Introduction on

Excise Taxes
 ⬜ “CIGARS”
DEFINITION means all rolls of tobacco or any substitute
thereof, wrapped in leaf tobacco.
OF
TERMS ◼“CIGARETTES”
means all rolls of finely-cut leaf tobacco, or any
When used herein substitute therefore, wrapped in paper or in any
and in statements or other material.
official forms
prescribed hereunder, ▫ “WHOLESALE PRICE”
the following terms shall mean the amount of money or price paid for
shall have the cigars or cigarettes purchased for the purpose of
meaning indicated: resale, regardless of quantity.

◼ “RETAIL PRICE”
shall mean the amount of money or price which
an ultimate consumer or end-user pays for cigars
 ◼ WHARFAGE DUES
▫ It is the amount assessed against the cargo of a
DEFINITION vessel engaged in foreign or coastwise trade,
based on the quantity, weight or measurement
OF received and/or discharged by such vessel. Either
the owner, consignee or agent of the merchandise
is liable for such charge.
TERMS ◼ ARRASTE CHARGES
▫ It is the amount which the owner, consignee, or
When used herein agent of either, of the merchandise has to pay for
the receiving, handling and custody of the
and in statements or merchandise imported or for export.
official forms ◼ EXCISE TAX
prescribed hereunder, ◼ Is a tax on the production, sale or consumption
the following terms of a commodity in a country.
◼ SPECIFIC TAX
shall have the ▫ Refers to the excise tax imposed which is base on
meaning indicated: weight or volume capacity or any other physical
unit.
◼ AD VALOREM TAX
▫ Refers to the excise tax which is base on selling
price or other specified value of the goods.
 • “NET RETAIL PRICE”
DEFINITIO shall mean the price at which the cigarette is sold on
retail in at least five (5) major supermarkets in Metro
N Manila (for brands of cigarettes marketed nationally),
OF excluding the amount intended to cover the
applicable excise tax and the value-added tax. For
TERMS cigarettes which are marketed only outside Metro
When used herein Manila, the ‘net retail price’ shall mean the price at
and in statements or which the cigarette is sold in at least five (5) major
official forms supermarkets in the region excluding the amount
prescribed hereunder, intended to cover the applicable excise tax and the
the following terms value-added tax.
shall have the ◼ “Stemmed leaf tobacco”
meaning indicated: means leaf tobacco which has had the stem or
midrib removed. The term does not include
broken leaf tobacco.
 ⬜ AUTOMOBILES – as defined under Sec. 2,
DEFINITIO paragraph (b) of Revenue Regulation 25-2003 shall
refer to any four (4) or more wheeled motor
N vehicle regardless of seating capacity, which is
propelled by gasoline, of these Regulations, buses,
OF trucks, cargo vans, jeep/jeepneys/jeepney
TERMS substitutes, single cab chassis, and special
When used herein purpose vehicles as defined under Sec. 2 (b) of
and in statements or Rev. Reg. 25-2003 shall not be considered as
automobiles. Only those classified as automobiles
official forms
are subject to excise tax.
prescribed hereunder,
the following terms
shall have the ⬜ EXCISE TAX – for automobiles, shall refer to
meaning indicated: the Ad Valorem Tax (AVT) subject to the rates
and bases imposed under Sec. 4 of Revenue
Regulation 25-2003.
DEFINITION
 BRAND NEW AUTOMOBILES – as contemplated under
OF DOF joint Order No. 1-2010 refers to the following criteria:

TERMS  of current or advance year model in the country of origin

and/or manufacture; or
 with year model of the immediately preceding year IB the
country of origin and/or manufacture provided that:
When used herein
 the motor vehicle has a mileage of not more than 200
and in statements or kms or 125 miles and
official forms  -the motor vehicle has been acquired by the importer from
prescribed hereunder, the car dealer as first owner.
the following terms  A brand new automobile with year model of the
shall have the immediately preceding year shall not be accorded any
meaning indicated: depreciation allowance.
 Abbreviations
ET – Excise Tax ST – Specific Tax

