Philippines

Background

President Rodrigo Duterte signed Republic Act No. 11346 on July 25, 2019. The Act contains numerous amendments to the Internal Revenue Code approved by Congress.

Tax on vapor products

Among the amendments approved by Congress was the creation of a new excise tax category for vapor products. The Act defines vapor products as “any liquid solution or gel which contains nicotine that transforms into an aerosol without combustion through the employment of a mechanical heating element, battery or circuit that can be used to heat such solution or gel.”

Excise tax structure

Vapor products taxes will be collected on individual cartridges, refills or other containers of liquid solutions or gel according to a tiered specific structure based on ranges of liquid volume contained. On the first 10 milliliters of liquid or gel a tax of ten pesos will apply. Between 10.01 and 20.0 ml, twenty pesos in tax will be collected. For volumes in excess of 50ml a tax of fifty (P.50) pesos plus ten pesos for every additional 10 ml will apply.

The rate of tax imposed will be increased by 5% each year starting on 1 January 2021 by means of revenue regulations issued by the Secretary of Finance.

The tax goes into effect on 1 January 2020.