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Republic Act No. 7654· Enacted 1993-06-14

Cigarette Excise Tax Philippines (RA 7654) — BatasKo ELI5

Paano kinakalkula ang buwis sa sigarilyo sa Pilipinas? RA 7654 explains cigarette excise taxes, misdeclaration penalties, and what it means for you.

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Official text — Republic Act No. 7654

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Preamble

Congress of the Philippines

First Regular Session

[ REPUBLIC ACT NO. 7654, June 14, 1993 ]

AN ACT REVISING THE EXCISE TAX BASE, ALLOCATING A PORTION OF THE INCREMENTAL REVENUE COLLECTED FOR THE EMERGENCY EMPLOYMENT PROGRAM FOR CERTAIN WORKERS AMENDING FOR THE PURPOSE SECTION 142 OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 142 — of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:

Section 142 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:

"Section 142.

Cigars and cigarettes.

-

"(a)

Cigars.

- There shall be levied, assessed and collected on cigars a tax of ten percent (10%) of the constructive manufacturer's or importer's wholesale price or the actual manufacturer's or importer's wholesale price, whichever is higher.

"(b)

Cigarettes packed by hand.

- There shall be levied, assessed and collected on cigarettes packed by hand a tax of fifteen percent (15%) of the constructive manufacturer's wholesale price or the actual manufacturer's wholesale price, whichever is higher.

"(c)

Cigarettes packed by machine.

- There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below based on the constructive manufacturer's wholesale price or the actual manufacturer's wholesale price, whichever is higher:

"(1) On locally manufactured cigarettes which are currently classified and taxed at fifty-five percent (55%) or the exportation of which is not authorized by contract or otherwise, fifty-five percent (55%) provided that the minimum tax shall not be less than Five pesos (₱5.00) per pack.

"(2) On other locally manufactured cigarettes, forty-five percent (45%) provided that the minimum tax shall not be less than Three pesos (₱3.00) per pack.

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

When the registered manufacturer's wholesale price or the actual manufacturer's wholesale price whichever is higher of existing brands of cigarettes, including the amounts intended to cover the taxes, of cigarettes packed in twenties does not exceed Four pesos and eighty centavos (₱4.80) per pack, the rate shall be twenty percent (20%).

"(d)

Imported cigarettes.

— If the cigarettes are of foreign manufacture, regardless of the contents per pack, there shall be levied, assessed and collected a tax of fifty-five percent (55%) of the constructive importer's wholesale price or the actual importer's wholesale price, whichever is higher.

"For purposes of this section, the term 'constructive manufacturer's or importer's wholesale price' shall mean the price including the amount intended to cover the tax imposed in paragraphs (a), (b), (c) or (d) hereof and the amount intended to cover the value-added tax imposed under

Title

IV of this Code at which locally manufactured or imported cigars or cigarettes are offered for sale to the wholesalers or distributors as fixed by the manufacturer or importer and registered with the Bureau of Internal Revenue plus a mark up of twenty percent (20%) of such price. The term 'actual manufacturer's or importer's wholesale price' shall mean the price at which the purchaser actually pays or is obligated to pay to the manufacturer or importer in consideration of the sale, barter, or exchange of cigars and cigarettes.

"The twenty percent (20%) mark up and the minimum taxes provided in this section shall be automatically increased in 1996 by ten percent (10%).

"Manufacturers and importers of cigars and cigarettes shall, within thirty (30) days from the effectivity of this Act, submit to the Commissioner of Internal Revenue a sworn statement of the manufacturer's or importer's wholesale price of each particular brand of their products, and periodically thereafter, a sworn written notification of any change thereof.

"Any downward reclassification of present categories, for tax purposes, of existing brands of cigars or cigarettes duly registered with the Bureau of Internal Revenue at the time of the effectivity of this Act or any reduction or undervaluation of the manufacturer's or importer's registered wholesale price or any violation of this section which will reduce the tax imposed herein, or the payment thereof, shall be prohibited.

"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 or reduces or undervalues or downgrades the classification of any existing brand of cigars and cigarettes duly registered with the Bureau of Internal Revenue at the time of the effectivity of this Act 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.

"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 interests which may be assessed pursuant to this section.

"Any person liable for any of the acts or omissions prohibited under this section shall be criminally liable and penalized under Section 253 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.

"If the offender is not a citizen of the Philippines, he shall be deported immediately after serving the sentence without further proceedings for deportation."

