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Philippine Tax Update - Chan Robles Virtual Law Library


   
THE
NATIONAL INTERNAL REVENUE CODE
OF THE PHILIPPINES
[Tax Reform Act of 1997]
Republic Act No. 8424
AN ACT AMENDING THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES


Read the full text of the




TITLE VI
EXCISE TAXES ON CERTAIN GOODS
 
CHAPTER IV
EXCISE TAX ON TOBACCO PRODUCTS
 

SEC. 144. Tobacco Products. - There shall be collected a tax of seventy-five centavos (P0.75) on each kilogram of the following 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 partially prepared with or without the use of any machine or instruments or without being pressed or sweetened; and
    (c) Fine-cut shorts and refuse, scraps, clippings, cuttings, stems and sweepings of tobacco.
Fine-cut shorts and refuse, scraps, clippings, cuttings, stems and sweepings of tobacco resulting from the handling or stripping of whole leaf tobacco may be transferred, disposed of, or otherwise sold, without prepayment of the excise tax herein provided for under such conditions as may be prescribed in the rules and regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner, if the same are to be exported or to be used in the manufacture of other tobacco products on which the excise tax will eventually be paid on the finished product.

On tobacco specially prepared for chewing so as to be unsuitable for use in any other manner, on each kilogram, Sixty centavos (P0.60).
 
SEC. 145. Cigars and Cigarettes. - 

(A) Cigars.- There shall be levied, assessed and collected on cigars a tax of One peso (P1.00) per cigar.cralaw

(B) Cigarettes Packed by Hand. - There shall be levied, assessed and collected on cigarettes packed by hand a tax of Forty centavos (P0.40) per pack.cralaw

(C) Cigarettes Packed by Machine. - There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below:

    (1) If the net retail price (excluding the excise tax and the value-added tax) is above Ten
         pesos (P10.00) per pack, the tax shall be Twelve pesos (P12.00) per pack;

    (2) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six
         pesos and fifty centavos (P6.50) but does not exceed Ten pesos (P10.00) per pack,
         the tax shall be Eight pesos (8.00) per pack;

    (3) If the net retail price (excluding the excise tax and the value-added tax) is Five pesos
         (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the tax
         shall be Five pesos (P5.00) per pack;

    (4) If the net retail price (excluding the excise tax and the value-added tax is below Five
         pesos (P5.00) per pack, the tax shall be One peso (P1.00) per pack;

Variants of existing brands of cigarettes which are introduced in the domestic market after the effectivity of R.A. No. 8240 shall be taxed under the highest classification of any variant of that brand.

The excise tax from any brand of cigarettes within the next three (3) years from the effectivity of R. A. No. 8240 shall not be lower than the tax, which is due from each brand on October 1, 1996: Provided, however, That in cases where the excise tax rates imposed in paragraphs (1), (2), (3) and (4) hereinabove will result in an increase in excise tax of more than seventy percent (70%); for a brand of cigarette, the increase shall take effect in two tranches: fifty percent (50%) of the increase shall be effective in 1997 and one hundred percent (100%) of the increase shall be effective in 1998.cralaw

Duly registered or existing brands of cigarettes or new brands thereof packed by machine shall only be packed in twenties.cralaw

The rates of excise tax on cigars and cigarettes under paragraphs (1), (2), (3) and (4) hereof, shall be increased by twelve percent (12%) on January 1, 2000.cralaw

New brands shall be classified according to their current net retail price.cralaw

For the above purpose, "net retail price" shall mean the price at which the cigarette is sold on retail in twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the "net retail price" shall mean the price at which the cigarette is sold in five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax.cralaw

The classification of each brand of cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex "D", shall remain in force until revised by Congress.cralaw

"Variant of a brand" shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand and/or a different brand which carries the same logo or design of the existing brand.cralaw

Manufactures and importers of cigars and cigarettes shall, within thirty (30) days from the effectivity of R. A. No. 8240 and within the first five (5) days of every month thereafter submit to the Commissioner a sworn statement of the volume of sales for each particular brand of cigars and/or cigarettes sold at his establishment for the three-month period immediately preceding.cralaw

Any manufacturer or importer who, in violation of this Section, knowingly misdeclares or misrepresents in his or its sworn statement herein required any pertinent data or information shall, upon discovery, be penalized by a summary cancellation or withdrawal of his or its permit to engage in business as manufacturer or importer of cigars or cigarettes.cralaw

Any corporation, association or partnership liable for any of the acts or omissions in violation of this Section shall be fined treble the amount of deficiency taxes, surcharges and interest which may be assessed pursuant to this Section.cralaw

Any person liable for any of the acts or omissions prohibited under this Section shall be criminally liable and penalized under Section 254 of this Code. Any person who willfully aids or abets in the commission of any such act or omission shall be criminally liable in the same manner as the principal.cralaw

If the offender is not a citizen of the Philippines, he shall be deported immediately after serving the sentence without further proceedings for deportation.
 
SEC. 146. Inspection Fee. - For inspection made in accordance with this Chapter, there shall be collected a fee of Fifty centavos (P0.50) for each thousand cigars or fraction thereof; Ten centavos (P0.10) for each thousand cigarettes of fraction thereof; Two centavos (P0.02) for each kilogram of leaf tobacco or fraction thereof; and Three centavos (P0.03) for each kilogram or fraction thereof, of scrap and other manufactured tobacco.cralaw

The inspection fee on leaf tobacco, scrap, cigars, cigarettes and other tobacco products as defined in Section 147 of this Code shall be paid by the wholesaler, manufacturer, producer, owner or operator of redrying plant, as the case may be, immediately before removal there of from the establishment of the wholesaler, manufacturer, owner or operator of the redrying plant. In case of imported leaf tobacco and products thereof, the inspection fee shall be paid by the importer before removal from customs' custody.cralaw

Fifty percent (50%) of the tobacco inspection fee shall accrue to the Tobacco Inspection Fund created by Section 12 of Act No. 2613, as amended by Act No. 3179, and fifty percent (50%) shall accrue to the Cultural Center of the Philippines.
 
SEC. 147. Definition of Terms. - When used herein and in statements or official forms prescribed hereunder, the following terms shall have the meaning indicated:

    (a) "Cigars" mean all rolls of tobacco or any substitute thereof, wrapped in leaf tobacco.
    (b) "Cigarettes" mean all rolls of finely-cut leaf tobacco, or any substitute therefor, wrapped in paper or in any other material.
    (c) "Wholesale price" shall mean the amount of money or price paid for cigars or cigarettes purchased for the purpose of resale, regardless of quantity.
    (d) "Retail price" shall mean the amount of money or price which an ultimate consumer or end-user pays for cigars or cigarettes purchased.
  

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