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ph/2012/12/21/revenue-regulation-no-17-2012/

Revenue Regulations No. 17-2012

REPUBLIC OF THE PHILIPPINES
DEPARTMENT OF FINANCE
BUREAU OF INT ERNAL REVENUE
Quezon City

December 21, 2012

REVENUE REGULATIONS NO. 17-2012

SUBJECT : Pr escr ibing the Implementing Guidelines on the

Revised T ax Rates on Alcohol and T obacco Pr oducts
Pur suant to the Pr ovisions of Republic Act No. 10351
and to Clar ify Cer tain Pr ovisions of Existing Revenue
Reg ulations.

TO : All Inter nal Revenue Officials and Other s Concer ned

SECT ION 1. Scope.– Pursuan t to th e provision s of Section 244 in relation to Section

245 of th e Nation al In tern al Reven ue Code (NIRC) of 1997, as amen ded, th ese
Reg ulation s are h ereby promulg ated to implemen t th e provision s of Republic Act No.
10351, “An Act Restructurin g Th e Excise Tax On Alcoh ol An d Tobacco Products By
Amen din g Section s 141, 142, 143, 144, 145, 8, 131 An d 288 of Republic Act No. 8424,
Oth erwise Kn own As Th e Nation al In tern al Reven ue Code Of 1997, as amen ded By
Republic Act No. 9334, An d For Oth er Purposes”, as well as to clarify certain provision s
of existin g reven ue reg ulation s on alcoh ol an d tobacco products.

SEC. 2. DEFINIT ION OF T ERMS. – For purposes of th ese Reg ulation s, th e followin g
words an d ph rases sh all h ave th e mean in g in dicated below:

(a) ACT – sh all refer to Republic Act (R.A.) No. 10351;

(b) CARBONAT ED WINE– sh all refer to an effervescen t win e artificially ch arg e with
carbon dioxide an d con tain in g more th an 0.392 of carbon dioxide per 100 milliliters of
win e;

(c) cig ar ettes packed by hand– sh all refer to th e man n er of packag in g of cig arette
sticks usin g an in dividual person ’s h an ds an d n ot th roug h an y oth er mean s such as a
mech an ical device, mach in e or equipmen t;

(d) COMPOUNDED LIQUORS– sh all refer in toxicatin g beverag es wh atever

con cocted by or resultin g from mixture of or addition to distilled spirits, eith er before or
after rectification , of an y colorin g matter, flavorin g extract or essen ce or oth er kin d of
win e, liquor or oth er in g redien t;

(e) NET RET AIL PRICE – sh all refer to th e price at wh ich th e alcoh ol an d tobacco
products are sold on retail in at least five(5)major supermarkets in Metro Man ila,
excludin g th e amoun t in ten ded to cover th e applicable excise tax an d th e value-added
tax. For alcoh ol an d tobacco products wh ich are marketed outside Metro Man ila, th e
‘n et retail price’ sh all mean th e price at wh ich th e alcoh ol an d tobacco products are
sold in at least five (5) major supermarkets in th e reg ion excludin g th e amoun t in ten ded
to cover th e applicable excise tax an d th e value-added tax;

(f) SPARKLING WINE OR CHAMPAGNE–sh all refer to an effervescen t win e

con tain in g more th an 0.392 g rams of carbon dioxide per 100 milliliters of win e
resultin g solely from th e secon dary fermen tation of th e win e with in a closed con tain er;

(g ) ST ILL WINE –sh all refer to win e con tain in g n ot more th an 0.392 of carbon
dioxide per 100 milliliters of win e; an d

(h) SUGGEST ED NET RET AIL PRICE – sh all refer to th e n et retail price at wh ich
locally man ufactured or imported alcoh ol or tobacco product is in ten ded to be sold by
th e man ufacturer or importer at retail in major supermarkets or retail outlets in th e
prescribed min imum n umber of Reven ue Reg ion s for bran ds with n ation al or reg ion al
markets.

