PWC Tax Seminar Excise Taxes

Excise Taxes
[amended by Republic Act No. 10963 or the Tax

Reform for Acceleration and Inclusion (TRAIN)]
Atty. Lawrence C. Biscocho

11 March 2019
PwC
Imposition of Excise Taxes
Section 129 of the Tax Code
Excise taxes apply to taxes to
Certain goods manufactured or produced in the Philippines for domestic sales or

consumption or for any other disposition;
Certain goods imported to the Philippines for domestic sales or consumption or for
any other disposition; or
Non-essential services performed in the Philippines (added by the TRAIN Law)
Excise Tax 12 March 2019

PwC 2
Nature of excise tax
1 Tax on production/non-
essential services
2 Indirect tax

PwC 3
Kinds of excise tax
Specific tax
– refers to the excise tax imposed which is based on weight or volume capacity or
any other physical unit of measurement
Ad valorem tax
– refers to the excise tax which is based on selling price or other specified value of
the goods.

PwC 4
Manner of computation
Specific tax
No. of units or other measurements X Specific Tax Rate = Excise Tax
Ad valorem tax
No. of units or other measurements X Selling Price X Ad Valorem Tax Rate = Excise
Tax

PwC 5
Classification of excisable articles
Alcohol Products Sections 141-143 of the Tax Code

a. Distilled Spirits (Section 141)
b. Wines (Section 142)
Tobacco Products c. Fermented Liquors (Section 143)
Petroleum Products
Miscellaneous Articles
Mineral Products

PwC 6
Alcohol Products
Sections 144-146 of the Tax Code
Tobacco Products a. Tobacco Products (Section 144)

b. Cigars & Cigarettes (Section 145)
c. Inspection Fee (Section 146)
Petroleum Products
Mineral Products

PwC 7
Alcohol Products
Tobacco Products
Petroleum Products Section 148 of the Tax Code
Mineral Products

PwC 8
Alcohol Products
Tobacco Products
Petroleum Products
Sections 149-150 of the Tax Code
a. Automobiles (Section 149)
Miscellaneous Articles b. Non-essential Goods (Section 150)
c. Non-essential Service (Section 150-A) **
d. Sweetened Beverages (Section 150-B) **
Mineral Products ** Amended by TRAIN
PwC 9
Alcohol Products
Tobacco Products
Petroleum Products
Mineral Products Section 151 of the Tax Code

PwC 10
Persons liable to excise tax
In general
On domestic or local articles
• Manufacturer
• Producer
• Owner or person having possession of articles removed
from the place of production without the payment of the tax
On imported articles
• Importer
• Owner
• Person who is found in possession of articles which are
exempt from excise taxes other than those legally entitled to
exemption
PwC 11
Persons liable to excise tax
Others
On Indigenous Petroleum
• Local Sale, Barter or Transfer

• First buyer, purchaser or transferee
• Exportation
• Owner, lessee, concessionaire or operator of the mining
claim

PwC 12
Time of payment
GENERAL RULE SPECIFIC RULES
• Locally manufactured petroleum products

• On domestic products and indigenous petroleum
– Before removal from the § Before removal from the place of
place of production production of such products
• On imported products • Nonmetallic mineral or mineral products
or quarry resources
– Before release from the
§ Upon removal of such products from the
customs' custody
locality where mined or extracted
• Locally produced or extracted metallic
mineral or mineral products
§ Paid within 15 days after the end of the
calendar quarter when such products
were removed
• Imported mineral or mineral products,
whether metallic or non-metallic
§ Before their removal from customs
custody
PwC 13
Place of payment
Excise Tax Return shall be filed with and tax paid to any:
a) Authorized Agent Bank (AAB)

b) Revenue Collection Officer
c) Authorized City or Municipal Treasurer

PwC 14
Determination of Gross Selling Price of Goods Subject to Ad
Valorem Tax
GROSS SELLING PRICE If the manufacturer also sells or allows such

goods to be sold at wholesale in another
establishment of which he is the owner or in
• the price, excluding the the profits of which he has an interest
value-added tax, at which
the goods are sold at § Gross selling price = wholesale price in
wholesale in the place of such establishment
production or through sales § If price is less than the cost of
agents to the public manufacture plus expenses incurred
until the goods are finally sold
Ø a proportionate margin of profit, not
less than ten percent (10%) of such
manufacturing cost and expenses,
shall be added to constitute the
gross selling price

PwC 15
Manufacturer’s or Producer’s Sworn Statement
Every manufacturer or producer of File a sworn statement showing,

goods or products subject to excise among other information:
taxes • the different goods or products
manufactured or produced;
• their corresponding gross selling
price or market value;
• cost of manufacture or production
plus expenses incurred or to be
incurred until the goods or
products are finally sold

PwC 16
Credits for Excise Tax on Goods Actually Exported
goods locally produced or

any excise tax paid thereon shall be
manufactured removed and actually
credited or refunded upon submission
exported without returning to the
of the proof of actual exportation and
Philippines, whether so exported in their
upon receipt of the corresponding
original state or as ingredients or parts
foreign exchange payment
of any manufactured goods or products
EXCEPTION
Excise tax on mineral products, except coal and coke shall not
be creditable or refundable even if the mineral products
are actually exported.