STR – Specific Tax Rate AVT – Ad Valorem Tax

AVTR – Ad Valorem Tax Rate GL – Gauge Liter

Pf – Proof PL – Proof Liter

AC – Alcohol Content NRP - Net Retail Price

 Abbreviations
Btl - Bottle/s NOB - Number of Bottles

NOC - Number of Cigars NOP - Number of

Packs

VC - Volume Capacity Li - Liter/s

Ml - Milliliters KG - Kilogram/s

Lb - Pound/s PC - Number of Pieces

 Abbreviations

VAT - Value Added Tax

Bx - Box/es

LC - Landed Cost
CuD - Customs Duty
 BASIC CONCEPT
Excise Tax is a tax on the
production, sale or consumption
of a commodity in a country.
Basic
Concept of
Excise APPLICABILITY
On goods manufactured or
Taxes produced in the Philippines for
domestic sale or consumption or
for any other disposition; and
On goods imported.
 Types Of Excise Taxes

Specific Tax – refers to

the excise tax imposed Ad Valorem Tax – refers
which is based on weight to the excise tax which is
or volume capacity or any based on selling price or
other physical unit of other specified value of the
measurement goods/articles.
 1. Alcohol Products

a. Distilled Spirits
b. Wines
MANNER OF c. Fermented Liquors
COMPUTATION
2. Tobacco Products

a. Tobacco Products
b. Cigars & Cigarettes
 3. Petroleum Products

4. Miscellaneous Articles

Manner Of a. Automobiles
Computation b. Non-essential Goods

5. Mineral Products

6. Sweetened Beverages
  Impose Higher Taxes on Oil Products; and
How does R.A
10963  Higher Automobile Excise Tax
otherwise
Higher Rate of Tobacco Products
known as 

TRAIN Law  New Implementation Cosmetic Products

affects when
it comes to  Sweetened Beverages

Excise Taxes?
 The top most
1. Smoker
affected
individual of
Excise Tax
DRINKERS LPG
USERS
New Provision in TRAIN Including
LAW  Sweetened Juice Drink
 Sweetened Tea
 All Carbonated Beverages
 Flavored Water
 Energy and sports drinks
 Other powdered drinks not classified as
milk,juice,tea and coffee
 Cereal and grain beverages
 Other non-alcoholic beverages that contain sugar
Exclusion: That the
following described in the
food category system from
Codex Alimentarius Food
Category Descripture
(CODEX STAN 192-1995)
New Provision in TRAIN
LAW

Manufactured Oils and

Other Fuels
New Provision in TRAIN
LAW

Mineral Products
with rate of tax of

 Effective Janaury 1,2018

(P50,00)

 Effective January 1,2019

(P100.00)

 Effective January 1,2020

(P150.00)

(Note: per metric ton)

New Provision in TRAIN
LAW
 What is the Concept of Implementing
New Rate of SIN TAX?
 Raising taxes on is the most effective way to reduce
using it.
 Why Excise Taxes
Matters
The implementation of excise taxes allows
federal and state governments the means to
raise additional revenue nececessary for large
projects such as social programs.
PAYMENT OF
EXCISE TAXES
ON IMPORTED
ARTICLES
SECTION 131 of NIRC
 • Importer
• Owner
• Person who is found
in possession of
Persons articles which are
exempt from excise
Liable taxes other than those
legally entitled to
exemption.
• Who in the course of
trade and business
 which are subsequently
sold, transferred or
exchanged in the
Philippines to
nonexempt persons or
Tax-free articles brought or entities, the
imported into the Philippines by purchasers or
the following exempt from tax recipients shall be
considered the
importers thereof, and
shall be liable for the
duty and internal
revenue tax due on
such importation.

