a newl y introduced cigarette shal l be
cl assified. After the end of nine (9) months from such val idation, the Bureau of Internal
Revenue shal l reval idate the initial l y val idated net retail price against the net retail price as
of the time of reval idation in order to final l y determine the correct tax bracket under which
a newl y introduced cigarette shal l be cl assified.
Net retail price shal l mean the price at which the cigarette is sol d on retail in at l east five
(5) major supermarkets in Metro Manil a (for brands of cigarettes marketed national l y),
excl uding the amount intended to cover the appl icabl e excise tax and the val ue-added tax.
For cigarettes which are marketed onl y outside Metro Manil a, the net retail price shah
mean the price at which the cigarette is sol d in at l east five (5) major supermarkets in the
region excl uding the amount intended to cover the appl icabl e excise tax and the val ue-
added tax.
Major supermarkets, as contempl ated under this Act, shal l be those with the highest
annual gross sal es in Metro Manil a or the region, as the case may be, as determined by the
National Statistics Office, and shal l excl ude retail outl ets or kiosks, convenience or sari-
sari stores, and others of a simil ar nature: Provided, That no two (2) supermarkets in the
l ist to be surveyed are affil iated and/or branches of each other: Provided, finally, That in
case a particul ar cigarette is not sol d in major supermarkets, the price survey can be
conducted in retail outl ets where said cigarette is sol d in Metro Manil a or the region, as
the case may be, upon the determination of the Commissioner of Internal Revenue.
The net retail price shal l be determined by the Bureau of Internal Revenue through a price
survey under oath.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
The proper tax cl assification of cigarettes, whether registered before or after the
effectivity of this Act, shal l be determined every two (2) years from the date of effectivity of
this Act.
Al l cigarettes existing in the market at the time of the effectivity of this Act shal l be
cl assified according to the net retail prices and the tax rates provided above based on the
l atest price survey of cigarettes conducted by the Bureau of Internal Revenue.
The methodol ogy and al l pertinent documents used in the conduct of the l atest price
survey shal l be submitted to the Congressional Oversight Committee on the Comprehensive
Tax Reform Program created under Republ ic Act No. 8240.
No tobacco products manufactured in the Phil ippines and produced for export shal l be
removed from their pl ace of manufacture or exported without posting of an export bond
equival ent to the amount of the excise tax due thereon if sol d domestical l y: Provided,
however, That tobacco products for export may be transferred from the pl ace of
manufacture to a bonded facil ity, upon posting of a transfer bond, prior to export.
Tobacco products imported into the Phil ippines and destined for foreign countries shal l
not be al l owed entry without posting a bond equival ent to the amount of customs duty,
excise and val ue-added taxes due thereon if sol d domestical l y.
Of the total vol ume of cigarettes sol d in the country, any manufacturer and/or sel l er of
tobacco products must procure at l east fifteen percent (15%) of its tobacco l eaf raw material
requirements from l ocal l y grown sources, subject to adjustments based on international
treaty commitments.
Manufacturers and importers of cigars and cigarettes shal l , within thirty (30) days from
the effectivity of this Act and within the first five (5) days of every month thereafter, submit
to the Commissioner a sworn statement of the vol ume of sal es for cigars and/or cigarettes
sol d for the three-month period immediatel y preceding.
Any manufacturer or importer who, in viol ation of this Section, misdecl ares or
misrepresents in his or its sworn statement herein required any pertinent data or
information shal l , upon final findings by the Commissioner that the viol ation was
committed, be penal ized by a summary cancel l ation or withdrawal of his or its permit to
engage in business as manufacturer or importer of cigars or cigarettes.
Any corporation, association or partnership l iabl e for any of the acts or omissions in
viol ation of this Section shal l be fined trebl e the aggregate amount of deficiency taxes,
surcharges and interest which may be assessed pursuant to this Section.
Any person l iabl e for any of the acts or omissions prohibited under this Section shal l be
criminal l y l iabl e and penal ized under Section 254 of this Code. Any person who wil l ful l y
aids or abets in the commission of any such act or omission shal l be criminal l y l iabl e in the
same manner as the principal .
If the offender is not a citizen of the Phil ippines, he shal l be deported immediatel y after
serving the sentence, without further proceedings for deportation.
