Republic Act No. 9334· Enacted 2004-12-21

Alcohol and Tobacco Excise Tax Law (RA 9334) — BatasKo ELI5

RA 9334 raised excise taxes on alcohol and tobacco in the Philippines starting 2005, with automatic increases every 2 years until 2011. Learn what this tax law means for consumers and businesses.

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Ang Batas sa Madaling Salita— ELI5

RA 9334 increased the excise taxes on beer, wine, distilled spirits, and tobacco products starting January 1, 2005, with scheduled 6-8% increases every two years until 2011. Part of the new revenue goes to PhilHealth and the Department of Health's disease prevention programs.

Official text — Republic Act No. 9334

Jump to section ↓12 sections

Preamble — Thirteenth Congress
Section 141 — of the National Internal Revenue Code of 1997,
Section 142 — of the National Internal Revenue Code of 1997,
Section 143 — of the National Internal Revenue Code of 1997,
Section 144 — of the National Internal Revenue Code of 1997,
Section 145 — of the National Internal Revenue Code, as amen
Section 131 — of the National Internal Revenue Code of 1997,
Section 288 — of the National Internal Revenue Code of 1997,
SEC. 8 — Implementing Rules and Regulations.
SEC. 9 — Separability Clause.
SEC. 10 — Repealing Clause.
SEC. 11 — Effeetiuity.

Preamble

Thirteenth Congress

First Regular Session

Begun and held in Metro Manila, on Monday, the twenty-sixth day of July, two thousand four.

REPUBLIC ACT No. 9334

AN ACT INCREASING THE EXCISE TAX RATES IMPOSED ON ALCOHOL AND TOBACCO PRODUCTS, AMENDING FOR THE PURPOSE SECTIONS 131,141, 142, 143, 144, 145 AND 288 OF THE

NATIONAL INTERNAL REVENUE CODE OF 1997

, AS AMENDED"

Be it enacted by the Senate and House of Representatives of the Philippine Congress Assembled:

Section 141 — of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 141 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"SEC. 141.

Distilled Spirits.

- On distilled spirits, there shall be collected, subject to the provisions of Section 133 of this Code, excise tax as follows:

"(a) If produced from the sap of nipa, coconut, cassava, camote, or buri palm or from the juice, syrup or sugar of the cane, provided such materials are produced commercially in the country where they are processed into distilled spirits, per proof liter, Eleven pesos and sixty-five centavos (P11.65);

"(b) If produced from raw materials other than those enumerated in the preceding paragraph, the tax shall be in accordance with the net retail price per bottle of seven hundred fifty milliliter (750 ml.) volume capacity (excluding the excise tax and the value-added tax) as follows:

"(1) Less than Two hundred and fifty pesos (P250.00) - One hundred twenty-six pesos (P126.00), per proof liter;

"(2) Two hundred and fifty pesos (P250.00) up to Six hundred and seventy-five pesos (P675.00) - Two hundred fifty-two pesos (P252.00), per proof liter; and

"(3) More than Six hundred and seventy five pesos (P675.00) -Five hundred four pesos (P504.00), per proof liter.

"(c) Medicinal preparations, flavoring extracts, and all other preparations, except toilet preparations, of which, excluding water, distilled spirits form the chief ingredient, shall be subject to the same tax as such chief ingredient.

"This tax shall be proportionally increased for any strength of the spirits taxed over proof spirits, and the tax shall attach to this substance as soon as it is in existence as such, whether it be subsequently separated as pure or impure spirits, or transformed into any other substance either in the process of original production or by any subsequent process.

"'Spirits or distilled spirits' is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions, purifications and mixtures thereof, from whatever source, by whatever process produced, and shall indlude whisky, brandy, rum, gin and vodka, and other similar products or mixtures.

"'Proof spirits' is liquor containing one-half (1/2) of its volume of alcohol of a specific gravity of seven thousand nine hundred and thirty-nine ten thousandths (0.7939) at fifteen degrees centigrade (15

C). A 'proof liter' means a liter of proof spirits.

"'Net retail price', as determined by the Bureau of Internal Revenue through a price survey to be conducted by the Bureau of Internal Revenue itself, or by the National Statistics Office when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price at which the distilled spirits is sold on retail in at least ten (10) major supermarkets in Metro Manila, excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed outside Metro Manila, the 'net retail price' shall mean the price at which the distilled spirits is sold in at least five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax.

"Variants of existing brands and variants of new brands which are introduced in the domestic market after the effectivity of this Act shall be taxed under the proper classifcation thereof based on their suggested net retail price:

Provided, however,

That such classification shall not, in any case, be lower than the highest classification of any variant of that brand.