by persons; Entities; or Agencies

“ 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.
… brought directly into the duly chartered or legislated free ports of the;
• Subic Special Economic and Freeport Zone (RA. No. 7227)
• Cagayan Special Economic Zone and Freeport (RA. No. 7922)
• Zamboanga City Special Economic Zone ( RA. No. 7903)
• such other free ports as may hereafter be established or created by law.
4. > Cigars and cigarettes, distilled spirits and wines within the
premises of all duty-free shops which are not labeled as 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-labeling or
reselling shall be punishable under the applicable provisions of this
Code. (NIRC).
5. Confiscated Articles shall be destroyed using the most
environmentally friendly method available, in accordance with the
rules and regulations promulgated by the Secretary of Finance, and
upon recommendation of the Commissioners of Customs and
Internal Revenue.
6. The tax due on any such goods, products, machinery, equipment or
other similar articles shall constitute a lien on the article itself, such
lien shall be superior to all other charges and liens, irrespective of
the possessor thereof.
NIRC
CHAPTER IV

Rates of
Excise Tax of
Tobacco
Products
 Tobacco Products

⬜ Smoking Tobacco except cigar and cigarette:

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. (RR 17-2012)

"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.”
 ⬜ Chewing Tobacco
“Tobacco specially prepared for
chewing and unsuitable for use in any
Tobacco other manner.”

Products ⬜ Cigar
⬜ Cigarettes whether packed by hand or by
machine.
 Rates of Excise Tax on Tobacco Products

⬜ According to RR 17-2012 the rates of excise tax of tobacco products are shown in the table below:

Particulars 2013 2014 2015 2016 2017 2018

onwards

Tobacco
Products per
kilogram:
Smoking Php 1.75 Php 1.82 Php 1.89 Php 1.97 Php 2.05 will
Tobacco increase
4% of the
previous
ST every
year.
Chewing Php 1.50 Php 1.56 Php 1.62 Php 1.68 Php 1.75 will
Tobacco increase
4% of the
previous
ST every
year.
 Rates of Excise Tax on Cigars
According to RR-17-2012 excise tax on Cigars shall be based on the NRP per Cigar (excluding the excise
and value-added tax). The rates of excise tax may be determined in the table shown below:

Cigars 2013 2014 2015 2016 2017 2018

onwards

Based on 20% 20% 20% 20% 20% 20%

the NRP
per Cigar.
AVT rate:
Per Cigar Php 5.00 Php 5.20 Php 5.41 Php 5.62 Php 5.85 will
ST rate: increase
4% of the
previous ST
every year.
 Rates of Excise tax on Cigarettes
RR no. 3-2018 issued on January 15, 2018 provides the revised tax rates on tobacco products pursuant to the provisions of R.A. 10963 (Tax
Reform for Acceleration and Inclusion or TRAIN LAW), amending for the purpose RR no. 17-2012.
The provisions of Section 3 items B(4) and B(5) of RR. No. 17-2012 is amended as follows.

Product Jan. 1, 2018 July 1, 2018 January 1, January 1, January 1,

until until 2020 until 2022 until 2024
June 30, December December December onwards
2018 31, 2019 31, 2021 31, 2023

B. Tobacco
Products
(4) Cigarettes Per pack Per pack Per pack Per pack
packed by hand

Php 32.50 Php 35.00 Php 37.50 Php 40.00 Effective

1/1/2024, the
specific tax rate
shall be
increased by
4% every year
thereafter
(5) Cigarettes Php 32.50 Php 35.00 Php 37.50 Php 40.00
packed by
machine
 Computation of Excise Taxes on Tobacco
Products
⬜ Sample computation of excise tax on Tobacco Products:
Zhaldy Imports 3MT of chewing tobacco from Africa on January 10, 2018. How much excise tax would be paid
in the Bureau of Customs?

Solution:
First Convert the said volume of item (tobacco product) to kilogram.
3𝑀𝑇 = 1000𝑘𝑔𝑠 × 3𝑀𝑇 = 3000 𝐾𝐺𝑆.

