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8box Solutions Inc.

4_20230710_150500_0001

Contact Number: 09369340340
Email: sales@8box.solutions

REVENUE MEMORANDUM CIRCULAR NO. 92-2019 issued on September 5, 2019 publishes the full text of Republic Act (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 National Internal Revenue Code (NIRC) of 1997, as Amended by RA No. 10968, and for Other Purposes”.

There shall be levied, assessed and collected on Heated Tobacco Products an Excise Tax at the rate of 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 of tax shall be increased by five percent (5%) every year effective on January 1, 2021, through Revenue Regulations issued by the Secretary of Finance. Heated Tobacco Products shall only be packed in twenties and other
packaging combinations of not more than twenty (20) units.

Effective on January 1, 2020, individual cartridge, refill, pod, or container of Vapor Products containing liquid solutions or gel sold in the following quantities shall be levied, assessed and collected an Excise Tax at the rates prescribed below:

Quantity  0.00 ml to 10.00 ml Excise Tax Ten pesos (₱10.00)
Quantity  10.01 ml to 20.00 ml Excise Tax Twenty pesos (₱20.00)
Quantity  20.01 ml to 30.00 ml Excise Tax Thirty pesos (₱30.00)
Quantity  30.01 ml to 40.00 ml Excise Tax Forty pesos (₱40.00)
Quantity  40.01 ml to 50.00 ml Excise Tax Fifty pesos (₱50.00)
Quantity  More than 50.00 ml Excise Tax Fifty pesos (₱50.00) plus Ten pesos (₱10.00) for every additional 10.00 ml

The rates of tax imposed above for Vapor Products shall be increased by five percent (5%) every year effective on January 1, 2021, through Revenue Regulations issued by the Secretary of Finance. Manufacturers, distributors, and importers of Vapor Products shall be required to indicate on the package the actual volume in milliliters of the liquid solutions and gels.

Effective on January 1, 2013, there shall be levied, assessed and collected on Cigars an Ad Valorem Tax equivalent to twenty percent (20%) of the net retail price (excluding the Excise Tax and the Value-Added Tax) per cigar; and a specific tax of Five Pesos (P5.00) per cigar. In addition to the Ad Valorem Tax, the specific tax rate of Five Pesos (₱5.00) imposed shall be increased by five percent (5%) effective on January 1, 2024 through Revenue Regulations issued by the
Secretary of Finance.

There shall be levied, assessed and collected on Cigarettes Packed by Hand and Cigarette Packed by Machine an Excise Tax based on the following schedules:
Effective on January 1, 2020, Forty-five pesos (₱45.00) per pack;
Effective on January 1, 2021. Fifty pesos (₱50.00) per pack;
Effective on January 1, 2022, Fifty-five pesos (₱55.00) per pack;
Effective on January 1, 2023, Sixty pesos (₱60.00) per pack.

The rates of tax imposed above shall be increased by five percent (5%) every year effective on January 1, 2024, through Revenue Regulations issued by the Secretary of Finance. Duly registered Cigarettes Packed by Hand and Cigarettes Packed by Machine shall only be packed in twenties and other packaging combinations of not more than twenty (20).

Understatement of the suggested net retail price by as much as fifteen percent (15%) of the actual net retail price shall render the manufacturer or importer liable for additional Excise Tax equivalent to the tax due and difference between the understated suggested net retail price and the actual net retail price.

No Tobacco Products, (Cigars and Cigarettes) including Heated Tobacco Products and Vapor Products, manufactured in the Philippines and produced for export shall be removed from their place of manufacture or exported without posting of an export bond equivalent to the amount of the Excise Tax due thereon if sold domestically: Provided, however, That Tobacco Products for export may be transferred from the place of manufacture to a bonded facility, upon posting of a
transfer bond, prior to export.

Tobacco Products, including Heated Tobacco Products and Vapor Products imported into the Philippines and destined for foreign countries shall not be allowed entry without posting a bond equivalent to the amount of customs duty, excise and Value-Added Taxes due thereon if sold domestically.

Manufacturers, distributors and importers of Cigars and Cigarettes, Heated Tobacco Products and Vapor Products shall, within thirty (30) days from the effectivity of the Act and within the first five (5) days of every month thereafter, submit to the Commissioner a sworn statement of the volume of sales and removals for cigars and/or cigarettes for the three-month period immediately preceding.

Any manufacturer, distributor or importer who misdeclares or misrepresents in his/her or its sworn statement herein required any pertinent data or information shall, upon final findings by the Commissioner that the violation was committed, be penalized by a summary cancellation or withdrawal of his/her or its permit to engage in business as manufacturer, distributor or importer of Cigars or Cigarettes, Heated Tobacco Products and Vapor Products.