Section 2

Section 2.

The wholesale price of cigars and cigarettes at which they are offered for sale to the wholesalers or distributors and registered with the Bureau of Internal Revenue as of December 31, 1992 shall be deemed the manufacturer's or importer's registered wholesale price until the submission by the manufacturer or importer of the sworn statement as required under Section 1 of this Act:

Provided,

That a variant of an existing brand of cigars or cigarettes that shall be manufactured after the effectivity of this Act shall be taxed at the same level as the main brand regardless of its declared wholesale price:

Provided, further,

That to prevent any underpayment of taxes, any new brand of cigars or cigarettes with comparable quality, blend, cost of production and other relevant facts as brands with a registered wholesale price of Three pesos (P3.00) or more per pack, and which shall be manufactured after the effectivity of this Act, shall be taxed at the highest rate regardless of its declared wholesale price. For the purpose of this section, cigars or cigarettes registered with the Bureau of Internal Revenue after May 31, 1993 shall be treated as new brands.

Section 3 — Fifty percent (50%) of the increment in total revenue collected under this Act→

Section 3.

Fifty percent (50%) of the increment in total revenue collected under this Act for a period of one (1) year from its effectivity shall be allocated and disbursed solely for purposes of providing emergency productive employment to workers displaced by the present electricity power crisis. For this purpose, the Secretary of Labor and Employment, in consultation with the Secretary of Finance, shall promulgate the necessary rules and regulations for the effective implementation of this section.

Provided,

likewise, That twenty-five percent (25%) of the increment in total revenue collected under this Act in 1995 shall be collected and segregated as a trust fund to be disbursed solely for funding the national health insurance program as may be hereafter mandated by law.

Section 4 — The incremental revenue collected under this Act shall be excluded from the re→

Section 4.

The incremental revenue collected under this Act shall be excluded from the revenue base as provided under Republic Act No. 7171.

Section 5 — The Secretary of Finance shall, upon the recommendation of the Commissioner of→

Section 5.

The Secretary of Finance shall, upon the recommendation of the Commissioner of Internal Revenue, promulgate the necessary rules and regulations within six (6) months from the effectivity of this Act.

Section 6 — The Bureau of Internal Revenue shall adopt any or all of the following measure→

Section 6.

The Bureau of Internal Revenue shall adopt any or all of the following measures:

1.

Affixture of internal revenue fuson stamps.

— Internal revenue fuson stamps without denomination or class, shall be firmly and conspicuously affixed on any part of the packages containing the cigarettes as the manufacturer may deem it fit before said packages are packed in cases for removal from the factory. The affixture must be done in such a manner that will prevent said fuson stamps from being removed and re-used by washing or any other means and from covering any warning that may be hereafter required by law to be printed on cigarette packages.

2.

Control of cigarette paper.

—

a. No person shall be permitted to import or manufacture cigarette paper without first securing the required permit therefore from the Commissioner of Internal Revenue;

b. Only duly registered cigarette manufacturers are authorized to buy from a permittee for use in their factories, but before effecting a sale, it shall be obligatory upon the seller of the cigarette paper to secure a written authority from the Commissioner of Internal Revenue, accompanied by a written confirmation of the buyer;

c. All cigarette manufacturers shall keep a manufacturer's cigarette paper registry book showing the following information:

1. Debit Entries:

i. The date the cigarette paper is received;

ii. The date of the authority issued by the Commissioner of Internal Revenue;

iii. The name and address of the person from whom received; and

iv. The number, brand, and color of bobbins or rolls received, showing also the length in meters of each.

2. Credit Entries:

i. The date of disposal or use; and

ii. The number, brand, and color of bobbins or rolls disposed of or used, showing also the length in meters of each.

3.

Keeping of subsidiary books.

- Local manufacturers of cigars and cigarettes shall keep and maintain subsidiary books covering the following:

a. Inventories of imported leaf tobacco showing its volume and value;

b. Inventories of local leaf tobacco showing its volume and value;

c. Cost of manufacture for each brand of cigarette; and

d. Inventories of cigarettes produced on a per brand basis showing their respective volumes and values.

The amount that may be needed to implement this provision relative to the monitoring of production and volume of removals of cigarette paper and the printing of fuson stamps shall be included in the General Appropriations Act.

Show 3 more sections +→
Section 7 — Separability Clause→

Section 7.