After you convert the unit of measurement, the rates of excise tax given on the Sec. 3 of RR no. 17-2012 shall be
multiplied on the computed kilograms of the said product.

3000𝐾𝑔𝑠 × 𝑃ℎ𝑝 1.82 = 𝑃ℎ𝑝 5,460.00 𝑇𝑜𝑡𝑎𝑙 𝑜𝑓 𝐸𝑇 𝑡ℎ𝑎𝑡 𝑍𝑎𝑙𝑑𝑦 𝑤𝑖𝑙𝑙 𝑝𝑎𝑦
“Since the date of importation was on the year of 2018 the
excise rate of the previous year increased 4%.”

Note: Excise Tax on Tobacco products shall be based per kilogram of the said volume of the products.
 Computation of Excise Taxes on
Tobacco Products
1. Tobacco Twisted by Hand Basis(STR/KG)

ET= STR x KG Basis:STR/KG

KG

ET= STR x 0.4536 KG x LBS

KG LB
 Computation of Excise Taxes on
Tobacco Products
2. Chewing Tobacco Basis(STR/KG)

ET= STR x KG Basis:STR/KG

KG

ET= STR x 0.4536 KG x LBS

KG LB
Computation of Excise Taxes on
Tobacco Products
Tobacco Products Specific Tax Per KG

(a)Tobacco Twisted By Hand P1.86

(b) Tobacco prepared or partially P1.89

prepared with or without the use of
machine

(c) Fine-cuts short and refuse, scraps, P1.89

clippings, cuttings, stems and
sweepings

(d) Chewing Tobacco, unsuitable in P1.62

any other manner
 Computation of Excise Taxes on
Tobacco Products
3. Cigars Basis:STR/PC and AVTR/PC

⬜ ET = NOC [(NRP x AVTR ) + STR ] (TOTAL)

PC PC
⬜ ET = [(NRP x AVTR ) + STR ] (PER CIGAR)
PC
 Computation of Excise Taxes on
Tobacco Products
3. Cigars
BASED ON 2015 RATES OF 20%/PC AND P5.20/CIGAR
⬜ ET = NOC [(NRP x AVTR ) + STR ] (TOTAL)
PC PC
⬜ ET = NOC [(NRP x 0.20) + P5.20] (TOTAL)
⬜ ET = NOC (0.20NRP + 5.20)

⬜ ET = [(NRP x AVTR ) + STR ] (PER CIGAR)

⬜ PC PC
⬜ ET = (0.20NRP + 5.20) (PER CIGAR)
 Computation of Excise Taxes on
Tobacco Products
⬜ TOBACCO PRODUCTS
⬜ 3. CIGARS BASIS: STR/PC; AVTR/PC
⬜ EXCISE TAX TABLE 2013 ~ 2017

ET ET

Year AVTR STR TOTAL PER PC

2013 20% P5.00 NOC(0.20NRP) + 5.00 0.20NRP + 5.00

2014 20% P5.20 NOC(0.20NRP) + 5.20 0.20NRP + 5.20

2015 20% P5.41 NOC(0.20NRP) + 5.41 0.20NRP + 5.41

2016 20% P5.62 NOC(0.20NRP) + 5.62 0.20NRP + 5.62

2017 20% P5.85 NOC(0.20NRP) + 5.85 0.20NRP + 5.85

 Computation of Excise Taxes on
Tobacco Products
4.. Cigarettes Packed by Hand Basis: STR/PACK

ET= NOP x STR (Total)

PACK
5. Cigarettes Packed by Machine Basis STR/PACK
NRP/PACK
ET= NOP x STR (Total)
PACK
 Computation of Excise Taxes on
Tobacco Products
5.(a) (b) Cigarettes Packed by Machine Basis STR/PACK
NRP/PACK
ET= NOP x STR (Total)
PACK

NRP PER PACK SPECIFIC TAX PER(PACK)

