Press Releases

House tax panel lauds Customs for nabbing 1.4 million pieces of vape suspected of evading P812 m in taxes

December 12th, 2023

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) praised the Bureau of Customs, led by Commissioner Bienvenido Rubio, for the actions it has taken to fight illicit trade in electronic cigarettes, as the Bureau presented its findings on the 1.4 million electronic cigarettes found in a Valenzuela warehouse and allegedly smuggled.

The stocks, marked “Manufactured by Flava Corporation” is suspected to have evaded P728 million in excise taxes and P84 million in Value-Added Tax.

“The report of the Bureau of Customs is complete, concise, and actionable. I would like to congratulate Commissioner Rubio, Assistant Commissioner Vincent Philip Maronilla, and the staff in charge of the entire process for the way they handled this,” Salceda said.

“This was extremely professional and BOC took very sensible measures,” Salceda added.

As countermeasures, Salceda proposed the following steps on the part of government agencies:

“The place of business of FLAVA did not have a Revenue Office on Premise (ROOP) assigned to it. The BIR should faithfully implement ROOP rule for electronic cigarette manufacturers,” Salceda said.

Salceda adds that “Contradictions in BIR system of registration of e-cigarette companies should be resolved.”

Distinction between manufacturers, importers, wholesalers, and retailers is crucial because it should determine the extent of responsibility for ensuring excise tax payment, Salceda pointed out.

Salceda also proposed that third-party liability should be established. Salceda pointed out that the rules and regulations “issued on the implementation of the Vape Tax Law and RA 11900 or the Vape Regulation Act do not outline the responsibility of foreign supplier to label and declare the shipment as electronic cigarettes, those of brokers, logistics providers, and online selling platforms.”

Salceda also demanded that the “definition of salt nicotine or freebase should be clearly set out.”

“Excisable products should also be declared from the port of departure,” Salceda said.

Salceda pointed out that tobacco excise tax revenues are likely to continue to decline, as the e-cigarette sector, both formal and informal, will take a bigger share of the market.

“Statista projects e-cigarette sector to be P13.244 bn in size. Using just freebase rates and average prices, the industry should be paying at least P5.56 billion,” Salceda estimates.

Salceda said that the “substitution effect” from tobacco to e-cigarettes will continue as cigarette prices increase while e-cigarette makers continue to innovate.
House tax panel lauds Customs for nabbing 1.4 million pieces of vape suspected of evading P812 m in taxes

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) praised the Bureau of Customs, led by Commissioner Bienvenido Rubio, for the actions it has taken to fight illicit trade in electronic cigarettes, as the Bureau presented its findings on the 1.4 million electronic cigarettes found in a Valenzuela warehouse and allegedly smuggled.

The stocks, marked “Manufactured by Flava Corporation” is suspected to have evaded P728 million in excise taxes and P84 million in Value-Added Tax.

“The report of the Bureau of Customs is complete, concise, and actionable. I would like to congratulate Commissioner Rubio, Assistant Commissioner Vincent Philip Maronilla, and the staff in charge of the entire process for the way they handled this,” Salceda said.

“This was extremely professional and BOC took very sensible measures,” Salceda added.

As countermeasures, Salceda proposed the following steps on the part of government agencies:

“The place of business of FLAVA did not have a Revenue Office on Premise (ROOP) assigned to it. The BIR should faithfully implement ROOP rule for electronic cigarette manufacturers,” Salceda said.

Salceda adds that “Contradictions in BIR system of registration of e-cigarette companies should be resolved.”

Distinction between manufacturers, importers, wholesalers, and retailers is crucial because it should determine the extent of responsibility for ensuring excise tax payment, Salceda pointed out.

Salceda also proposed that third-party liability should be established. Salceda pointed out that the rules and regulations “issued on the implementation of the Vape Tax Law and RA 11900 or the Vape Regulation Act do not outline the responsibility of foreign supplier to label and declare the shipment as electronic cigarettes, those of brokers, logistics providers, and online selling platforms.”

Salceda also demanded that the “definition of salt nicotine or freebase should be clearly set out.”

“Excisable products should also be declared from the port of departure,” Salceda said.

Salceda pointed out that tobacco excise tax revenues are likely to continue to decline, as the e-cigarette sector, both formal and informal, will take a bigger share of the market.

“Statista projects e-cigarette sector to be P13.244 bn in size. Using just freebase rates and average prices, the industry should be paying at least P5.56 billion,” Salceda estimates.

Salceda said that the “substitution effect” from tobacco to e-cigarettes will continue as cigarette prices increase while e-cigarette makers continue to innovate.

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