"A 'variant of a brand' shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand.

"New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price.

"Willful understatement of the suggested net retail price by as much as fifteen percent (15%) of the actual net retail price shall render the manufacturer 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.

"'New brand' shall mean a brand registered after the date of effectivity of R.A. No. 8240.

"'Suggested net retail price' shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported distilled spirits are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket to which a particular new brand of distilled spirits, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket which a particular new brand of distilled spirits shall be classified:

Provided, however,

That brands of distilled spirits introduced in the domestic market between January 1, 1997 and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress.

"The rates of tax imposed under this Section shall be increased by eight percent (8%) every two years starting on January 1, 2007 until January 1, 2011.

"Any downward reclassification of present categories, for tax purposes, of existing brands of distilled spirits duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited.

"The classification of each brand of distilled spirits based on the average net retail price as of October 1, 1996, as set forth in Annex 'A', including the classification of brands for the same products which, although not set forth in said Annex'A', were registered and were being commercially produced and marketed on or after October 1,1996, and which continue to be commercially produced and marketed after the effectivity of this Act, shall remain in force until revised by Congress.

"Manufacturers and importers of distilled spirits shall, within thirty (30) days from the effectivity of this Act, and within the first five (5) days of every third month thereafter, submit to the Commissioner a sworn statement of the volume of sales for each particular brand of distilled spirits sold at his establishment for the three-month period immediately preceding.

"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 shall, upon final findings by the Commissioner that the violation was committed, be penalized by a summary cancellation or withdrawal of his or its permit to engage in business as manufacturer or importer of distilled spirits.

"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 interest 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 254 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 142 — of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

Section 142 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"SEC 142.

Wines.

- On wines, there shall be collected per liter of volume capacity, the following taxes:

"(a) Sparkling wines/champagnes regardless of proof, if the net retail price per bottle (excluding the excise tax and the value-added tax) is:

"(1) Five hundred pesos (P500.00) or less - One hundred forty-five pesos and sixty centavos (P145.60); and

"(2) More than Five hundred pesos (P500.00) - Four hundred thirty-six pesos and eighty centavos (P436.80).

"(b) Still wines containing fourteen percent (14%) of alcohol by volume or less, Seventeen pesos and forty-seven centavos (P17.47); and

"(c) Still wines containing more than fourteen percent (14%) but not more than twenty-five percent (25%) of alcohol by volume, Thirty-four pesos and ninety-four centavos (P34.94).

"Fortified wines containing more than twenty-five percent (25%) of alcohol by volume shall be taxed as distilled spirits. 'Fortified wines' shall mean natural wines to which distilled spirits are added to increase their alcohol strength.

"'Net retail price', as determined by the Bureau of Internal Revenue through a price survey to be conducted by the Bureau of Internal Revenue itself, or by the National Statistics Office when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price at which wine is sold on retail in at least ten (10) major supermarkets in Metro Manila, excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed outside Metro Manila, the 'net retail price' shall mean the price at which the wine is sold in at least five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax.

"Variants of existing brands and variants of new brands which are introduced in the domestic market after the effectivity of this Act shall be taxed under the proper classification thereof based on their suggested net retail price:

Provided, however,

That such classification shall not, in any case, be lower than the highest classification of any variant of that brand.

"A 'variant of a brand' shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand.

"New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price.

"'New brand' shall mean a brand registered after the date of effectivity of R. A. No. 8240.

"'Suggested net retail price' shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported wines are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket to which a particular new brand of wine, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket which a particular new brand of wines shall be classified:

Provided, however,

That brands of wines introduced in the domestic market between January 1, 1997 and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress.

"The rates of tax imposed under this Section shall be increased by eight percent (8%) every two years starting on January 1, 2007 until January 1, 2011.

"Any downward reclassification of present categories, for tax purposes, of existing brands of wines duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited.

"The classification of each brand of wines based on the average net retail price as of October 1,1996, as set forth in Annex 'B', including the classification of brands for the same products which, although not set forth in said "Annex B", were registered and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the effectivity of this Act, shall remain in force until revised by Congress.

"Manufacturers and importers of wines shall, within thirty (30) days from the effectivity of this Act, and within the first five (5) days of every month thereafter, submit to the Commissioner a sworn statement of the volume of sales for each particular brand of wines sold at his establishment for the three-month period immediately preceding.

"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 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 wines.

"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 143 — of the National Internal Revenue Code of 1997, as amended, is hereby further→

Section 143 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"SEC. 143.

Fermented Liquors.

