In an obvious ploy to force many Filipinos to stop smoking because of prohibitive costs, the BIR has come up with new stiffer floor prices for tobacco and vape products. This is a case of shooting two birds with one stone in which the government stands to earn more from taxes while also making smokers think twice about continuing with their vice.
THE Bureau of Internal Revenue (BIR) has issued guidelines on the floor price for tobacco and vapor products.
Under the guidelines, the agency announced that the minimum price of cigarette, heated, and vapor tobacco products will now be computed by adding the total production cost of the cheapest brand per tobacco product, the excise tax, and the value-added tax (VAT).
The reference rates were made for taxation purposes in case there are no documents available to prove the actual price of the tobacco products.
An example would be for heated tobacco products with a P20 production cost, P42 in excise tax and P7.44 in VAT should have a minimum price of at least P69.44.
Cigarettes with a production cost of P20, excise tax of P50, and VAT of P8.40 will have a floor price of P78.40.
Meanwhile for vapor products, BIR announced that a 0.7 mL pod of nicotine salts will now have a P125.44 floor price, as it has a Php70 production cost, P42 excise tax, and P13.44 VAT rate.
Nicotine salts of 2.5 mL volume will now have a P421.12 minimum price and a 4-pod item will have a floor price of P2,195.20.
For establishments and manufacturers caught selling the products below the floor price can face potential penalties of P200,000 to P500,000, or worth 10 times the amount of the excise tax and VAT due to the government.
Those caught may also face 4-6 years of imprisonment.
Moreover, the BIR imposed inspection fees of 50 centavos per 1000 pieces of cigars, 10 centavos per 1000 sticks of cigarettes, and 10 centavos per 1000 units of heated tobacco products.
A one-centavo inspection fee per mL of vapor product has also been placed, two centavos per kilo of whole leaf tobacco, and three centavos per kilo of tobacco scraps.
The government has been trying its best to tax tobacco products higher in line with the country’s Republic Act No. 11346 which increases excise tax on “sin” products in the country such as tobacco and alcohol beverages.
While this initiative is a sure way for the government to earn money, it is also focused on trying to force Filipinos to veer away from such vices due to their prohibitive costs. (MO)
Tags: #BureauOfInternalRevenue, #tobaccoproducts