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BIR issues new tobacco, alcohol excise tax rates

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Smokers who patronize lower-priced cigarette brands will have to pay more to get their fix starting next week as the Bureau of Internal Revenue has issued new rules on the implementation of revised excise tax rates under the sin tax reform law.

On the other hand, smokers who patronize higher priced brands can expect to pay less.

A new schedule of excise tax rates on tobacco products and alcoholic beverages, spelled out in Republic Act No. 10351 and described more concisely in the new rules, indicate an increase of as much as P9.28 per pack of machine-packed cigarettes.

This is for brands with a net retail price (NRP)—not counting the excise tax and the value-added tax—of less than P5 per pack.

Under Revenue Regulation No. 17-2012 dated Dec. 21, machine-packed cigarettes are classified into two— those whose net retail price is P11.50 or less per pack and those with NRPs above that point.

Starting Jan. 1, excise tax on the lower tier will be P12 per pack while that on the higher tier will be P25.

This means that excise tax on the lower two price tiers will increase by P9.28 and P4.44. The levy remains the same for the third tier, but drops by P3.30 for the highest-priced brands.

Further, the new BIR rules state that for brands priced P11.50 or less per pack, the excise tax will increase to P17 in 2014, P21 in 2015, and P25 in 2016.

For brands priced higher than P11.50 per pack, the tax will climb to P27 in 2014, P28 in 2015, and P29 in 2016.

The price tiers will be dropped by 2017, when the excise tax will be P30 per pack on all brands.

From 2018, the levy will be raised by 4 percent every year.

RR 17-2012 also lays down revised tax schedules—as provided for under RA No 10351 —for cigarettes packed by hand, cigars, chewing tobacco, and other tobacco products.

As well, new schedules of ad valorem tax and specific tax are provided for distilled spirits, wines, and fermented liquor.

According to Finance Secretary Cesar V. Purisima, the new sin tax law is expected to yield additional tax revenues averaging P44 billion per year in the first five years of implementation.

The new law streamlines the four-tier price classification in the current system which follows RA No. 9334, enacted in 2005.

Under the old law, brands with an NRP of less than P5 carried an excise tax of P2.72 per pack.

The excise tax was P7.56 on brands with NRPs of P5 to P6.50; P12 for NRPs of more than P6.50 and up to P10; and P28.30 for NRPs of more than P10.


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