PwC 17
Excise tax on alcohol
products

PwC 18
Excise tax on distilled spirits
EXCISE TAX RATE

• An ad valorem tax equivalent to twenty percent (20%) of the net retail price (excluding the excise tax and
the value-added tax) per proof
PLUS
• a specific tax of P20.00 per proof liter (which shall be increased by 4% every year thereafter effective on
January 1, 2016)

PwC 19
Excise tax on fermented liquors
Excise tax rate

on all fermented liquors PhP23.50 per liter
(effective 1 January 2017)
Excisable fermented liquors - beer, lager beer, ale, porter and other fermented liquors except tuba, basi,
tapuy and similar fermented liquors
The rates of tax imposed shall be increased by 4% every year thereafter effective on January 1, 2018.

PwC 20
Other matters
• Net retail price - price at which the alcohol product is sold on retail in at least 5 major supermarkets in
Metro Manila, excluding the amount intended to cover the applicable excise tax and the VAT
• Major supermarkets - those with the highest annual gross sales in Metro Manila or the region, as the
case may be, as determined by the National Statistics Office, and shall exclude retail outlets or kiosks,
convenience or sari-sari stores, and others of a similar nature
Understatement of the suggested net retail price by as much as 15% of the actual net retail price
shall render the manufacturer or importer 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.

PwC 21
Excise tax on tobacco
products

PwC 22
Excise tax on tobacco products
Tobacco products Excise tax rate
• Tobacco twisted by hand or reduced into a PhP1.75/kg
condition to be consumed in any manner other
than the ordinary mode of drying and curing
• 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
• Fine-cut shorts and refuse, scraps, clippings,
cuttings, stems and sweepings of tobacco
Tobacco specially prepared for chewing so as to be PhP1.50/kg
unsuitable for use in
any other manner
The rates of tax imposed shall be increased by 4% every year thereafter effective on January 1, 2014.

PwC 23
Excise tax on tobacco products
No tobacco products manufactured in the Philippines and produced for export shall be removed from their
place of manufacture or exported without posting of an export bond equivalent to the amount of the excise
tax due thereon if sold domestically: Provided, however, That tobacco products for export may be
transferred from the place of manufacture to a bonded facility, upon posting of a transfer bond, prior to
export.
Tobacco products imported into the Philippines and destined for foreign countries shall not be allowed entry
without posting a bond equivalent to the amount of customs duty, excise and value-added taxes due
thereon if sold domestically.
Any manufacturer or importer who, in violation of this Section, 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 cigars or cigarettes.
PwC 24
Excise tax on cigars and cigarettes (amended by TRAIN)
Cigars
Ø mean all rolls of tobacco or any substitute thereof, wrapped in leaf tobacco.
Cigarettes
Ø all rolls of finely-cut leaf tobacco, or any substitute therefor, wrapped in paper or in any other material.

PwC 25
Excise tax on cigars and cigarettes (amended by TRAIN)
Old Law PHP30.00

per pack
Vetoed
Effective PHP32.50
Incremental revenues from
1 January 2018 per pack tobacco taxes shall be subject to
Effective PHP35.00 Sec. 3 of the Act to Promote the
Development of the Farmer in the
1 July 2018 per pack Virginia Tobacco Producing
Effective PHP37.50 Provinces
Cigars and 1 January 2020 per pack
Cigarettes
Effective PHP40.00
1 January 2022 per pack
Effective 4% increase in rates
1 January 2024 every year

PwC 26
Inspection fees on tobacco products
RATES
• P0.50 for each thousand cigars or fraction thereof

• P0.10 for each thousand cigarettes or fraction thereof
• P0.02 for each kilogram of leaf tobacco or fraction thereof
• P0.03 for each kilogram or fraction thereof, of scrap and other manufactured tobacco.
The inspection fee on leaf tobacco, scrap, cigars, cigarettes and other tobacco products as defined in shall
be paid by the wholesaler, manufacturer, producer, owner or operator of redrying plant, as the case may
be, immediately before removal thereof from the establishment of the wholesaler, manufacturer, owner or
operator of the redrying plant.
In case of imported leaf tobacco and products thereof, the inspection fee shall be paid by the
importer before removal from customs' custody.