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

Selling of Tobacco Products at a price lower than the combined Excise and Value-Added Taxes imposed under the law shall be prohibited. The seller of such products shall be punished with a fine of not less than ten (10) times the amount of Excise plus Value-Added Taxes due but not less than Two Hundred Thousand Pesos (₱ 200,000.00) nor more than Five Hundred Thousand Pesos (₱ 500,000.00) and imprisonment of not less than four (4) years but not more than six (6)
years.

The BIR is mandated to issue a Revenue Regulations prescribing the cigarette floor price or the minimum cigarette price taking into account the sum of the Excise and Value-Added Taxes as provided herein.

Any person liable for any of the acts or omissions prohibited under the Section shall be criminally liable and penalized under Section 254 of the 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. If the offender is not a citizen of the Philippines, he/she shall be deported immediately after serving the sentence, without further proceedings for deportation.

The BIR has the authority to supervise establishments where articles subject to Excise Tax are made or kept. The Secretary of Finance shall prescribe Rules and Regulations in which the process of production shall be conducted insofar as may be necessary to secure a sanitary output and to safeguard revenue. Such rules and regulations to safeguard revenue may allow the appointment of third parties to monitor production and removal processes and volumes, and the exclusion of excisable goods from duty-free barter transactions.

For inspection made in accordance with this Chapter, there shall be collected a fee of Fifty Centavos (₱ 0.50) for each thousand cigars or fraction thereof; Ten Centavos (₱ 0.10) for each thousand cigarettes or fraction thereof; Ten Centavos (₱ 0.10) for each thousand unit of Heated Tobacco Products; One Centavo (₱ 0.01) for each milliliter of liquid used in Vapor Products; Two Centavos (₱ 0.02) for each kilogram of leaf tobacco or fraction thereof; and Three Centavos (₱
0.03) for each kilogram or fraction thereof, of scrap and other manufactured tobacco.

Manufacturers, indentors, wholesalers and importers of any apparatus or mechanical contrivance specially for the manufacture of articles subject to tax shall, before any such apparatus or mechanical contrivance is removed from the place of manufacture or from the customs house, give written information to the Commissioner as to the nature and capacity of the same, the time when it is to be removed, and the place for which it is destined, as well as the name of the person by whom it is to be used; and such apparatus or mechanical contrivance shall not be set up nor dismantled or transferred without a permit in writing from the Commissioner.

A written permit from the Commissioner for importing, manufacturing or selling of apparatus or mechanical contrivance specially for the manufacture of articles subject to Excise Tax, cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips is required before any person shall engage in the importation, manufacture or sale of the said articles. No permit to sell said articles shall be granted unless the name and address of the prospective buyer is first submitted to the Commissioner and approved by him/her. Records, showing the stock of the said articles and the disposal thereof by sale of persons with their respective addresses as approved by the Commissioner, shall be kept by the seller, and records, showing stock of said articles and consumption thereof, shall be kept by the buyer, subject to inspection by internal revenue officers.

It shall be unlawful for any person to have in his possession cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips, without the corresponding authority therefor issued by the Commissioner. Any person, importer, manufacturer of Cigar and Cigarettes, who has been found guilty, shall, upon conviction for each act or omission, be punished by a fine of not less than One Million Five Hundred Thousand Pesos (₱ 1,500,000.00) but not more than Fifteen
Million Pesos (₱ 15,000,000.00) and imprisonment for a term of not less than six (6) years and one (1) day but not more than twelve (12) years.

Any person who ships, transports or removes spirituous, compounded or fermented liquors, wines or any manufactured products of tobacco under any other than the proper name or brand known to the trade as designating the kind and quality of the contents of the cask, bottle or package containing the same or as an imitation of any existing or otherwise known product name or brand or causes such act to be done, shall, upon conviction for each act or omission, be punished by a fine of not less than One Million Five Hundred Thousand Pesos (₱ 1,500,000.00) but not more than Fifteen Million Pesos (₱15,000,000.00) and imprisonment of not less than six (6) years and one (1) day but not more than twelve (12) years.