- There shall be levied, assessed and collected an excise tax on beer, lager beer, ale, porter and other fermented liquors except

tuba, basi, tupuy

and similar fermented liquors in accordance with the following schedule:

"(a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is less than Fourteen pesos and fifty centavos (P14.50), the tax shall be Eight pesos and twenty- seven centavos (P8.27) per liter;

"(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fourteen pesos and fifty centavos (p14.50) up to Twenty-two pesos (P22.00), the tax shall be Twelve pesos and thirty centavos (P12.30) per liter;

"(c) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Twenty-two pesos (P22.00), the tax shall be Sixteen pesos and thirty-three centavos (P16.33) per liter.

Provided, however,

That such classification shall not, in any case, be lower than the highest classification of any variant of that brand.

"A 'variant of a brand' shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand.

"Fermented liquors which are brewed and sold at micro-breweries or small establishments such as pubs and restaurants shall be subject to the rate in paragraph (e) hereof.

"New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price.

"'New brand' shall mean a brand registered after the date of effectivity of R.A. No. 8240.

"'Suggested net retail price' shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported fermented liquor are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket to which a particuIar new brand of fermented liquor, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Interns Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket which a particular new brand of fermented liquors shall he classified: Provided, however, That brands of fermented liquors introduced in the domestic market between January 1, 1997 and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31,2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress.

"'Net retail price', as determined by the Bureau of Internal Revenue through a price survey to be conducted by the Bureau of Internal Revenue itself, or the National Statistics Office when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price at which the fermented liquor is sold on retail in at least twenty (20) major supermarkets in Metro Manila (for brands of fermented liquor marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed outside Metro Manila, the 'net retail price' shall mean the price at which the fermented liquor is sold in at least five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax.

"The classification of each brand of fermented liquor based on its average net retail price as of October 1, 1996, as set forth in Annex 'C', including the classification of brands for the same products which, although not set forth in said Annex 'C', were registered and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the effectivity of this Act, shall remain in force until revised by Congress.

"The rates of tax imposed under this Section shall be increased by eight percent (8%) every two years starting on January 1, 2007 until January 1, 2011.

"Any downward reclassification of present categories, for tax purposes, of existing brands of fermented liquor duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited.

"Every brewer or importer of fermented liquor shall, within thirty (30) days from the effectivity of this Act, and within the first five (5) days of every month thereafter, submit to the Commissioner a sworn statement of the volume of sales for each particular brand of fermented liquor sold at his establishment for the three-month period immediately preceding.

"Any brewer 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 shall be penalized by a summary cancellation or withdrawal of his or its permit to engage in business as brewer or importer of fermented liquor.

"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 144 — of the National Internal Revenue Code of 1997, as amended, is hereby further→

Section 144 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"SEC. 144.

Tobacco Products.

- There shall be collected a tax of One peso (P1.00) on each kilogram of the following products of tobacco:

"(a) Tobacco twisted by hand or reduced into a condition to be consumed in any manner other than the ordinary mode of drying and curing;

"(b) Tobacco prepared or partially prepared with or without the use of any machine or instruments or without being pressed or sweetened except as otherwise provided hereunder; and

"(c) Fine-cut shorts and refuse, scraps, clippings, cuttings, stems and sweepings of tobacco except as otherwise provided hereunder.

"Stemmed leaf tobacco, tobacco prepared or partially prepared with or without the use of any machine or instrument or without being pressed or sweetened, fine-cut shorts and refuse, scraps, clippings, cuttings, stems, midribs, and sweepings of tobacco resulting from the handling or stripping of whole leaf tobacco shall be transferred, disposed of, or otherwise sold, without any prepayment of the excise tax herein provided for, if the same are to be exported or to be used in the manufacture of cigars, cigarettes, or other tobacco products on which the excise tax will eventually be paid on the finished product, under such conditions as may be prescribed in the rules and regulations promulgated by the Secretary of Finance, upon recommendation of the Commissioner.

"On tobacco specially prepared for chewing so as to be unsuitable for use in any other manner, on each kilogram, Seventy-nine centavos (P0.79).

"The rates of tax imposed under this Section shall be increased by six percent (6%) every two years starting on January 1, 2007 until January 1, 2011.

"Manufacturers and importers of tobacco products shall, within thirty (30) days from the effectivity of this Act, and within the first five (5) days of every month thereafter, submit to the Commissioner a sworn statement of the volume of sales for each particular brand of tobacco products sold at their establishment for the three-month period immediately preceding.

"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 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.

"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 145 — of the National Internal Revenue Code, as amended, is hereby further amended→

Section 145 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:

"SEC. 145.

Cigars and Cigarettes.