SEC. 3. REVISED RAT ES AND BASES OF T HE SPECIFIC T AX.– Th ere sh all be

levied, assessed an d collected an excise tax on alcoh ol or tobacco products, in
accordan ce with th e followin g sch edule:
ILLUST RAT ION:

No. 1- Distilled Spir its

No. 2 – Cig ars

SEC. 4. TAX CLASSIFICATION OF ALCOHOL AND TOBACCO PRODUCTS. – An y alcoh ol
or tobacco product th at is in troduced in th e domestic market on or after th e effectivity
of th is Act sh all be in itially tax classified accordin g to th eir sug g ested n et retail prices
as declared in th e prescribed man ufacturer’s or importer’s sworn statemen t, subject to
th e in itial validation an d revalidation requiremen ts prescribed un der Reven ue
Reg ulation s No. 3-2006, as amen ded by Section 6 of th ese Reg ulation s.

In case of an alcoh ol an d or tobacco product th at was duly reg istered with th e BIR
before th e effectivity of th e Act but was n ot tax classified by th e BIR accordin g to th e n ew
tax rates provided un der th e Act, such product sh all be treated as a n ewly in troduced
product upon re-in troduction th ereof in th e domestic market after th e effectivity of th e
Act. Accordin g ly, th e tax classification th ereof sh all be based on th e sug g ested n et retail
price declared in th e aforesaid sworn statemen t, subject to th e in itial validation an d
revalidation requiremen ts.

Th e proper tax classification of all fermen ted liquors an d tobacco products, wh eth er
reg istered before or after th e effectivity of th e Act, sh all be determin ed every two (2)
years from th e date of effectivity of th e Act.

For purposes of tax classification , alcoh ol or tobacco products, wh eth er imported or

domestically man ufactured, sh all be taxed accordin g to th eir in dividual bran d n ame
(wh eth er or n ot with prefix or suffix), color an d/or desig n of label (such as log o, fon t,
pictureg ram, an d th e like), man n er an d/or form of packag in g or size of con tain er of th e
product. Accordin g ly, th e followin g in stan ces, but n ot limited to, sh all be taxed
differen tly:

(a) Two products bearin g exactly th e same root n ame but with differen t suffixes or
prefixes

(b) Two products bearin g exactly th e same bran d n ame but with differen t colors an d/or
desig n of labels

(c) Two products bearin g exactly th e same bran d n ame an d label but with differen t
forms of packag in g (e.g ., soft packs an d h ard packs for cig arettes, or in bottles, can s or
keg s for alcoh ol products)

(d) Two products bearin g exactly th e same bran d n ame an d label but with differen t sizes
of con tain er (e.g ., on e liter, 500 ml., 330 ml., etc., for alcoh ol products)

(e) On e product is sold in a reg ular basis wh ile th e oth er product is in troduced in a
limited basis such as a special edition , for specific occasion an d oth er similar in stan ces

SEC. 5. DOWNWARD RECLASSIFICAT ION OF FERMENT ED LIQUORS. -An y

down ward reclassification of an y fermen ted liquor product th at is duly reg istered with
th e BIR at th e time of effectivity of th e Act wh ich will reduce th e tax imposed h erein , or
th e paymen t th ereof, sh all be proh ibited. Startin g Jan uary 1, 2014, th e applicable tax
rate sh all be in crease by four percen t (4%) an n ually: Provided, however,it sh all n ot be
lower th an th e rates prescribed un der Section 3 of th ese Reg ulation s.
Illustr ation:

SEC. 6. REVISED REVALIDAT ION PERIOD FOR NEWLY INT RODUCED

ALCOHOL OR T OBACCO PRODUCT S. – Th e revalidation of th e sug g ested n et retail
price of a n ewly in troduced alcoh ol or tobacco product sh all be con ducted after th e en d
of n in e (9) mon th s from th e in itial validation . Th e in itial validation an d revalidation of
th e sug g ested n et retail price of all n ewly in troduced alcoh ol an d tobacco products
sh all be con ducted exclusively by th e auth orized represen tatives of th e BIR

