Some of the country’s biggest liquor manufacturers have asked a Manila court to stop the Department of Finance and the Bureau of Internal Revenue from enforcing the so-called Sin Tax Law, which they claim constitutes “double taxation” against local alcohol producers.
Through its counsel, the Distilled Spirits Association of the Philippines (DSAP)—the umbrella organization of local liquor makers—said the implementation of Revenue Regulations No. 17-2012 (the implementing rules of Republic Act No. 10351 or new excise tax law) violates the National Internal Revenue Code, as amended (Tax Code) and the 1987 Constitution.
The law would also cause “grave and irreparable damage” to the local distilled spirits industry, the group said.
DSAP members include representatives from Destileria Limtuaco & Co. Inc., Emperador Distillers Inc., Ginebra San Miguel Inc. and Tanduay Distillers Inc.
In seeking a temporary restraining order from the Manila Regional Trial Court, DSAP said “the necessity and urgency of a TRO is underscored considering that an invalid regulation is sought to be enforced against the petitioners. Under the circumstances, the prohibition on the claim for tax credit or refund of specific taxes paid on ethyl alcohol subsequently used as raw materials would mean very substantial losses to petitioners.”
Some companies have already paid about P1.7 billion in excise taxes on its ethyl alcohol inventory as of the effectivity of RA 10351 and they stand to lose this if the regulation is enforced.
The DSAP claimed that the imposition of another excise tax on compounded liquors produced from ethyl alcohol, for which excise tax had been paid, would translate to very substantial losses not only to the companies but also to the entire distilled spirits industry.—Daxim L. Lucas