SEC. 6. Section 8 of Republ ic Act No. 8424 or the National Internal Revenue Code, as
amended, is hereby further amended to read as fol l ows:
SEC. 8. Duty of the Commissioner to Ensure the Provision and Distribution of Forms, Receipts,
Certificates, and Appliances, and the Acknowledgment of Payment of Taxes. -
(A) Provision and Distribution to Proper-Officials. Any l aw to the contrary
notwithstanding, it shah be the duty of the Commissioner, among other things, to
prescribe, provide, and distribute to the proper official s the requisite l icenses; internal
revenue stamps; unique, secure and nonremovabl e identification markings (hereafter cal l ed
unique identification markings), such as codes or stamps, be affixed to or form part of al l
unit packets and packages and any outside packaging of cigarettes and bottl es of distil l ed
spirits; l abel s and other forms; certificates; bonds; records; invoices; books; receipts;
instruments; appl iances and apparatus used in administering the l aws fal l ing within the
jurisdiction of the Bureau. For this purpose, internal revenue stamps, or other markings
and l abel s shal l be caused by the Commissioner to be printed with adequate security
features.
Internal revenue stamps, whether of a bar code or fuson design, or other markings shal l
be firml y and conspicuousl y affixed or printed on each pack of cigars and cigarettes and
bottl es of distil l ed spirits subject to excise tax in the manner and form as prescribed by the
Commissioner, upon approval of the Secretary of Finance.
To further improve tax administration, cigarette and al cohol manufacturers shal l be
required to instal l automated vol ume-counters of packs and bottl es to deter over-removal s
and misdecl aration of removal s.
SEC. 7. Section 131, Subsection A of the National Internal Revenue Code of 1997, as amended
by Republ ic Act No. 9334, is hereby further amended as fol l ows:
SEC. 131. Payment of Excise Taxes on. Imported Articles.
x x x
The provision of any special or general l aw to the contrary notwithstanding, the
importation of cigars and cigarettes distil l ed spirits, fermented l iquors and wines into the
Phil ippines, even if destined for tax and duty-free shops, shal l be subject to al l appl icabl e
taxes, duties, charges, incl uding excise taxes due thereon. This shal l appl y to cigars and
cigarettes, distil l ed spirits, fermented l iquors and wines brought directl y into the dul y
chartered or l egisl ated freeports of the Subic Special Economic and Freeport Zone, created
under Republ ic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created
under Republ ic Act No. 7922; and the Zamboanga City Special Economic Zone, created
under Republ ic Act No. 7903, and such other freeports as may hereafter be establ ished or
created by l aw: Provided, further, That notwithstanding the provisions of Republ ic Act Nos.
9400 and 9593, importations of cigars and cigarettes, distil l ed spirits, fermented l iquors
and wines made directl y by a government-owned and operated duty-free shop, l ike the
Duty-Free Phil ippines (DFP), shal l be exempted from al l appl icabl e duties onl y: x x x
x x x
Articl es confiscated shal l be destroyed using the most environmental l y friendl y method
avail abl e in accordance with the rul es and regul ations to be promul gated by the Secretary
of Finance, upon recommendation of the Commissioners of Customs and Internal Revenue.
x x x.
SEC. 8. Section 288, subsections (B) and (C) of the National Internal Revenue Code of 1997,
as amended by Republ ic Act No. 9334, is hereby further amended to read as fol l ows:
(B) Incremental Revenues from Republic Act No. 8240. Fifteen percent (15%) of the
incremental revenue col l ected from the excise tax on tobacco products under R. A. No. 8240
shal l be al l ocated and divided among the provinces producing burl ey and native tobacco in
accordance with the vol ume of tobacco l eaf production. The fund shal l be excl usivel y
util ized for programs to promote economical l y viabl e al ternatives for tobacco farmers and
workers such as:
(1) Programs that wil l provide inputs, training, and other support for tobacco farmers
who shift to production of agricul tural products other than tobacco incl uding, but not
l imited to, high-val ue crops, spices, rice, corn, sugarcane, coconut, l ivestock and fisheries;
(2) Programs that wil l provide financial support for tobacco farmers who are displ aced or
who cease to produce tobacco;
(3) Cooperative programs to assist tobacco farmers in pl anting al ternative crops or
impl ementing other l ivel ihood projects;
(4) Livel ihood programs and projects that wil l promote, enhance, and devel op the tourism
potential of tobacco-growing provinces;
(5) Infrastructure projects such as farm to market roads, school s, hospital s, and rural
heal th facil ities; and
(6) Agro-industrial projects that wil l enabl e tobacco farmers to be invol ved in the
management and subsequent ownership of projects, such as post-harvest and secondary
processing l ike cigarette manufacturing and by-product util ization.