SEC. 7. SUBMISSION OF SWORN ST AT EMENT .– Every local man ufacturer or

importer of alcoh ol an d tobacco products sh all a duly n otarized man ufacturer’s or
importer’s sworn statemen t for alcoh ol or tobacco product sh owin g , amon g oth ers, th e
followin g in formation :

(a) Name, address, TIN an d assessmen t n umber of th e man ufacturer or importer;

(b) Complete root n ame of th e bran d as well as th e complete bran d n ame with modifiers,
if an y;

(c) Complete specification s of th e bran d detailin g th e specific measuremen ts, weig h ts,
man n er of packag in g , etc.;

(d) Name(s) of th e reg ion (s) wh ere th e bran d is/are to be marketed;

(e) Wh olesale price per case, g ross an d n et of vat an d excise tax;

(f) Sug g ested retail price, g ross an d n et of vat an d excise tax, per pack or per bottle, as
th e case may be;

(g ) Detailed production /importation costs an d all oth er expen ses in curred or to be

in curred un til th e product is fin ally sold (e.g . materials, labor, overh ead, sellin g an d
admin istrative expen ses) per case;

(h ) Applicable rate of excise tax per un it of measure or value, as th e case may be; an d

(i) Correspon din g excise an d value-added taxes per case.

Th e man ufacturer’s or importer’s sworn statemen t sh all be submitted as a supportin g

documen t to th e prescribed application for th e in itial reg istration of alcoh ol or tobacco
product an d th ereafter submit an updated sworn statemen t on or before th e en d of th e
mon th s of Jun e an d December of th e year: Provided, h owever, Th at wh en ever th ere is a
ch an g e in th e cost to man ufacture, produce an d sell th e bran d or ch an g e in th e actual
sellin g price of th e bran d, th e updated sworn statemen t sh all be submitted at least five
(5) days before th e actual removal of th e product from th e place of production or release
from th e customs’ custody, as th e case may be: Provided, furth er, Th at if th e man ufacturer
or importer sells or allows such g oods to be sold at wh olesale in an oth er establish men t
of wh ich h e is th e own er or th e profits th ereof of wh ich h e h as an in terest, th e sellin g
price in such establish men t sh all con stitute th e wh olesale price.sh ould such price be
less th an th e said costs an d expen ses, a proportion ate marg in of profit of n ot less th an
ten percen t (10%) th ereof sh all be added to con stitute th e wh olesale price. With respect
to imported alcoh ol or tobacco products, th e cost of importation sh all, in n o case, be
less th an th e value in dicated in th e referen ce books or an y oth er referen ce materials
used by th e BOC in determin in g th e proper valuation of th e imported products, or th e
dutiable value as defin ed un der th e Tariff an d Customs Code of th e Ph ilippin es, as
amen ded, wh ich ever, is h ig h er: Provided, finally,Th at, in case th e n ewly in troduced
alcoh ol or tobacco product sh all be subsequen tly marketed in an oth er reg ion /oth er
reg ion s before th e proper tax classification is fin ally determin ed by th e BIR, an updated
sworn statemen t sh all be submitted to th e appropriate BIR Office before th e same sh all
be removed from th e place of production .

Th e sworn statemen t prescribed h erein sh all be subject to verification by th e BIR to

validate its con ten ts with respect to its accuracy an d completen ess. In th e even t th at th e
con ten ts th ereof are foun d to be in accurate an d/or in complete, th e taxpayer sh all be
required to submit a revised sworn statemen t, with out prejudice to th e imposition of
correspon din g san ction s an d pen alties.

SEC. 8. UNDERST AT EMENT OF SUGGEST ED NET RET AIL PRICE. – Th e

un derstatemen t of th e sug g ested n et retail price by as much as fifteen percen t (15%) of
th e actual n et retail price sh all ren der th e man ufacturer or importer liable for
addition al excise tax equivalen t to th e tax due an d differen ce between th e un derstated
sug g ested n et retail price an d th e actual n et retail price.
ILLUST RAT ION:

No. 4 – CPI Corp., a cig arette man ufacturer, submitted a sworn statemen t of a cig arette
product, “Mirag e”, wh erein th e tax rate to be imposed is P12.00 per pack based on th e
Sug g ested Net Retail Price (SNRP), excludin g vat an d excise, of P 9.50 per pack. After
th ree mon th s from th e date of submission of th e sworn statemen t, th e BIR con ducted a
price survey an d foun d out th at th e Actual Net Retail Price (ANRP), excludin g vat an d
excise tax is actually P 12.00 subject to th e h ig h er excise tax rate of P 25.00 per pack. Th e
total volume removed by CPI Corp. on th e product is 10,000 packs from th e time of its
removal up to th e time of th e price survey. Compute th e total deficien cy excise tax an d
pen alties of CPI Corp., if th ere are an y.

