THE FThe lowest price of the cheapest pack of 20 cigarettes will be 82.49 pula according to a tax calculation made by the Philippine Tobacco Institute (PTI), an industry association.
The PTI, in a statement, cited a June memorandum issued by the Bureau of Internal Revenue (BIR) and calculated that under this tax regime, the bulk of the final retail price will be made up of excise taxes and value added taxes.
In Circular No. 79-2022, the BIR provided a tax breakdown of the cheapest pre-tax cigarettes per pack. Besides the net cost of 18.65 pesos of the cheapest cigarettes, the excise tax adds 55 pesos and a value added tax of 8.84 pesos, the PTI said.
The PTI said tobacco manufacturers face competition from contraband cigarettes and clarified that compliant manufacturers must follow tax rules and sell at a certain price.
“It is estimated that 26 billion pesos are lost each year in the illicit tobacco trade. According to a Euromonitor report, six out of 10 cigarettes sold in Mindanao are illegal,” he said.
In its statement, the PTI charged the taxes as a clear indicator of cigarettes that are smuggled or non-compliant, calling the tax regime designed “to Ifcombat smuggling and the sale of illegal cigarettes.
The memorandum lists registered brands of cigarettes, tobacco and vaping products that can be legally sold in the country or exported.
“Products must also comply with the requirement for the graphic health warning and label.Ifxing of BIR revenue stamps, except for steam products where Integrated Internal Revenue Stamp System (IRSIS) stamps are not yet available in the system,” the BIR said.
Graphic health warnings should contain “Tagalog text in front and English text in back; and tax stamps of Tarsier or Vinta design required as proof of tax payment,” noted the PTI.
Violators face fines of a minimum of 200,000 pula and up to five years in prison for breaching the health graphic warning rules, and a minimum of 1 million pula and up to eight years imprisonment for tax stamp violations.
“Any product not included in the list, no BIR tax stamp, absence of the mandatory graphic health warning and the product which is below the floor/minimum price will be considered unauthorized/unlawful subject to seizure/apprehension”, said the BIR.
In the three months to March, the Customs Office reported that cigarettes worth 132.56 pesos had been seized. — Diego Gabriel C.Robles