RR No. 3-2006: Prescribes the implementing guidelines on the revised tax rates on alcohol and tobacco products pursuant to the provisions of Republic Act No. 9334, and clarifies certain provisions of existing Revenue Regulations relative thereto

Key points

1. Brand variations. Variations in label color or design, packaging or container size of a registered brand are not by themselves a new brand or variant, but each needs a prior written permit from the BIR. Changing letters, numbers, symbols or words in a registered brand’s root name makes it a variant of that brand.
2. Existing classifications. The tax classification of brands in Annexes A, B, C and D of R. A. No. 8240, brands listed in RR Nos. 1-97 and 2-97, and new brands introduced between January 1, 1997 and December 31, 2003 stays in force until revised by Congress. Downward reclassification of a brand registered on or after January 1, 2005 is prohibited.
3. Classifying new brands. A new brand or variant introduced from January 1, 2005 is first classified by the suggested net retail price in the sworn statement of the manufacturer or importer. A variant may not be classified lower than the highest classification for that brand.
4. Price validation. The BIR or the NSO surveys prices within 45 days after the end of 3 months from product launch, and again within 45 days after the end of 18 months from the initial validation. If the survey is not done, the classification based on the declared price stays.
5. Understated price. A suggested net retail price understated by at least 15% of the actual net retail price is prima facie proof of willful intent to evade the correct excise tax. Without convincing evidence otherwise, the manufacturer or importer is liable for additional excise tax equal to the tax due and the price difference.
6. Sworn statements and leaf tobacco. Manufacturers and importers submit a sworn statement of sales volume and amount per brand, with customer name, address and TIN, within 25 days after the end of each taxable quarter. Stemmed leaf tobacco and tobacco waste may be sold without prepaying excise tax if directly exported or used as raw material in making excisable tobacco products.

Who is affected

• Manufacturers and importers of alcohol and tobacco products
• Owners of brands listed in Annexes of R. A. No. 8240
• Owners of goods and transshipment operators

Deadlines and effectivity

• First price survey within 45 days after the end of 3 months from product launch
• Revalidation within 45 days after the end of 18 months from initial validation
• Sworn statement within 25 days after the end of each taxable quarter