EXCISE TAX

EXCISE TAX
Excise tax is a hybrid consumption tax with a regulatory overture. It is imposed
only on certain goods or services.

Scope of Excise Tax

The Philippine version of excise tax is limited only to certain goods with the
exception of cosmetic surgery - the only service currently subject to excise tax.

List of Excisable Articles and Services in the Philippines

1. Alcohol products, such as distilled spirits, wines and fermented liquors
2. Tobacco products, such as cigars and cigarettes
3. Petroleum products, such as gas, gasoline, diesel, wax, lubricant oils and
greases, kerosene, naphtha, denatured alcohol, coke, asphalt and bunker
fuel oil
4. Mineral products whether as metallic or non-metallic minerals and quarry
resources
5. Miscellaneous articles, such as automobiles, non-essential goods like
jewelry, perfume and yacht, and sweetened beverages like soft drinks and
sweetened drinks
6. Non-essential services such as cosmetic surgery

Timing of Excise Taxation

Excisable article or service Taxable at the point of
Import Production Sale
Alcohol products Yes Yes
Tobacco products Yes Yes
Petroleum products Yes Yes
Mineral products Yes Yes
Automobiles Yes Yes
Non-essential goods Yes Yes
Sweetened beverages Yes Yes
Non-essential services Yes

NATURE OF PHILIPPINE EXCISE TAX

A. Excise Tax as a regulatory tax
1. Environmental Tax-It is imposed on products which causes harm to the
environment when produced or extracted or used. It is also known as
green tax.

Examples are excise tax levied on:

a. Petroleum products
 b. Quarry resources
c. Minerals products
Environmental tax may also be referred to as green tax.
2. Sumptuary tax -it is imposed to restrain luxury or extravagance. It is
also referred to as vanity tax. Examples are excise tax levied on:
a. Intrusive cosmetic surgery
b. Automobiles and yacht
c. Jewelry
3. Sin tax - it is imposed on the consumption of sin products or those
known to pose health risk. It is also known as health tax. Examples are
excise tax levied on:
a. Alcoholic beverages
b. Tobacco products such as cigar and cigarettes
The excise taxes may be imposed on purely punitive grounds or to raise
funds to alleviate the damage caused on society by the consumption of the
undesirable products.
B. Excise tax as an indirect tax
Excise tax is an indirect tax. It is levied upon producers or importers with
the understanding that he will pass-on the same to the consumers.
C. Excise tax as a consumption tax
The excise tax is usually levied at the point of production or importation,
except excise tax on minerals and cosmetic surgery which is levied at the
point of sale. Thus, it is a typical pre-consumption tax, compared to other
business taxes which are levied at the point of sale or consumption.
D. Excise tax as an additional business tax
A business normally pays either percentage tax or value added tax.
However, if it produces or imports excisable goods or sells excisable
services, the excise tax is imposed in additional tax to the usual business
tax.
E. Excise tax as specific and ad valorem tax
Excise taxes imposed in the Philippines are primarily specific taxes but
there are also ad valorem imposition and mixed of them.

TYPES OF EXCISE TAX

1. Specific tax - excise tax imposed based on weight or volume capacity or
any other physical unit of measurement
2. Ad valorem tax - excise tax imposed on selling price and other specified
value

BASIS OF AD VALOREM TAX

Locally produced goods
Locally produced goods imposed with ad valorem tax is subject to tax on gross
selling price.
Imported goods
Unless otherwise specified by law, imported goods imposed with ad valorem tax
shall be subject to the same rates and basis of excise taxes applicable to locally
manufactured articles.

EXCISE TAX ON ALCOHOL PRODUCTS

Alcohol products Excise tax rates for 2019*

Distilled spirits Per proof liter P 23.40
NRP 26%
Sparkling wines / NRP per 750ml bottle: P500 or less 316.33
Champagnes More than P500 885.73
Still wines and 14% alcohol by volume or less 37.96/L
carbonated wines More than 14% but not more than 25% 75.92/L
Fermented liquors If brewed and sold at pub and
restaurants 35.43/L
Others 25.42/L
*The specific tax rates are subject to 4% annual adjustment every January 1 of
each year

EXCISE TAX ON TOBACCO PRODUCTS

Tobacco products Tax rates
a. a. Tobacco twisted by hand or reduced into a condition
to be consumed in any manner other than the ordinary
mode of drying and cutting
b. b. Tobacco prepared or partially prepared with or P 2.20/kg as of
without the use of any machine or instruments or January 1, 2019*
without being pressed or sweetened
c. Fine-cut shorts and refuse, scrips, clippings, cuttings,
stems and sweepings of tobacco
P 1.89/kg as of
d. On tobacco specially prepared for chewing so as to be
January
unsuitable for use in any other manner
1, 2019*
*subject to 4% yearly increase thereafter