Separability Clause

. — If any provision of this Act is subsequently declared unconstitutional, the validity of the remaining provisions hereof shall remain in full force and effect.

Section 8 — Repealing Clause→

Section 8.

Repealing Clause

. — All laws, decrees, executive orders, rules and regulations, and other issuances inconsistent with this Act are hereby repealed or modified accordingly.

1a⍵⍴h!1

Section 9 — Effectivity→

Section 9.

Effectivity

Clause. — This Act shall take effect after fifteen (15) days from its publication in the Official Gazette or in at least two (2) national newspapers of general circulation whichever comes earlier.

Approved, June 14, 1993.

The Lawphil Project - Arellano Law Foundation

Full text on BatasKo. Original source: Official Gazette / Lawphil.

Sa madaling salita: Bawat pack ng sigarilyo na binibili mo ay may kasamang excise tax na direktang binabayad ng manufacturer o importer — bago pa man maabot ang tindahan. Ang RA 7654 ay ang batas na nagtakda kung magkano ang buwis na iyon, kung paano ito kinakalkula, at kung ano ang mangyayari kapag nag-imbento ng presyo ang mga kumpanya para makatakas sa buwis. Hindi ito batas na para lang sa malalaking korporasyon — nakakaapekto ito sa presyo ng sigarilyo na hawak mo ngayon.

Real Filipino Scenario: Ang Tindero at ang Bagong Brand ng Sigarilyo

Si Pacita, 44 taong gulang, ay isang tricycle driver sa San Fernando, Pampanga. Sa harap ng terminal nila, may maliit siyang tindahan na pinamamahalaan ng kanyang asawa. Isang araw, dumating ang isang sales rep ng isang tobacco company at nag-alok ng bagong brand ng sigarilyo — mas mura raw kaysa sa karaniwang brands, kaya mas madaling ibenta.

Tinanong ni Pacita: "Bakit mas mura? Pareho lang naman ang sigarilyo?"

Ang sagot ng batas: Ayon sa Section 2 ng RA 7654, ang mga bagong brand ng sigarilyo na may katulad na kalidad, blend, at gastos ng produksyon sa mga brand na may rehistradong presyo na ₱3.00 pataas ay dapat na buwisan sa pinakamataas na rate — kahit sabihin ng manufacturer na mas mababa ang kanilang wholesale price.

Ibig sabihin, hindi niya maaaring gamitin ang mababang declared price para makatakas sa mas mataas na tax bracket.

Ano ang dapat gawin ni Pacita: Maging mapanuri sa mga bagong brand na "mas mura." Ang presyo ay maaaring resulta ng legal na kompetisyon — o ng tax misdeclaration na eventually mahahuli. Kung may duda, pwede siyang mag-check sa BIR kung registered ang brand.

What the Law Actually Says

Ang RA 7654, na nilagdaan noong Hunyo 14, 1993, ay nag-amyenda sa Section 142 ng National Internal Revenue Code (NIRC). Bago ito, ang tax base ng sigarilyo ay mas madaling manipulahin ng mga manufacturer.

Narito ang pangunahing probisyon:

Para sa mga tabako at sigarilyo, apat ang kategorya ng buwis:

  • Cigars — 10% ng constructive o actual wholesale price, alinman ang mas mataas (Section 142(a))
  • Cigarettes packed by hand — 15% (Section 142(b))
  • Cigarettes packed by machine — dalawang tier:
    • Brands na classified at 55% o hindi authorized i-export: 55%, minimum ₱5.00 per pack (Section 142(c)(1))
    • Ibang locally manufactured cigarettes: 45%, minimum ₱3.00 per pack (Section 142(c)(2))
    • Kung ang wholesale price ay hindi lalampas sa ₱4.80 per pack: 20%
  • Imported cigarettes — 55%, regardless ng laman ng pack (Section 142(d))

Dalawang uri ng wholesale price ang ginagamit:

  1. Constructive wholesale price — ang presyong nairehistro sa BIR, kasama ang taxes at VAT, plus 20% markup
  2. Actual wholesale price — ang tunay na presyong binabayad ng buyer sa manufacturer

Ang batas ay gumagamit ng whichever is higher — walang escape route.

Ang 20% markup at minimum taxes ay awtomatikong tumaas ng 10% noong 1996 (Section 142, paragraph 8).