Step 1. Determin e wh eth er or n ot th e un derstatemen t of th e SNRP is equal to or more

th an 15% of th e ANRP

Sin ce th e un derstatemen t of 26.32%

is more th an 15%, CPI Corp is,
th erefore, liable to th e addition al
pen alty for un derstatemen t of
sug g ested n et retail price.

Step 2. Compute th e deficien cy

excise an d in terest

Step 3. Compute th e addition al

pen alty to CPI Corp. as a juridical
person

Step 4. Compute th e total amoun t

due from CPI Corp.

SEC. 9. EXCISE T AX
T REAT MENT OF ALL
IMPORT AT IONS OF ALCOHOL
OR T OBACCO PRODUCT S BY
DUT Y FREE PHILIPPINES,
DUT Y-FREE SHOPS, OR INT O
ECONOMIC ZONES AND
FREEPORT ZONES. – Th e
provision of an y special or g en eral
law to th e con trary
n otwith stan din g , th e importation
of alcoh ol or tobacco products,
even if destin ed for tax an d duty-
free sh ops, Duty Free Ph ilippin es
or in to th e ch artered or leg islated
econ omic an d/or freeport zon es
sh all be subject to excise tax
pursuan t to th e provision s of th e
Act. : Provided, however, Th at, upon
th e effectivity of th e Act, th e
importation of an y alcoh ol or
tobacco product bearin g suffixes
or prefixes to th e root n ame, color an d/or desig n of th e label (such as log o, fon t,
pictureg ram, an d th e like), man n er an d/or form of packag in g or size of con tain er of th e
product th at is differen t from th at already reg istered an d locally bein g sold in th e
domestic market sh all be treated as a n ewly in troduced product. Accordin g ly, th e same
sh all be in itially classified accordin g to its sug g ested n et retail price, subject to th e
validation an d revalidation requiremen ts prescribed by th ese Reg ulation s.

SEC. 10. Additional expor t and impor t r equir ements for tobacco pr oducts. – No
tobacco products man ufactured in th e Ph ilippin es an d produced for export sh all be
removed from th eir place of man ufacture or exported with out postin g of an export bon d
equivalen t to th e amoun t of th e excise tax due th ereon if sold domestically; provided,
however, th at tobacco products for export may be tran sferred from th e place of
man ufacture to a bon ded facility, upon postin g of a tran sfer bon d, prior to export.

Tobacco products imported in to th e Ph ilippin es an d destin ed for foreig n coun tries

sh all n ot be allowed en try with out postin g a bon d equivalen t to th e amoun t of customs
duty, excise an d value-added taxes due th ereon if sold domestically.

SEC. 11. REVISED PROVISIONS FOR T HE MANNER OF PACKAGING OF

CIGARET T ES. – AllCig arettes wh eth er packed by h an d or packed by mach in e sh all
on ly be packed in twen ties (20s), an d th roug h oth er packag in g combin ation s wh ich
sh all result to n ot more th an twen ty sticks of cig arettes: Provided, Th at, in case of
cig arettes packed in n ot more th an twen ty sticks, wh eth er in 5 sticks, 10 sticks an d oth er
packag in g combin ation s below 20 sticks, th e n et retail price of each in dividual packag e
of 5s, 10s, etc. sh all be th e basis of imposin g th e tax rate prescribed un der th e Act.

