REVENUE MEMORANDUM CIRCULAR NO. 89-2014 issued on December 23, 2014 clarifies the implementation of the increase in Excise Tax rates on locally-manufactured cigarettes effective January 1, 2015 in relation to the new Internal Revenue Stamps prescribed under Revenue Regulations No. 7-2014, as amended.

         All local manufacturers of cigarette shall compute and pay the differential increase between the new tax rates and the current tax rates, according to the tax classification of their cigarette products, based on the number of internal revenue stamps, whether or not actually affixed to the packs of cigarette, being held in their possession as of December 31, 2014. The total Excise Taxes shall be paid to the BIR not later than the last working day of December, 2014.

         For purposes of validating the said tax payment, a physical inventory of all internal revenue stamps held in possession by all manufacturers of cigarettes as of December 31, 2014, whether or not actually affixed on packs of cigarettes, shall be conducted by the authorized representatives of the BIR.

         In case of discrepancy between the actual payment of the local manufacturer and the results of the physical inventory, the deficiency Excise Tax shall be accordingly assessed and collected upon demand.

        Subsequently, the database of Internal Revenue Stamp Integrated System (IRSIS) shall be updated according to the new tax rates with respect to the internal revenue stamps previously issued to and paid under the current tax rates, according to the price classifications of cigarettes, by the concerned local manufacturers of cigarette products.