The Department of Budget and Management, in consul tation with the Department of
Agricul ture, shal l issue rul es and regul ations governing the al l ocation and disbursement
of this fund, not l ater than one hundred eighty (] 80) days from the effectivity of this Act.
(C) Incremental Revenues from the Excise Tax on Alcohol and Tobacco Products.
After deducting the al l ocations under Republ ic Act Nos. 7171 and 8240, eighty percent
(80%) of the remaining bal ance of the incremental revenue derived from this Act shal l be
al l ocated for the universal heal th care under the National Heal th Insurance Program, the
attainment of the mil l ennium devel opment goal s and heal th awareness programs; and
twenty percent (20%) shal l be al l ocated nationwide, based on pol itical and district
subdivisions, for medical assistance and heal th enhancement facil ities program, the
annual requirements of which shal l be determined by the Department of Heal th (DOH).
SEC. 9. Transitory Provision. A special financial support for displ aced workers in the
al cohol and tobacco industries shal l be al l ocated and incl uded in the appropriations
under the Department of Labor and Empl oyment (DOLE) to finance unempl oyment
al l eviation program; and to the Technical Education and Skil l s Devel opment Authority
(TESDA) to finance the training and retool ing programs of displ aced workers, to be
incl uded in the General Appropriations Acts for the Fiscal Years 2014 to 2017.
SEC. 10. Annual Report. The Department of Budget and Management (DBM), the
Department of Agricul ture (DA), the Department of Heal th (DOH) and the Phil ippine
Heal th Insurance Corporation (Phil Heal th) shal l each submit to the Oversight Committee,
created under Republ ic Act No. 8240, a detail ed report on the expenditure of the amounts
earmarked in this Section on the first week of August of every year. The reports shal l be
simul taneousl y publ ished in the Official Gazette and in the agencies websites.
SEC. 11. Congressional Oversight Committee. The composition of the Congressional
Oversight Committee, created under Republ ic Act No. 8240, shal l incl ude the Agricul ture
and Heal th Committee Chairpersons of the Senate and the House of Representatives as
part of the four (4) members to be appointed from each House.
Upon receipt of the annual reports from the DBM, DA, DOH, DOLE, Phil Heal th and TESDA,
the Committee shal l review and ensure the proper impl ementation of this Act as regards
the expenditures of the earmarked funds.
Starting the third quarter of Cal endar Year 2016, the Committee is mandated to review the
impact of the tax rates provided under this Act.
SEC. 12. Implementing Rules and Regulations. The Secretary of Finance shal l , upon the
recommendation of the Commissioner of Internal Revenue, and in consul tation with the
Department of Heal th, promul gate the necessary rul es and regul ations for the effective
impl ementation of this Act not l ater than one hundred eighty (180) days upon the
effectivity of this Act.
SEC. 13. Separability Clause. If any of the provisions of this Act is decl ared inval id by a
competent court, the remainder of this Act or any provision not affected by such
decl aration of inval idity shal l remain in force and effect.
SEC. 14. Repealing Clause. Al l l aws, decrees ordinances, rul es and regul ations, executive
or administrative orders and such other presidential issuances that are inconsistent with
any of the provisions of this Act are hereby repeal ed, amended or otherwise modified
accordingl y.
SEC. 15. Effectivity. This Act shal l take effect upon its publ ication in a newspaper of
general circul ation.
Approved,
(Sgd.) JUAN
PONCE ENRILE
President of the
Senate
(Sgd.) FELICIANO
BELMONTE JR.
Speaker of the House
of Representatives
This Act which is a consol idation of House Bil l No. 5727 and Senate Bil l No. 3299 was
final l y passed by the House of Representatives and the Senate on December 11, 2012.
Approved: DEC 19 2012
(Sgd.) EMMA
LIRIO-REYES
Secretary of the
Senate
(Sgd.) MARILYN B.
BARUA-YAP
Secretary General
House of Representatives
(Sgd.) BENIGNO S. AQUINO III
President of the Philippines
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