"(A) Cigars. - There shall be levied, assessed and collected on cigars an ad valorem tax based on the net retail price per cigar (excluding the excise tax and the value-added tax) in accordance with the following schedule:

"(1) If the net retail price per cigar is Five hundred pesos (P500.00) or less, ten percent (10%); and

"(2) If the net retail price per cigar (excluding the excise tax and the value-added tax) is more than Five hundred pesos (P500.00), Fifty pesos (P50.00) plus fifteen percent (15%) of the net retail price in excess of Five hundred pesos (P500.00).

"(B) Cigarettes Packed by Hand. - There shall be levied, assessed and collected on cigarettes packed by hand a tax at the rates prescribed below:

"Effective on January 1, 2005, Two pesos (P2.00) per pack;

"Effective on January 1,2007, Two pesos and twenty-three centavos (P2.23) per pack;

"Effective on January 1, 2009, Two pesos and forty-seven centavos (P2.47) per pack; and

"Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72) per pack.

"Duly registered or existing brands of cigarettes or new brands thereof packed by hand shall only be packed in thirties.

"(C)

Cigarettes Packed by Machine.

- There shall be levied, assessed and collected on cigarettes packed by machine a tax at the rates prescribed below:

"(1) If the net retail price (excluding the excise tax and the value-added tax) is below Five pesos (P5.00) per pack, the tax shall be:

"Effective on January 1, 2005, Two pesos (P2.00) per pack;

"Effective on January 1, 2007, Two pesos and twenty-three centavos (P2.23) per pack;

"Effective on January 1, 2009, Two pesos and forty-seven centavos (P2.47) per pack; and

"Effective on January 1, 2011, Two pesos and seventy-two centavos (P2.72) per pack.

"(2) If the net retail price (excluding the excise tax and the value-added tax) is Five pesos (P5.00) but does not exceed Six pesos and fifty centavos (P6.50) per pack, the tax shall be:

"Effective on January 1, 2005, Six pesos and thirty-five centavos (P6.35) per pack;

"Effective on January 1, 2007, Six pesos and seventy-four centavos (P6.74) per pack;

"Effective on January 1, 2009, Seven pesos and fourteen centavos (P7.14) per pack; and

"Effective on January 1, 2011, Seven pesos and fifty-six centavos (P7.56) per pack.

"(3) If the net retail price (excluding the excise tax and the value-added tax) exceeds Six pesos and fifty centavos (P6.50) but doesnot exceed Ten pesos (Pl0.00) per pack, the tax shall be:

"Effective on January 1, 2005, Ten pesos and thirty-five centavos (P10.35) per pack;

"Effective on January 1, 2007, Ten pesos and eighty-eight centavos (P10.88) per pack;

"Effective on January 1, 2009, Eleven pesos and forty-three centavos (P11.43) per pack; and

"Effective on January 1, 2011, Twelve pesos (P12.00) per pack.

"(4) If the net retail price (excluding the excise tax and the value-added tax) is above Ten pesos (P10.00) per pack, the tax shall be:

"Effective on January 1, 2005, Twenty-five pesos (P25.00) per pack;

"Effective on January 1, 2007, Twenty-six pesos and six centavos (P26.06) per pack;

"Effective on January 1, 2009, Twenty-seven pesos and sixteen centavos (P27.16) per pack; and

"Effective on January 1, 2011, Twenty-eight pesos and thirty centavos (P28.30) per pack.

"Variants of existing brands and variants of new brands of cigarettes which are introduced in the domestic market after the effectivity of this Act shall be taxed under the proper classification thereof based on their suggested, net retail price:

Provided, however,

That such classification shall not, in any case, be lower than the highest classification of any variant of that brand.

"A 'variant of a brand' shall refer to a brand on which a modifier is prefixed and/or suffixed to the root name of the brand.

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

"Any downward reclassification of present categories, for tax purposes, of existing brands of cigars and cigarettes duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited.

"New brands, as defined in the immediately following paragraph, shall initially be classified according to their suggested net retail price.

"'New brand' shall mean a brand registered after the date of effectivity of R.A. No. 8240.

"'Suggested net retail price' shall mean the net retail price at which new brands, as defined above, of locally manufactured or imported cigarettes are intended by the manufacturer or importer to be sold on retail in major supermarkets or retail outlets in Metro Manila for those marketed nationwide, and in other regions, for those with regional markets. At the end of three (3) months from the product launch, the Bureau of Internal Revenue shall validate the suggested net retail price of the new brand against the net retail price as defined herein and determine the correct tax bracket under which a particular new brand of cigarette, as defined above, shall be classified. After the end of eighteen (18) months from such validation, the Bureau of Internal Revenue shall revalidate the initially validated net retail price against the net retail price as of the time of revalidation in order to finally determine the correct tax bracket under which a particular new brand of cigarettes shall be classified:

Provided, however,

That brands of cigarettes introduced in the domestic market between January 1, 1997 and December 31, 2003 shall remain in the classification under which the Bureau of Internal Revenue has determined them to belong as of December 31, 2003. Such classification of new brands and brands introduced between January 1, 1997 and December 31, 2003 shall not be revised except by an act of Congress.

