RR No. 20-2018: Provides the implementing rules and guidelines on the imposition of Excise Tax on sweetened beverages pursuant to the provisions of RA No. 10963 (TRAIN Law)

Summary

RR No. 20-2018 provides the implementing rules on the Excise Tax on sweetened beverages under RA No. 10963 (TRAIN Law).

Key points

1. Covered beverages and rates. Sweetened beverages are pre-packaged, sealed non-alcoholic beverages with added sweeteners. The tax, effective January 1, 2018, is P 6.00 per liter for caloric, non-caloric or mixed sweeteners and P 12.00 per liter for high fructose corn syrup. Beverages using purely coconut sap sugar and purely steviol glycosides are exempt.
2. Who pays. Manufacturers and persons possessing untaxed domestic products are liable, as are owners or importers of imported products. Toll manufacturers, bottlers and sub-contractors are not subject to the tax, and the manufacturer or importer pays.
3. Filing and payment. Local manufacturers file a separate BIR Form No. 2200-S per place of production with the RDO of the Head Office and pay before removal. Importers apply for an Authority to Release Imported Goods (ATRIG) with the Excise LT Regulatory Division and pay before release from customs, while tax on imported raw materials is paid before finished goods leave the place of production.
4. Not subject to the tax. These include milk products, soymilk and flavored soymilk, 100% natural fruit and vegetable juices, meal replacement and medically indicated beverages, and ground, instant and pre-packaged powdered coffee. Dairy products are not synonymous with milk products, and only milk products are exempt.
5. Other rules. Raw materials cannot be removed from the place of production except for further processing in registered plants, with an Excise Taxpayer’s Removal Declaration (ETRD). Semi-processed syrups, puree and concentrates sold to fast food chains are treated as finished goods, and exports may be removed without prepayment under stated conditions.
6. Labeling and effectivity. Starting June 1, 2018, the FDA requires labels to show the type of sweetener, and for powder form the number of liters per pack size. The Regulations are effective beginning January 1, 2018.

Who is affected

• Manufacturers and importers of sweetened beverages
• Persons in possession of untaxed sweetened beverages

Deadlines and effectivity

• Tax effective January 1, 2018
• FDA labeling requirement starting June 1, 2018

Summary by Tax Resources PH. It is not a substitute for the full text of the issuance or professional advice.