Any person who owns and/or is found in possession of imported articles subject to Excise Tax, the tax on which has not been paid in accordance with law, or any person who owns and/or is found in possession of imported tax-exempt articles other than those to whom they are legally issued shall be punished by:
a. A fine of not less than One Hundred Thousand Pesos (₱ 100,000.00) but not more than Two Hundred Thousand Pesos (₱ 200,000.00) and imprisonment of not less than sixty (60) days but not more than one hundred (100) days if the appraised value, to be determined in the manner prescribed in RA No. 10863, otherwise known as the “Customs Modernization and Tariff Act (CMTA)” including duties and taxes, of the articles does not exceed Two Hundred Fifty Thousand Pesos (₱ 250,000.00): Provided, That if the appraised value, including duties and taxes, does not exceed Ten Thousand Pesos (₱ 10,000.00), the penalty shall only be a fine in the amount of Twelve Thousand Pesos (₱12,000.00);
b. A fine of not less than One Million Pesos (₱ 1,000,000.00) but not more than Two Million Pesos (₱ 2,000,000.00) and imprisonment of not less than two (2) years but not more than four (4) years if the appraised value, to be determined in the manner prescribed in RA No. 10863 (CMTA), including duties and taxes, of the articles exceeds Two Hundred Fifty Thousand Pesos (₱ 250,000.00) but does not exceed Five Hundred Thousand Pesos (₱ 500,000.00);
c. A fine of not less than Three Million Pesos (₱ 3,000,000.00) but not more than Four Million Pesos (₱ 4,000,000.00) and imprisonment of not less than four (4) years but not more than six (6) years, if the appraised value, to be determined in the manner
prescribed in RA No. 10863 (CMTA), including duties and taxes of the articles is more than Five Hundred Thousand Pesos (₱ 500,000.00) but does not exceed One Million Pesos (₱ 1,000,000.00);
d. A fine of not less than Ten Million Pesos (₱ 10,000,000.00) but not more than Twenty Million Pesos (₱ 20,000,000.00) and imprisonment of not less than ten (10) years but not more than twelve (12) years, if the appraised value, to be determined in the manner prescribed in RA No. 10863 (CMTA), including duties and taxes, of the articles exceeds One Million Pesos (₱ 1,000,000.00).
Any person who is found in possession of locally manufactured articles subject to Excise Tax, the tax on which has not been paid in accordance with law, or any person who is found in possession of such articles which are exempt from Excise Tax other than those to whom the same is lawfully issued shall be punished with a fine of not less than (10) times the amount of Excise Tax due on the articles found but not less than One Million Pesos (₱ 1,000,000.00) and imprisonment of not less than five (5) years but not more than eight (8) years.

Any manufacturer, importer, owner or person in charge of any article subject to Excise Tax who removes or allows or causes the unlawful removal of any such articles from the place of production or bonded warehouse, upon which the Excise Tax has not been paid at the time and in the manner required, and any person who knowingly aids or abets in the removal of such articles as aforesaid or conceals the same after illegal removal shall, for the first offense, be punished with
a fine of not less than ten (10) times the amount of Excise Tax due on the articles but not less than Fifty Million Pesos (₱ 50,000,000.00) and imprisonment of not less than five (5) years but not more than eight (8) years.

The mere unexplained possession of articles subject to Excise Tax, the tax on which has not been paid in accordance with law, shall be punishable. Any person who commits any of the acts enumerated hereunder shall, upon conviction thereof, be punished by a fine of not less than Ten Million Pesos (₱10,000,000.00) but not more than Five Hundred Million Pesos (₱ 500,000,000.00) and imprisonment of not less than five (5) years but not more than eight (8) years:
a. Making, importing, selling, using or possessing without express authority from the Commissioner, any die for printing or making stamps, labels, tags or playing cards;
b. Reusing previously affixed stamps, erasing the cancellation marks of any stamp previously used, or altering the written figures or letters or cancellation marks on
internal revenue stamps;
c. Possessing false, counterfeit, restored or altered stamps, labels or tags or causing the commission of any such offense by another;
d. Selling or offering for sale any box or package containing articles subject to Excise Tax with false, spurious or counterfeit stamps or labels or selling from any such fraudulent box, package or container as aforementioned; or
e. Giving away or accepting from another, or selling, buying or using containers on which the stamps are not completely destroyed.

Provided, That the cumulative possession of false/counterfeit/recycled tax stamps in excess of the amount of Fifty Million Pesos (₱ 50,000,000.00) shall be punishable by a fine of Five Hundred Million Pesos (₱ 500,000,000.00) or up to ten (10) times the value of the illegal stamps seized, whichever is higher, and imprisonment of not less than ten (10) years but not more than fifteen (15) years.

Provided, finally, That if the cumulative value of false/counterfeit/recycled tax stamps does not exceed Ten Thousand Pesos (₱ 10,000.00), the penalty shall only be a fine in the amount of Twelve thousand pesos (₱ 12,000.00).

The following new Sections under Chapter II, Title X of the NIRC of 1997, as amended, are inserted:
a. Section 263-A. Sanctions for selling of Heated Tobacco Products and Vapor Products at a price lower than the combined Excise and Value-Added Taxes.—
b. Section 265-B. Sanctions for violations committed by manufacturers, importers, indentors, and wholesalers of any apparatus or mechanical contrivance specially
for the manufacture of articles subject to Excise Tax and importers, indentors, manufacturers or sellers of cigarette paper in bobbins, cigarette tipping paper or
cigarette filter tips.
c. Section 288-A. Disposition of revenues from Excise Tax on Sugar-Sweetened Beverages, Alcohol, Tobacco Products, Heated Tobacco Products and Vapor
Products.

RA No. 11346 shall take effect on January 1, 2020 following its complete publication in the Official Gazette or in at least one (1) newspaper of general circulation.