"'Net retail price', as determined by the Bureau of Internal Revenue through a price survey to be conducted by the Bureau of Internal Revenue itself, or the National Statistics Office when deputized for the purpose by the Bureau of Internal Revenue, shall mean the price at which the cigarette is sold on retail in at least twenty (20) major supermarkets in Metro Manila (for brands of cigarettes marketed nationally), excluding the amount intended to cover the applicable excise tax and the value-added tax. For brands which are marketed only outside Metro Manila, the 'net retail price' shall mean the price at which the cigarette is sold in at least five (5) major supermarkets in the region excluding the amount intended to cover the applicable excise tax and the value-added tax.

"The classification of each brand of cigarettes based on its average net retail price as of October 1, 1996, as set forth in Annex 'D', including the classification of brands for the same products which, although not set forth in said Annex ID', were registered and were being commercially produced and marketed on or after October 1, 1996, and which continue to be commercially produced and marketed after the effectivity of this Act, shall remain in force until revised by Congress.

"Manufacturers and importers of cigars and cigarettes shall, within thirty (30) days from the effectivity of this Act and within the first five (5) days of every month thereafter, submit to the Commissioner a sworn statement of the volume of sales for each particular brand of cigars and/or cigarettes sold at his establishment for the three-month period immediately preceding.

"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 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 aggregate amount of deficiency taxes, surcharges and interest which may be assessed pursuant to this Section.

"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 131 — of the National Internal Revenue Code of 1997, as amended, is hereby amended→

Section 131 of the National Internal Revenue Code of 1997, as amended, is hereby amended to read as follows:

"SEC. 131.

Payment of Excise Taxes on Imported Articles.

"(A)

Persons Liable.

- Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customshouse, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption.

"In the case of tax-free articles brought or imported into the Philippines by persons, entities, or agencies exempt from tax which are subsequently sold, transferred or exchanged in the Philippines to non-exempt persons or entities, the purchasers or recipients shall be considered the importers thereof, and shall be liable for the duty and internal revenue tax due on such importation.

"The provision of any special or general law to the contrary notwithstanding, the importation of cigars and cigarettes, distilled spirits, fermented liquors and wines into the Philippines, even if destined for tax and duty-free shops, shall be subject to all applicable taxes, duties, charges, including excise taxes due thereon. This shall apply to cigars and cigarettes, distilled spirits, fermented liquors and wines brought directly into the duly chartered or legislated freeports of the Subic Special Economic and Freeport Zone, created under Republic Act No. 7227; the Cagayan Special Economic Zone and Freeport, created under Republic Act No. 7922; and the Zamboanga City Special Economic Zone, created under Republic Act No. 7903, and such other freeports as may hereafter be established or created by law:

Provided, further,

That importations of cigars and cigarettes, distilled spirits, fermented liquors and wines made directly by a government-owned and operated duty-free shop, like the Duty-Free Philippines (DFP), shall be exempted from all applicable duties only:

Provided, still further,

That such articles directly imported by a government-owned and operated duty-free shop, like the Duty-Free Philippines, shall be labeled 'duty-free' and 'not for resale':

Provided, finally,

That the removal and transfer of tax and duty-free goods, products, machinery, equipment and other similar articles other than cigars and cigarettes, distilled spirits, fermented liquors and wines, from one freeport to another freeport, shall not be deemed an introduction into the Philippine customs territory."

"Cigars and cigarettes, distilled spirits and wines within the premises of all duty-free shops which are not labelled as hereinabove required, as well as tax and duty-free articles obtained from a duty-free shop and subsequently found in a non-duty-free shop to be offered for resale shall be confiscated, and the perpetrator of such non-labelling or re-selling shall be punishable under the applicable provisions of this Code.

"Articles confiscated shall be disposed of in accordance with the rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioners of Customs and Internal Revenue, upon consultation with the Secretary of Tourism and the General Manager of the Philippine Tourism Authority.

"The tax due on any such goods, products, machinery, equipment or other similar articles shall constitute a lien on the article itself, and such lien shall be superior to all other charges or liens, irrespective of the possessor thereof.

"(B)

Rate and Basis of the Excise Tax on Imported Articles.

- Unless otherwise specified, imported articles shall be subject to the same rates and basis of excise taxes applicable to locally manufactured articles."