(a) NRP P11.50 or Less P21.00

(b) NRP or more than P11.50 P28.00

 Computation of Excise Taxes on
Tobacco Products
⬜ SEC. 11. REVISED PROVISIONS FOR THE MANNER OF PACKAGING OF
CIGARETTES.
⬜
⬜ All cigarettes whether packed by hand or packed by machine shall
only be packed in twenties (20’s), and through other packaging
combinations which shall result to not more than twenty sticks of
cigarettes: Provided, That, in case of cigarettes packed in not more
than twenty sticks, whether in 5 sticks, 10 sticks and other packaging
combinations below 20 sticks, the net retail price of each individual
package of 5s, 10s, etc. shall be the basis of imposing the tax rate
prescribed under the Act.
⬜
 Computation of Excise Taxes on Cigars
⬜ Sample computation of excise tax on Cigars
Facts: Total Retail Selling Price, net of VAT and E.T per box of cigar containing 25 pieces, amounting to Php 3,000.00 NRP.
Compute Excise tax due:
Solution:
⬜ First you need to compute the NRP/Cigar given the formula below:
Total NRP ÷ pieces per box = Net Retail Price per Cigar
Php 3000.00 ÷ 25 pieces per box = Php 120.00 NRP per Cigar

⬜ Second you need to compute the Total E.T. due

AVT due per cigar:

NRP/cigar: Php 120.00 x AVT rate of 20% = Php 24.00 AVT per Cigar and then add the ST rate Php 6.08 2018 rate =
Total E.T per cigar Php 29.85 multiply by the no. of cigars per box 25 pcs = Php 750.5 Total Excise Tax of 25 pieces of cigars

Note: excise tax on Cigars shall be based per piece.

Computation of Excise tax on Cigarettes
Rates of excise tax shall be based on RR no 3-2018 and cigarettes per pack.
Sample problem:
Mr. Fuentes an Importer and a nicotine enthusiast imports 10 reams of cigarettes on Jan. 10, 2018. Compute the Total
Excise tax due.

Solution:
According to RR no. 3-2018 excise tax on cigarettes may determined by per pack.

10 reams x 10 packs per ream= 100 packs

Then multiply the total packs to the excise tax rate of Php 32.50 since the importation begun on January 10, 2018.

100 packs x Php 32.50 rate= Total excise tax Php 3,000.00
 Conversion of Units

⬜ For Cigarettes:
50 reams per 1 box
10 pack per 1 ream
20 pieces per 1 pack
⬜ For Tobacco Products:
1 MT= 1000 kgs
1LB= 0.453592 kg
1 g = .001 kg
 Cigar vs. Cigarette

While both cigarettes and cigars contain tobacco the big

difference is that in a cigar the tobacco is wrapped in leaf tobacco, or
another material containing tobacco. But cigarettes contain tobacco
wrapped in paper, or another material that does not contain tobacco.
Cigars are usually bigger and thicker than cigarettes, last longer
when smoked, contain more tobacco and are more expensive. Both
are bad for your health and can cause throat or lung cancer.
Cigar smoking is often viewed as more sophisticated than
cigarette smoking. Cigars are more popular in the US than the rest of
the world, with 2.2% of adults smoking them. They are significantly
more popular with men than women. They are often included in
caricatures of the rich and of capitalism, and are smoked to celebrate
special occasions, such as the birth of a child. They are seen as
masculine, powerful objects.
 CIGAR CIGARETTE

WRAPPER A cigar is a tobacco product wrapped in leaf tobacco Cigarettes are tobacco products wrapped in paper.

TIME TO SMOKE 30 - 60 minutes 5-10 minutes

Nicotine Content 100-200mg 10mg

Filters No Yes

Secondhand Yes Yes

smoke

Health Risks Cancer, Nicotine Addiction Cancer, Nicotine Addiction

Inhale No Yes
Group 1
Kyle Orante
Jester Benosa
Carmela Vergara
Marc Misula
Normalyn Penados
Apple Asoy
Paolo Lagdamin
Jerico Datig
Teresa Romasanta
Zaldy Fuentes