PwC 27
Excise tax on
petroleum products

PwC 28
Excise tax on petroleum products (amended by TRAIN)
Manufactured oils and other fuels
Description Old Law 2018 2019 2020
Lubricating oils (per L) and greases (per kg) PHP4.50

Processed gas (per L)
PHP0.05 PHP8.00
Denatured alcohol (per L)
PHP9.00
PHP10.00
Waxes and petrolatum (per kg) PHP3.50
Naphtha (per L)
PHP4.35 PHP7.00
Unleaded premium gasoline (per L)
Aviation turbo jet fuel (per L) PHP3.67 PHP4.00 PHP4.00

PHP4.00
Kerosene (per L) PHP0.00 PHP3.00 PHP5.00
PwC 29
Description Old law 2018 2019 2020
Diesel fuel oil (per L) PHP2.50 PHP4.50 PHP6.00

PHP0.00
Liquefied petroleum gas (per kg) PHP1.00 PHP2.00 PHP3.00
Asphalts (per kg) PHP0.56 PHP8.00 PHP9.00 PHP10.00
Bunker fuel oil (per L) PHP0.00
PHP2.50 PHP4.50 PHP6.00
Petroleum Coke (per metric ton) N/A
For 2018 to 2020, increase in the excise tax on fuel shall be suspended if the average Dubai Crude Oil
price based on Mean of Platts Singapore for three months prior to the scheduled increase reaches or
exceeds US$80 per barrel.
PwC 30
Naphtha and pyrolysis gasoline used as raw material in the production of

petrochemical products or in the refining of petroleum products, or as
replacement fuel for natural-gas-fired-combined cycle power plant
Production of petroleum products, whether or not they are classified as

products of distillation and for use solely for production of gasoline
Exempt
from excise
tax Liquefied petroleum gas when used as raw material in the production of
petrochemical products
Petroleum coke, when used as feedstock to any power generating facility

PwC 31
Secretary of Finance
(in consultation with the Requires the use of an Petroleum products refined,
Commissioner of Internal Revenue, official marking or similar manufactured or imported,
the Commissioner of Customs and technology and are subject to taxes and
the Secretary of Energy) duties

PwC 32
Excise tax on
miscellaneous articles

PwC 33
Excise tax on automobiles (as amended by TRAIN)
Automobiles
Over Up to Excise tax rate

PHP600,000
PHP600,000 PHP1,100,000 PHP12,000 + 20% in excess of
PHP600,000
Old Law PHP1,100,000 PHP2,100,000 PHP112,000 + 40% in excess of

PHP1,100,000
Over PHP2,100,000 PHP512,000 + 60% in excess of
PHP2,100,000
Over Up to Excise tax rate
PHP600,000 4%
PHP600,000 PHP1m 10%
PHP1m PHP4m 20%
TRAIN Over PHP4m 50%
PwC 34
Automobiles
50% of
Purely electric vehicles & pick-ups
applicable
excise tax
Hybrid
Vehicle
Hybrid vehicle
Over Up to
tax rate
PHP600,000 2% Exempted
PHP600,000 PHP1m 5%
PHP1m PHP4m 10% ü Purely electric vehicles
Over PHP4m 25% ü Pick-ups

PwC 35
Sample computation
Description Old Law TRAIN
Effective rate 2% 4%
Toyota Wigo – PHP560,000 PHP560,000
TIER 1
Old Law TRAIN
Basic -
PHP11,200 PHP22,400
2% PHP11,200
4% PHP22,400
Increase of
Tax due PHP11,200 PHP22,400 PHP11,200

PwC 36
Automobiles
Sample computation

Toyota Vios – PHP865,000 PHP865,000
TIER 2
Basic PHP12,000 Old Law TRAIN

PHP65,000 PHP86,500
20% PHP53,000
10% PHP86,500
Increase of
Tax due PHP65,000 PHP86,500
PHP21,500
PwC 37
Automobiles
Sample computation
Toyota Fortuner PHP1,555,000 PHP1,555,000
– TIER 3
Old Law TRAIN
Basic PHP112,000 PHP294,000 PHP311,000
40% PHP182,000
20% PHP311,000
Tax due PHP294,000 PHP311,000

Increase of
PHP17,000

PwC 38
Automobiles
Sample computation
Porsche – PHP5,800,000 PHP5,800,000
TIER 4
Old Law TRAIN
Basic PHP512,000 PHP2,732,000 PHP2,900,000
60% PHP2,220,000
50% PHP2,900,000
Tax due PHP2,732,000 PHP2,900,000

Increase of
PHP168,000

PwC 39
Automobiles
Sample computation

Bentley PHP18,500,000 PHP18,500,000
Continental
Old Law TRAIN
GT– TIER 4
PHP10,352,000 PHP9,250,000
Basic PHP512,000
60% PHP9,840,000
50% PHP9,250,000
Tax due PHP10,352,000 PHP9,250,000