Show 5 more sections +→

Section 288 — of the National Internal Revenue Code of 1997, as amended, is hereby further→

Section 288 of the National Internal Revenue Code of 1997, as amended, is hereby further amended to read as follows:

"SEC. 288.

Disposition of Incremental Revenues.

"(A)

Incremental Revenues front Republic Act No. 7660.

- The incremental revenues from the increase in the documentary stamp taxes under R.A. No. 7660 shall be set aside for the following purposes.

"(1) In 1994 and 1995, twenty-five percent (25%) thereof respectively, shall accrue to the Unified Home-Lending Program under Executive Order No. 90 particularly for mass-socialized housing program to be allocated as follows: fifty percent (50%) for mass-socialized housing; thirty percent (30%) for the community mortgage program; and twenty percent (20%) for land banking and development to be administered by the National Housing Authority:

Provided

, That not more than one percent (1%) of the respective allocations hereof shall be used for administrative expenses;

"(2) In 1996, twenty-five percent (25%) thereof to be utilized for the National Health Insurance Program that hereafter may he mandated by law;

"(3) In 1994 and every year thereafter, twenty-five percent (25%) thereof shall accrue to a Special Education Fund to be administered by the Department of Education, Culture and Sports for the construction and repair of school facilities, training of teachers, and procurement or production of instructional materials and teaching aids; and

"(4) In 1994 and every year thereafter, fifty percent (50%) thereof shall accrue to a Special Infrastructure Fund for the construction and repair of roads, bridges, dams and irrigation, seaports and hydroelectric and other indigenous power projects:

Provided, however,

That for the years 1994 and 1995, thirty percent (30%), and for the years 1996, 1997 and 1998, twenty percent (20%), of this fund shall be allocated for depressed provinces as declared by the President as of the time of the effectivity of R.A. No. 7660:

Provided, further,

That availments under this fund shall be determined by the President on the basis of equity.

Provided, finally,

That in paragraphs (2), (3) and (4) of this Section, not more than one percent (1%) of the allocated funds thereof shall be used for administrative expenses by the implementing agencies.

"(B)

Incremental Revenues from Republic Act No. 8240.

- Fifteen percent (15%) of the incremental revenue collected from the excise tax on tobacco products under R.A. No. 8240 shall be allocated and divided among the provinces producing burley and native tobacco in accordance with the volume of tobacco leaf production. The fund shall be exclusively utilized for programs in pursuit of the following objectives:

"(1) Cooperative projects that will enhance better quality of agricultural products and increase income and productivity of farmers;

"(2) Livelihood projects, particularly the development of alternative farming system to enhance farmer's income; and

"(3) Agro-industrial projects that will enable tobacco farmers to be involved in the management and subsequent ownership of projects, such as post-harvest and secondary processing like cigarette manufacturing and by-product utilization.

"The Department of Budget and Management, in consultation with the Oversight Committee created under said R.A. No. 8240, shall issue the corresponding rules and regulations governing the allocation and disbursement of this fund.

"(C)

Incremental Revenues from the Excise Tax on Alcohol and Tobacco Products.

"(1) Two and a half percent (2.5%) of the incremental revenue from the excise tax on alcohol and tobacco products starting January 2005 shall be remitted directly to the Philippine Health Insurance Corporation for the purpose of meeting and sustaining the goal of universal coverage of the National Health Insurance Program; and

"(2) Two and a half percent (2.5%) of the incremental revenue from the excise tax on alcohol and tobacco products starting January 2005 shall be credited to the account of the Department of Health and constituted as a trust fund for its disease prevention program.

"The earmarking provided under this provision shall be observed for five (5) years starting from January 2005."

SEC. 8 — Implementing Rules and Regulations.→

SEC. 8.

Implementing Rules and Regulations.

- The Secretary of Finance shall, upon the recommendation of the Commissioner of Internal Revenue, promulgate the necessary rules and regulations for the effective implementation of this Act.

SEC. 9 — Separability Clause.→

SEC. 9.

Separability Clause.

- If any of the provisions of this Act is declared invalid by a competent court, the remainder of this Act or any provision not affected by such declaration of invalidity shall remain in force and effect.

SEC. 10 — Repealing Clause.→

SEC. 10.

Repealing Clause.

- All laws, decrees, ordinances, rules and regulations, executive or administrative orders, and such other presidential issuances as are inconsistent with any of the provisions of this Act are hereby repealed, amended or otherwise modified accordingly.

SEC. 11 — Effeetiuity.→

SEC. 11.

Effeetiuity.

- This Act shall take effect on January 1, 2005.