SEC. 12. T RANSIT ORY PROVISIONS. – Upon th e effectivity of th e Act, th e followin g

tran sitory provision s sh all be strictly observed by all con cern ed:

(a) All alcoh ol an d tobacco products existin g in th e market at th e time of th e effectivity

of th is Act sh all be in itially classified accordin g to th e tax rates prescribed by th e Act
based on th e 2010 price survey of th ese products con ducted by th e Bureau of In tern al
Reven ue (BIR), subject to th e proh ibition ag ain st down ward reclassification on
fermen ted liquors: Provided, however, Th at in case of alcoh ol an d or tobacco products
th at were in troduced after th e 2010 price survey but before th e effectivity of th e Act, th eir
respective tax classification or rate sh all be based on th e sug g ested n et retail price
declared in latest sworn statemen t filed by th e local man ufacturer or importer, as th e
case maybe. Th e Commission er of In tern al Reven ue sh all issue a Reven ue Memoran dum
Circular con tain in g th e tax classification s/rates applicable to all alcoh ol an d tobacco
products existin g in th e market at th e time of th e effectivity of th e Act.

(b) For purposes of determin in g th e actual volume of locally man ufactured alcoh ol an d
tobacco products th at sh all be imposed with th e n ew tax rates upon th e removal th ereof
from th e place of production , an actual stocktakin g sh all be con ducted by th e BIR on all
stocks of locally man ufactured alcoh ol an d tobacco products h eld in possession by th e
man ufacturer as of th e effectivity of th e Act.

(c) Th e specific tax th at was paid on th e ph ysical in ven tory of eth yl alcoh ol h eld in
possession by man ufacturers of compoun ded liquors as of th e effectivity of th e Act
subsequen tly used as raw materials in th e production of compoun ded liquors sh all n ot
be en titled to tax credit/refun d or sh all n ot be deducted from th e total excise tax due on
compoun ded liquors.

SEC. 13. Penalties.– Violation s of th ese Reg ulation s sh all be subject to th e

correspon din g pen alties un der Title X of th e NIRC of 1997, as amen ded.

Furth er, th e followin g pen alty provision s are h ereby prescribed pursuan t to th e
provision s of th e Act, as follows:

(a) An y man ufacturer or importer wh o misdeclares or misrepresen ts in h is or its sworn

statemen t h erein required an y pertin en t data or in formation sh all, upon discovery, be
pen alized by a summary can cellation or with drawal of h is or its permit to en g ag e in
busin ess as a man ufacturer or importer of alcoh ol or tobacco products;

(b) An y corporation , association or partn ersh ip liable for an y of th e acts or omission s

(b) An y corporation , association or partn ersh ip liable for an y of th e acts or omission s
in violation of th e Act an d implemen ted by th ese Reg ulation s sh all be fin ed treble th e
ag g reg ate amoun t of deficien cy taxes, surch arg es an d in terest wh ich may be assessed
pursuan t to th e provision s of th e Act;

(c) An y person liable for an y of th e acts or omission proh ibited un der th e Act an d
implemen ted by th ese Reg ulation s sh all be crimin ally liable an d pen alized un der Section
254 of th e NIRC of 1997, as amen ded; an d

(d) If th e offen der is n ot a citizen of th e Ph ilippin es, h e sh all be deported immediately

after servin g th e sen ten ce, with out furth er proceedin g s for deportation .

SEC. 14. SEPARABILIT Y CLAUSE – If an y of th e provision s of th ese Reg ulation s is

declared in valid by a competen t court, th e remain der of th ese Reg ulation s or an y
provision n ot affected by such declaration of in validity sh all remain in force an d effect.

SEC. 15. Repealing Clause.– All reg ulation s, rulin g s, orders, or portion s th ereof
wh ich are in con sisten t with th e provision s of th ese Reg ulation s are h ereby revoked,
repealed or amen ded, accordin g ly.

SEC. 16. Effectivity.– Th ese Reg ulation s sh all take effect upon its publication in
leadin g n ewspapers of g en eral circulation .

(Sg d.) CESAR V. PURISIMA

Secretary of Fin an ce

Recommen din g Approval:

(Sg d.) KIM S. JACINT O-HENARES
Commission er of In tern al Reven ue