Decrease of
PHP1,102,000
Excise Tax
PwC
Excise tax on
miscellaneous articles

PwC 41
Excise tax on non-essential goods
NON-ESSENTIAL GOODS
• All goods commonly or commercially known as jewelry, whether real or imitation, pearls, precious and
semi-precious stones and imitations thereof; goods made of, or ornamented, mounted or fitted with,
precious metals or imitations thereof or ivory (not including surgical and dental instruments, silver-plated
wares, frames or mountings for spectacles or eyeglasses, and dental gold or gold alloys and other
precious metals used in filling, mounting or fitting of the teeth); opera glasses and lorgnettes
• Perfumes and toilet waters
• Yachts and other vessels intended for pleasure or sports
EXCISE TAX RATE

Ø 20% based on the wholesale price or the value of importation used by the Bureau of Customs in
determining tariff and customs duties, net of excise tax and value-added tax

PwC 42
Excise tax on non-essential services (introduced by TRAIN)
Non-essential services (Cosmetic procedures)

5%
Exempt from excise tax
Procedures to ameliorate deformity related to:
ü Congenital/development defect or abnormality
based on gross receipts (net of excise tax
and VAT) on invasive cosmetic ü Injury arising from accident or trauma
procedures and surgeries directly ü Disfiguring disease, tumor, virus or infection
towards enhancing patient’s appearance

PwC 43
Excise tax on sweetened beverages (introduced by TRAIN)
Sweetened beverages Not considered

excisable products
Using purely caloric and PHP 6.00 • All milk products

purely non-caloric sweeteners per liter
or a mixture of both • 100% natural fruit juices
• 100% natural vegetable juices
• Meal replacement and medically
Using purely high fructose PHP 12.00 indicated beverages
corn syrup per liter
• Ground, insoluble, and prepacked
Using purely coconut sap Exempt powdered coffee products
sugar/steviol glycosides

PwC 44
Excise tax on mineral
products

PwC 45
Excise tax on mineral products (amended by TRAIN)
PHP50/100/150
Mineral products
Coal and
coke
products
2018 2019 2020

PHP50 PHP100 PHP150
/metric ton /metric ton /metric ton
PwC 46
Excise tax on mineral products (amended by TRAIN)
4% 6%
Mineral products
Non-metallic
and metallic Indigenous
products
Actual market Value used by Bureau of

value of gross Customs in determining tariff
output, if locally and customs duties, net of
extracted excise tax and VAT, in case of
Excise Tax
PwC
importation 12 March 2019
47
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PWC Tax Seminar Excise Taxes

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PWC Tax Seminar Excise Taxes

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Excise Taxes

[amended by Republic Act No. 10963 or the Tax

Atty. Lawrence C. Biscocho

Section 129 of the Tax Code

Excise taxes apply to taxes to

Certain goods manufactured or produced in the Philippines for domestic sales or

Non-essential services performed in the Philippines (added by the TRAIN Law)

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Alcohol Products Sections 141-143 of the Tax Code

Excise Tax 12 March 2019

Sections 144-146 of the Tax Code

Tobacco Products a. Tobacco Products (Section 144)

Excise Tax 12 March 2019

Petroleum Products Section 148 of the Tax Code

Excise Tax 12 March 2019

Mineral Products Section 151 of the Tax Code

Excise Tax 12 March 2019

On domestic or local articles

• Local Sale, Barter or Transfer

Excise Tax 12 March 2019

• Locally manufactured petroleum products

a) Authorized Agent Bank (AAB)

Excise Tax 12 March 2019

GROSS SELLING PRICE If the manufacturer also sells or allows such

Excise Tax 12 March 2019

Every manufacturer or producer of File a sworn statement showing,

Excise Tax 12 March 2019

goods locally produced or

Excise Tax 12 March 2019

Excise Tax 12 March 2019

EXCISE TAX RATE

Excise Tax 12 March 2019

Excise tax rate

(effective 1 January 2017)

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Old Law PHP30.00

Excise Tax 12 March 2019

• P0.50 for each thousand cigars or fraction thereof

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Description Old Law 2018 2019 2020

Lubricating oils (per L) and greases (per kg) PHP4.50

Aviation turbo jet fuel (per L) PHP3.67 PHP4.00 PHP4.00

Manufactured oils and other fuels

Description Old law 2018 2019 2020

Diesel fuel oil (per L) PHP2.50 PHP4.50 PHP6.00

Manufactured oils and other fuels

Naphtha and pyrolysis gasoline used as raw material in the production of

Production of petroleum products, whether or not they are classified as

Petroleum coke, when used as feedstock to any power generating facility

Excise Tax 12 March 2019

Manufactured oils and other fuels

Excise Tax 12 March 2019

Excise Tax 12 March 2019

Over Up to Excise tax rate

Old Law PHP1,100,000 PHP2,100,000 PHP112,000 + 40% in excess of