Para sa revenue allocation (Section 3): 50% ng incremental revenue para sa isang taon mula sa effectivity ay nakalaan para sa emergency employment ng mga manggagawang naapektuhan ng power crisis noon. At 25% ng incremental revenue noong 1995 ay para sa isang trust fund para sa national health insurance program.

Para sa mga lumalabag (Section 142, penalty provisions):

  • Misdeclaration o undervaluation: summary cancellation ng permit bilang manufacturer o importer
  • Korporasyon o partnership: treble tax deficiency (tatlong beses ng kulang na buwis, surcharges, at interes)
  • Indibidwal: kriminal na pananagutan sa ilalim ng Section 253 ng NIRC
  • Dayuhang manlalabag: deportasyon pagkatapos ng sentensya

What This Means for You

Hindi ka sigurong manufacturer ng sigarilyo. Pero nakakaapekto pa rin ito sa iyo sa tatlong paraan.

Una, ang presyo ng sigarilyo na binibili mo ay may built-in na buwis. Hindi mo ito binabayad sa BIR direkta — ang manufacturer o importer ang nagbabayad. Pero dahil kasama na ang buwis sa wholesale price, napupunta ito sa retail price na binabayad mo sa tindahan.

Pangalawa, kapag nag-misdeclare ang isang kumpanya, lahat tayo ay naaapektuhan. Ang hindi nakolektang buwis ay dapat sana napunta sa pondo para sa trabaho o kalusugan ng publiko. Iyan ang layunin ng Section 3 — ang tobacco tax ay may direktang koneksyon sa pondo para sa mga manggagawa at kalusugan.

Pangatlo, bilang consumer, may karapatan kang malaman kung registered ang brand na binibili mo. Ang BIR ang nagtatago ng listahan ng lahat ng rehistradong brands at kanilang declared wholesale prices.

Kapag nakakita ka ng brand na mukhang "masyadong mura" para sa kalidad nito, possible na may nangyayaring tax evasion — at may mekanismo ang gobyerno para tugunan iyon.

Real Filipino Scenario: Ang Guro at ang "Bago" na Brand

Si Corazon, 38 taong gulang, ay isang public school teacher sa Marikina. Hindi siya naninigarilyo, pero ang kanyang kapatid ay nagtatanong sa kanya tungkol sa isang napansin nilang bagay: ang isang kilalang tobacco company ay naglabas ng "bagong" brand — parehong amoy, parehong lasa ng kanilang sikat na brand, pero mas mababang presyo.

"Baka bagong variant lang ng dati?" tanong ng kapatid.

Ito mismo ang tinutugunan ng Section 2 ng RA 7654. Ang batas ay malinaw: ang isang variant ng existing brand na gagawin pagkatapos ng effectivity ng batas ay buwisan sa parehong level ng main brand — regardless ng declared wholesale price.

Ibig sabihin, kahit sabihin ng kumpanya na "bago" ito at mas mababa ang kanilang presyo, kung malinaw na ito ay variant ng isang established brand, hindi nila mababago ang tax classification nito.

Ano ang dapat gawin ni Corazon: Kung naniniwala siyang may nangyayaring tax avoidance, maaari siyang mag-file ng reklamo sa BIR. Hindi kinakailangan ng legal representation para magreklamo — may complaint form ang BIR online at sa kanilang mga opisina. Ang BIR ang magde-determine kung totoong nag-misdeclare ang kumpanya.

What Most Filipinos Get Wrong

"Ang buwis sa sigarilyo ay babayaran mo sa tindahan."

Hindi. Ang excise tax ay advance tax — binabayad ng manufacturer o importer bago pa man makarating ang produkto sa retailer. Ang presyo sa tindahan ay kasama na ang buwis. Ikaw bilang consumer ay hindi nag-fi-file ng anumang tax return para dito.

"Mas bago ang brand, mas mababa ang buwis."

Kabaligtad. Ang RA 7654 ay espesipikong nagtatakda na ang mga bagong brand na katulad ng kalidad ng mga existing brand (na may wholesale price na ₱3.00 pataas) ay buwisan sa pinakamataas na rate. Ginawa ito para pigilan ang mga kumpanya na gumawa ng "bagong" brand para lang makapasok sa mas mababang tax bracket.

"Walang silbi ang pagrereklamo — malaki ang mga tobacco companies."

May ngipin ang batas. Ang penalty ay hindi lang multa — summary cancellation ng business permit ang posibleng mangyari sa manufacturer, at treble damages para sa korporasyon. Ang BIR ay may kapangyarihang umaksyon batay sa sworn statement submissions na kinukuha nila sa bawat manufacturer.