Approved,

FRANKLIN DRILON

President of the Senate

JOSE DE VENECIA JR.

Speaker of the House of Representatives

This Act which is a consolidation of House Bill No. 3174 and Senate Bill No. 1854 was finally passed by the House of Representatives and the Senate on December 15, 2004 and December 16, 2004, respectively.

OSCAR G. YABES

Secretary of Senate

ROBERTO P. NAZARENO

Secretary General

House of Represenatives

Approved: December 21, 2004

GLORIA MACAPAGAL-ARROYO

President of the Philippines

The Lawphil Project - Arellano Law Foundation

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

Bawat beses na bumibili ka ng San Miguel, Red Horse, o pack ng Marlboro, may excise tax na nakasama sa presyo. Ang batas na ito ang nagtatakda kung magkano ang buwis na iyon.

ELI5: RA 9334 raised the taxes on beer, wine, hard drinks, cigarettes, and cigars starting January 1, 2005. The taxes were set to automatically go up by 6-8% every two years until 2011. A small portion of the extra tax money collected goes to PhilHealth and disease prevention programs.

Hindi ito ang batas na "nagpamahal" ng sigarilyo — maraming batas ang nagawa pagkatapos nito. Pero ito ang simula ng scheduled sin tax increases bago pa dumating ang TRAIN Law.

Real Filipino Scenario

Si Carlo, isang 35-anyos na tindero sa Cagayan de Oro, ay nagtataka noong 2005 kung bakit mas mahal na ang mga sigarilyo at beer na kanyang ipinagbibili sa tindahan.

Ang kanyang supplier ay nagsabi: "May bagong batas, pare. Dinagdagan ng gobyerno ang buwis sa alak at tabako."

Sa totoo lang, hindi ito malaking impact sa mga consumer sa simula — ang dagdag sa presyo ng isang pack ng sigarilyo noong 2005 ay ilang sentimo lang. Pero ang pinaka-important na parte ay hindi ang presyo ng baso ng beer. Ang importante ay saan napupunta ang dagdag na koleksyon ng gobyerno.

What the Law Actually Says

RA 9334, approved on December 21, 2004, took effect on January 1, 2005 (RA 9334, Section 11). It amended Sections 131, 141, 142, 143, 144, 145, and 288 of the National Internal Revenue Code of 1997.

What products are covered?

The law covers:

Distilled spirits — rum, gin, vodka, whisky, brandy, lambanog-based products, and similar drinks (Section 141)
Wines — sparkling wines/champagnes and still wines (Section 142)
Fermented liquors — beer, lager beer, ale, porter (Section 143); traditional drinks like tuba, basi, and tupuy are excluded
Tobacco products — raw tobacco and processed tobacco for chewing (Section 144)
Cigars and cigarettes — both hand-packed and machine-packed (Section 145)

Key tax rates (as of January 1, 2005)

Distilled spirits (Section 141):

Local sugarcane/nipa/coconut-sourced: ₱11.65 per proof liter
Other spirits priced below ₱250 per 750ml bottle: ₱126 per proof liter
Priced ₱250–₱675: ₱252 per proof liter
Priced above ₱675: ₱504 per proof liter

Fermented liquors / Beer (Section 143):

Below ₱14.50 per liter retail: ₱8.27 per liter excise tax
₱14.50–₱22.00 per liter: ₱12.30 per liter
Above ₱22.00 per liter: ₱16.33 per liter

Cigarettes packed by machine (Section 145, effective Jan 1, 2005):

Below ₱5.00 retail per pack: ₱2.00 per pack
₱5.00–₱6.50 retail: ₱6.35 per pack
₱6.50–₱10.00 retail: ₱10.35 per pack
Above ₱10.00 retail: ₱25.00 per pack

Cigarettes packed by hand (Section 145):

₱2.00 per pack starting January 1, 2005

Automatic increases built in

Tax rates were scheduled to increase by 8% every two years starting January 1, 2007 until January 1, 2011 for alcohol products. For tobacco products, the increase was 6% every two years on the same schedule (Section 144).

This is a key feature: the increases were pre-programmed into the law — no need for Congress to pass a new law each time.

Where does the money go? (Section 288)

Starting January 2005, for the first 5 years:

2.5% of incremental revenue from alcohol and tobacco excise taxes → goes directly to Philippine Health Insurance Corporation (PhilHealth) for universal health coverage
2.5% → goes to the Department of Health as a trust fund for disease prevention programs

Additionally, 15% of incremental tobacco tax revenue continues to be allocated to provinces producing burley and native tobacco for livelihood and agro-industrial programs.