Cigar and cigarettes

Cigars, per cigar Excise tax
Ad valorem 20% on net retail price
Specific tax 6.25/cigar as of January 1, 2019*
Cigarettes per pack Packed by hand/machine
 July 1, 2018 to Dec. 31, 2019 P35/pack
Jan. 1, 2020 to Dec. 31, 2021 P37.50/pack
Jan. 1, 2022 to Dec. 31, 2023 P40/pack*
*subject to 4% yearly increase thereafter starting January 1, 2024

Tobacco inspection fee

Tobacco products Inspection fee rate
Cigars P0.50/thousand or fraction thereof
Cigarettes P0.10/thousand or fraction thereof
Leaf tobacco P0.02/thousand or fraction thereof
Scraps and other manufactured P0.03/thousand or fraction thereof
tobacco

EXCISE TAX ON PETROLEUM PRODUCTS

Tax rate Unit of
Petroleum product 2019 2020 measure
Lubricating oils and greases including but not
liter &
limited to base stocks for lube oils and P9.00 P10.00
kilogram
greases, and additives
Processed as 9.00 10.00 liter of
volume
Waxes and petroleum 9.00 10.00 Kilogram
Denatured alcohol for motive power 9.00 10.00 liter of
volume

liter of
Naphtha, regular gasoline, pyrolysis gasoline 9.00 10.00
volume
and other similar products of distillation
If used as raw materials in the production of
petrochemicals or as a replacement fuels for 0.00 0.00
power plants
Unleaded gasoline liter of
9.00 10.00
volume
Aviation turbojet and aviation as liter of
4.00 4.00
volume
Kerosene liter of
4.00 5.00
volume
Diesel fuel oil and similar fuel oils liter of
4.50 6.00
volume
Liquefied petroleum gas* kilogram
If used for motive power Tax as
2.00 3.00
diesel oil
If used tor production of petrochemical
0.00 0.00
products
 Asphalts 9.00 10.00 kilogram
Bunker fuel oil and similar fuel oils liter of
4.50 6.00
volume
Petroleum coke 4.50 6.00 Metric ton
If used as feed stocks to power generation
0.00 0.00
facilities

Petroleum products to be used as raw materials

Petroleum products used as raw materials in the manufacture of other petroleum
products or as fuel for power plants are not taxable.

EXCISE TAX MINERALS

Mineral product Domestically Imported

produced
P 50/MT effective Jan. 1, 2018
P100/MT effective Jan. 1, 2019
Coal and coke P150 MT effective Jan. 1, 2020
Non-metallic minerals and quarry 4% 4%
resources
Copper, gold, chromite and other
metallic minerals 4% 4%
Indigenous petroleum 6%
Natural gas and liquefied natural gas Exempt

EXCISE TAX
MISCELLANEOUS ARTICLES
Automobiles
Manufacturer’s or importer’s selling price* Tax rate
Up to P600,000 4%
P600,000 to P1,000,000 10%
 P1,000,000 to P4,000,000 20%
Over P4,000,000 50%
*net of excise tax and VAT

NON-ESSENTIAL GOODS
A 20% ad valorem tax is imposed upon the following non-essential goods:
1. Jewelry
2. Perfume and toilet waters
3. Yachts and other vessels intended for pleasure or sports

NON-ESSENTIAL SERVICES
A tax of 5% on gross receipts derived from the performance of services, net of
excise tax and VAT, on invasive cosmetic procedure, surgeries, and body
enhancement directed solely towards improving, altering, or enhancing the
patient's appearance and do not meaningfully promote the proper function of the
body or prevent or treat illness or disease.

Sweetened beverages
Product description Tax rate per
liter
Using purely caloric sweeteners, and purely non-caloric P 6.00
sweeteners or a mix of them
Using purely high fructose corn syrup or in combination with P 12.00
any caloric or non-caloric sweetener

Using purely coconut sap sugar and purely steviol, Exempt

glucosides

Exempt products from Excise Tax

The following shall not be subject to the excise tax on sweetened beverages:
1. All milk products, including plain milk, infant formula milk, follow-on milk,
growing up milk, powdered milk, ready-to-drink milk, flavored milk, and
fermented milk.
2. Soymilk and flavored soymilk
3. 100% natural fruit juices
4. 100% natural vegetable fruit juices
5. Meal replacement and medically indicated beverages
6. Ground coffee, instant soluble coffee, and pre-packed powdered coffee
products
 ACTIVITY:

1. Excise tax shall certain goods intended for:

Domestic consumption Foreign consumption
A. Yes Yes
B. Yes No
C. No Yes
D. No No
2. Excise tax shall apply to certain goods that are
Locally produced Imported
A. a. Yes Yes
B. b. Yes No
C. c. No Yes
D. d. No No
3. Excise tax that are imposed based on weight or volume capacity or Other
physical unit of measurement
A. Specific tax C. Ad valorem tax
B. Quantitative tax D. Metrical tax
4. The excise tax on certain excisable goods is a tax on
A. person - the owner or producer of certain goods
B. property -- the goods produced on manufactured
C. privilege -the right to enter into the business of producing or importing
certain articles
D. Privilege — the right to transport certain goods
5. Taxes imposed on substance known to harm health
A. Sin tax C. Sumptuary tax
B. Green tax D. Vanity tax
6. Taxes imposed to restrain luxury
A. Sin tax C. Sumptuary tax
B. Green tax D. Vanity tax
7. Which could not be considered a green tax?
A. Tax imposed upon mineral products
B. Tax imposed upon petroleum products
C. Tax imposed upon jewelry
D. Tax imposed upon quarry materials
8. Which could not be considered a vanity tax
A. Tax imposed upon jewelry
B. Tax imposed upon champagne
C. Tax imposed upon automobiles
D. Tax imposed upon cosmetic surgery

9. Sin taxes is not be imposed on

A. Wines
B. Cosmetic surgery
 C. Cigars
D. Sweetened beverages

10. The excise tax on certain goods or services is not a

A. direct tax.
B. indirect tax.
C. national tax.
D. tax on domestic consumption.

11. Who is the taxpayer on locally produced excisable goods?

A. Importer C. Producer
B. Wholesaler D. Consumer
12. Which statement is correct?
A. Excise tax normally don't have a deadline of payment.
B. Excise tax is payable on top of value added tax but not of percentage tax.
C. Business for subsistence are exempt from excise tax.
D. Excise tax are imposed at the point of consumption.
13. Which is not subject to excise tax?
A. Quarry resources C. Precious metals
B. Prostitution D. Sweetened beverages
14. Which of the following is not considered a taxable sin product?
A. Liquors C. Marijuana
B. Tobacco leaves D. Sweetened beverages
15. Statement 1: Excise tax rates are relatively more burdensome compared to
other business taxes.
Statement 2: Excise tax rates covers a small range products or services.
Which is true?
A. Both statements are true
B. Both statements are false
C. Only statement 1
D. Only statement 2
16. Statement 1: Excise tax, customs duties and the VAT on importation is similarly
collectible at the point of importation.
Statement 2: Excise tax and the VAT on importation are similarly imposed
upon landed costs.
Which is false?
A. Neither statement C. Both statement
B. Statement 1 D. Statement 2
17. Statement 1: The regulatory aspect of specific taxes on certain sin products
will best be preserved when their tax rates adjust for inflation.
Statement 2: There is no need to adjust ad valorem taxes since they ride with
inflation.
Which is true?
A. Statement 1 B. Both statement
 C. Statement 2 D. Neither statement
18. Which is subject to purely specific tax?
A. Cigar C. Distilled spirits
B. Cigarettes D. Yacht
19. Which statement is false?
A. Cigarettes are subject to specific taxes.
B. All excisable petroleum products are subject to specific taxes.
C. All excisable jewelries are subject to ad valorem tax.
D. All excisable automobiles are subject to specific tax.
20. Which of the following mineral products is subject to specific tax?
A. Coal and coke C. Copper and gold
B. Indigenous petroleum D. Granite
21. HKG, Inc. produced and withdrawn 1,000,000 units of excisable goods X which
is subject to Pl/unit excise tax. HKG, Inc. uses goods X to manufacture Product
Y which is sold domestically and abroad. 50,000 units of Product Y was
produced out of which 30,000 units were exported.
Which is incorrect?
A. Excise tax is payable only on the 400,000 units of goods X.
B. HKG, Inc. shall pay P1,000,000 in excise tax.
C. HKG, Inc. shall claim tax credit or refund for P600,000
D. None of these.
22. So excise tax credit or refund is allowed to the export of which of the
following commodities?
A. Mineral products C. Coal
B. Coke D. Petroleum products
23. "which of the following requires a payment of bond?
A. Removal of wines and distilled spirits for tobacco leaf treatment
B. Removal of spirits for rectification
C. Removal of fermented liquor to bonded warehouses
D. All of these
24. The excise tax on excisable goods exported is claimable by refund or tax
credit. Which is an exception to this rule?
A. Sin products C. Non-essential goods
B. Mineral products D. Petroleum products
25. is ultimately liable for the rectification of spirits?
A. Distiller
B. both distiller and rectifier
C. Rectifier
D. transporter