"Ang revenue mula sa tobacco tax ay napupunta lang sa general fund."

Noong 1993, ang batas ay espesipikong nag-earmark ng revenue: 50% para sa emergency employment ng mga manggagawa, at 25% (noong 1995) para sa health insurance fund. Ang tobacco tax ay may direktang social purpose — hindi lang source ng kita ng gobyerno.

"Kahit anong presyo ideclare ng manufacturer, okay lang."

Hindi. Bawat manufacturer at importer ay kailangan na mag-submit ng sworn statement sa BIR ng kanilang wholesale prices sa loob ng 30 araw mula sa effectivity ng batas. At hindi pwedeng bawasan ang declared price o i-downgrade ang classification — ipinagbabawal ito ng batas.

What to Do if Your Rights Are Violated

Bilang consumer o small business owner, narito ang mga hakbang kung may napansin kang posibleng paglabag:

  1. Mag-document. Kumuha ng larawan ng produkto — brand name, packaging, barcode, at retail price. Kung may resibo, itago.

  2. I-check ang BIR registration ng brand. Makipag-ugnayan sa BIR Revenue District Office (RDO) na may jurisdiction sa lugar ng manufacturer. Pwede ka ring mag-email sa info@bir.gov.ph para magtanong kung registered ang brand.

  3. Mag-file ng reklamo sa BIR. Ang BIR ay may Run After Tax Evaders (RATE) Program. Pwede kang mag-submit ng sworn complaint sa iyong RDO o sa National Office ng BIR sa Quezon City. Hindi ka kailangan ng abogado para mag-report.

  4. Makipag-ugnayan sa Department of Finance (DOF). Kung ang reklamo ay tungkol sa mas malaking pattern ng tax evasion, ang DOF ay may oversight sa BIR at tumatanggap ng reports.

  5. I-report sa DTI kung ang isyu ay tungkol din sa maling labeling o consumer deception ng produkto — ito ay hiwalay na batas (Consumer Act of the Philippines).

  6. Hintayin ang BIR action. Ang BIR ang may kapangyarihang mag-audit ng sworn statements at mag-utos ng summary cancellation ng permit kung may paglabag. Hindi ito fast process — maaaring tumagal ng buwan o taon ang imbestigasyon.

Related Laws

Mga Madalas Itanong / FAQ

Q: Bilang isang mamimili, kailangan ko bang magbayad ng excise tax nang direkta?

A: Hindi. Ang excise tax sa sigarilyo ay responsibilidad ng manufacturer o importer — binabayad nila bago pa man makarating ang produkto sa retailer. Ang presyo na binabayad mo sa tindahan ay kasama na ang buwis. Ikaw ay hindi nag-fi-file ng tax return para dito.

Q: Bakit may minimum tax per pack (₱5.00 o ₱3.00)? Hindi ba percentage na lang sapat?

A: Ang minimum tax ay safety net para hindi mapababa ng manufacturer ang declared wholesale price para lang mabawasan ang buwis. Kahit sabihin ng kumpanya na ₱2.00 lang ang wholesale price ng isang pack, ang buwis ay hindi magiging mas mababa sa ₱3.00 o ₱5.00 (depende sa classification). Ito ay nagpoprotekta sa tax base ng gobyerno.

Q: Ano ang mangyayari sa manufacturer na nahuli sa misdeclaration?

A: Tatlong posibleng parusa: (1) Summary cancellation ng permit bilang manufacturer o importer ng sigarilyo; (2) Para sa korporasyon, multa na tatlong beses ng tax deficiency kasama ang surcharges at interes; (3) Para sa indibidwal na responsible, kriminal na pananagutan sa ilalim ng Section 253 ng NIRC. Kung dayuhan ang offender, deportasyon pagkatapos ng sentensya.

Q: Saan napupunta ang buwis na kinolekta sa ilalim ng RA 7654?

A: Noong una (1993), 50% ng incremental revenue ay para sa emergency employment ng mga manggagawang naapektuhan ng power crisis. Noong 1995, 25% ng incremental revenue ay napunta sa isang trust fund para sa national health insurance program. Ngayon, ang tobacco tax revenue ay bahagi ng

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Legal disclaimer: BatasKo provides general legal information, not legal advice. For your specific situation, consult a licensed Filipino lawyer or the Public Attorney's Office (PAO).

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