Imported products

All imports of alcohol and tobacco are subject to the same excise taxes, even if destined for duty-free shops — including those in Subic, Cagayan, and Zamboanga freeports (Section 131). The only exception is government-operated duty-free shops like Duty-Free Philippines, which are exempt from duties (not excise taxes), and their items must be labeled "duty-free" and "not for resale."

What This Means for You

If you are a consumer: the price you pay for beer, wine, spirits, and cigarettes includes an excise tax. RA 9334 raised those taxes starting 2005 and programmed automatic increases until 2011.

If you are a manufacturer or importer of these products: you are required to submit sworn statements of your sales volume to the BIR every month (within the first 5 days), and willful misrepresentation can get your permit cancelled.

If you run a duty-free shop: products not labeled as "duty-free" and found being re-sold are subject to confiscation. The rules on freeport zone imports are very specific.

Para sa karaniwang Pilipino: ang bahagi ng binabayad mo sa bawat bote ng beer o pack ng sigarilyo ay pumupunta sa PhilHealth at sa Department of Health — theoretically, para sa kalusugan ng bawat Pilipino.

What Most Filipinos Get Wrong

"Ang RA 9334 ay ang 'sin tax' na nagpamahal ng sigarilyo ng malaki."

Hindi ito ang pangunahing sin tax law. Ang mas makabuluhang reforma sa sin taxes ay dumating sa RA 10351 (Sin Tax Reform Law of 2012), na mas dramatikong nagpamahal ng tabako at alkohol. Ang RA 9334 ay ang earlier, incremental version.

"Ang tuba at basi ay may excise tax din."

Hindi. Section 143 explicitly exempts tuba, basi, tupuy, and similar traditional fermented liquors from the fermented liquor excise tax. Local homebrews are treated differently from commercial beer.

"Ang duty-free shops ay palaging libre sa lahat ng taxes."

Mali. Kahit ang mga produkto sa duty-free shops ay exempt sa customs duties, ang excise taxes pa rin ay applicable ayon sa RA 9334. "Duty-free" ay hindi katumbas ng "tax-free sa lahat."

"Kapag binago ang batas, automatic na magbabago ang lahat ng tax rates."

Hindi. Ang RA 9334 ay nagtatakda na ang mga brand classifications na naitakda bago o sa panahon ng batas ay mananatili "until revised by Congress" — ibig sabihin, ang Congress ang kailangang mag-legislate ng bagong pagbabago, hindi automatic.

What to Do If You Are a Business Owner Affected by This Law

Register with the BIR — All manufacturers and importers of alcohol and tobacco products must be registered with the Bureau of Internal Revenue
Submit your sworn statements on time — Monthly volume-of-sales reports are required within the first 5 days of every month; late or inaccurate filings can result in permit cancellation
Classify your products correctly — Willful understatement of net retail price by 15% or more triggers additional excise tax liability (Section 141)
Keep records of imports — If you import alcohol or tobacco, ensure proper excise tax payment at customs before release
Consult a tax professional — Excise tax compliance for alcohol and tobacco is complex; engage a CPA or tax attorney familiar with NIRC provisions

Related Laws

FAQs

Bakit may excise tax sa alak at tabako pero hindi sa ibang pagkain at inumin?

Ang excise tax sa alak at tabako — tinatawag na "sin tax" — ay isang paraan ng gobyerno para (1) dagdagan ang revenue at (2) discourage consumption ng mga produktong may masamang epekto sa kalusugan. Ito ay karaniwang patakaran sa maraming bansa.

Ang RA 9334 ba ay nag-apply pa rin noong 2011 at pataas?

Ang scheduled increases ng RA 9334 ay hanggang January 1, 2011 lang. Pagkatapos noon, ang RA 10351 (Sin Tax Reform Law ng 2012) ang pumalit na may mas malaking at mas systematic na mga dagdag sa buwis. // TODO: verify exact timeline and transition with tax law specialist.

Saan ko malalaman kung tama ang excise tax na kasama sa produktong aking binibili?

Ang BIR ang nagpo-publish ng mga approved tax rates at brand classifications. Para sa mga reklamo tungkol sa tamang excise tax, makipag-ugnayan sa BIR sa bir.gov.ph o sa pinakamalapit na Revenue District Office.

Sources

Republic Act No. 9334 (December 21, 2004). An Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products, Amending for the Purpose Sections 131, 141, 142, 143, 144, 145 and 288 of the National Internal Revenue Code of 1997, as Amended. Available at: https://lawphil.net/statutes/repacts/ra2004/ra_9334_2004.html

General information only. Not legal advice. Consult PAO at 1-800-10-PAO-8888 or visit the nearest Public Attorney's Office for legal assistance.

By Irvin Abarca & Claude (AI Research Partner) | Published May 2026

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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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