Duterte raises taxes on alcohol, e-cigarettes; exempts certain medicines

Arianne Merez, ABS-CBN News

Posted at Jan 23 2020 07:39 AM | Updated as of Jan 23 2020 05:39 PM

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MANILA (2ND UPDATE) - President Rodrigo Duterte has signed a law increasing taxes on alcohol, heated tobacco, and vapor products, and also exempts certain medicines from value-added tax.

Duterte signed Republic Act No. 11467 on Wednesday, which amends the National Internal Revenue Code of 1997 to impose heavier levies on alcohol products, and e-cigarettes. 

Duterte, however, vetoed a section of the law that prevents the BIR from conducting raids without a court order.

In his veto message, the President said the provision “unduly curtails” the seizure powers of the BIR.

The President in November last year certified the measure as urgent, saying tax adjustments would "address the urgent need" to fund Universal Health Care.

ALCOHOL PRODUCTS

Under the law, excise taxes on distilled spirits will be increased to P42 per proof liter this year, P47 per proof liter by 2021, P52 per proof liter by 2022, P59 per proof liter by 2023, and P66 per proof liter by 2024.

The said levies will increase by 6 percent every year starting 2025. These are also separate from the ad valorem tax imposed on the products which is equivalent to 22 percent of the price of the distilled spirits.

Among the drinks considered as distilled spirits in the law are whiskey, brandy, rum, gin, vodka and other similar mixtures.

For wine products, a P50 excise tax per liter will be imposed starting this year and will increase by 6 percent every year starting 2021.

Beer products, meanwhile, and other fermented liquor will be levied with a P35 excise tax per liter this year, P37 per liter by 2021, P39 per liter by 2022, P41 per liter by 2023, and P43 per liter by 2024.

Just like with other alcoholic beverages, the rate of the excise tax for beer products and other fermented liquor will increase by 6 percent every year starting 2025.

The law, however, exempts tuba, basi, and tapuy from higher excise taxes.

VAPOR PRODUCTS

Every pack of heated tobacco products containing 20 units or more will have an excise tax of P25 this year, P27.50 by 2021, P30 by 2022, and P32.50 by 2023.

For salt nicotine products, excise taxes are set at P37 per milliliter or a fraction thereof this year, P42 per milliliter or a fraction thereof by 2021, P47 per milliliter or a fraction thereof by 2022, and P52 per milliliter or a fraction thereof by 2023.

Excise taxes on cigarettes, meanwhile, are set at P45 per pack this year, P50 per pack by 2021, P55 per pack by 2022, and P60 per pack by 2023.

The excise tax rate for all vapor products will increase by 5 percent every year in the succeeding years.

EXEMPTIONS

Starting this year, medicine for diabetes, hypertension, and high cholesterol will be free of value-added tax.

The exemption will also apply to medicine and prescription drugs for cancer, mental illness, tuberculosis, and kidney disease by 2023.

The law asks the Department of Health to issue a list of approved drugs to be included in the exemption.

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