RMC No. 92-2019: Publishes the full text of the RA No. 11346 entitled “An Act Increasing the Excise Tax on Tobacco Products Imposing Excise Tax on Heated Tobacco Products and Vapor Products, Increasing the Penalties for Violations of Provisions on Articles Subject to Excise Tax, and Earmarking a Portion of the Total Excise Tax Collection from Sugar-Sweetened Beverages, Alcohol, Tobacco, Heated Tobacco and Vapor Products for Universal Health Care, Amending for this Purpose Sections 144, 145, 146, 147, 152, 164, 260, 262, 263, 265, 288 and 289, Repealing Section 288(B) and 288(C), and Creating New Sections 263-A, 265-B and 288-A of the NIRC of 1997, as Amended by RA No. 10968 and for Other Purposes”

Key points

1. Heated Tobacco Products. Excise tax is Ten Pesos (P10.00) per pack of twenty (20) units, or packaging combinations of not more than twenty (20) units, effective on January 1, 2020. The rate increases by five percent (5%) every year effective on January 1, 2021, through Revenue Regulations issued by the Secretary of Finance.
2. Vapor Products. Effective January 1, 2020, each cartridge, refill, pod or container is taxed by volume: Ten pesos (P10.00) for 0.00 ml to 10.00 ml, rising by Ten pesos per 10 ml bracket to Fifty pesos (P50.00) for 40.01 ml to 50.00 ml. Above 50.00 ml the tax is Fifty pesos (P50.00) plus Ten pesos (P10.00) for every additional 10.00 ml, with a yearly five percent (5%) increase from January 1, 2021.
3. Cigars and cigarettes. Effective on January 1, 2013, cigars bear an Ad Valorem Tax of twenty percent (20%) of net retail price plus a specific tax of Five Pesos (P5.00) per cigar, with the specific tax increasing by five percent (5%) effective on January 1, 2024. Cigarettes packed by hand or machine are taxed per pack at Forty-five pesos (P45.00) in 2020, Fifty pesos (P50.00) in 2021, Fifty-five pesos (P55.00) in 2022 and Sixty pesos (P60.00) in 2023, increasing five percent (5%) yearly from January 1, 2024.
4. Export bonds and reporting. Tobacco products for export cannot be removed or exported without an export bond equal to the excise tax due if sold domestically, except for transfer to a bonded facility under a transfer bond. Manufacturers, distributors and importers submit a sworn statement of sales and removals within thirty (30) days from effectivity of the Act and within the first five (5) days of every month after, and misdeclaration may cause cancellation of their permit.
5. Penalties. Selling tobacco products below the combined Excise and Value-Added Taxes is prohibited. The fine is not less than ten (10) times the Excise plus Value-Added Taxes due and not less than Two Hundred Thousand Pesos (P200,000.00) nor more than Five Hundred Thousand Pesos (P500,000.00), with imprisonment of not less than four (4) years but not more than six (6) years, and other offenses carry their own fines and imprisonment.
6. New sections and effectivity. The Act inserts Sections 263-A and 265-B on sanctions and Section 288-A on the disposition of excise revenues from sugar-sweetened beverages, alcohol, tobacco, heated tobacco and vapor products. RA No. 11346 takes effect on January 1, 2020 following complete publication in the Official Gazette or in at least one (1) newspaper of general circulation.

Who is affected

• Manufacturers, distributors and importers of cigars, cigarettes, heated tobacco products and vapor products
• Sellers of tobacco products

Deadlines and effectivity

• Heated tobacco and vapor products taxed effective January 1, 2020, with yearly 5% increase from January 1, 2021
• Cigarette rate increases by 5% yearly effective January 1, 2024
• Sworn statement within thirty (30) days from effectivity and within the first five (5) days of every month after
• RA No. 11346 effective on January 1, 2020