RR No. 14-2022 — Pre cribe the rule and regulation implementing the provi ion of Republic Act No. 11900, relative to the importation, manufacture, ale, packaging, di tribution, u e, and communication of Vaporized Nicotine and Non-Nicotine Product , and Novel Tobacco Product (Publi hed in Manila Time and Manila Bulletin on November 17, 2022) Dige t |

REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE RECORDS MGT,DIVISION S NOV 11 2022 BUREAU OF INTERNAL REVENUE National Office Building RECEIVED LSt"Dm-ADMIN-1

October 24, 2022

REVENUE REGULATIONS NO. (4- 2022

SUBJECT Relative to the Importation, Manufacture, Sale, Packaging, Distribution, Use. Novel Tobacco Products Rules and Regulations Implementing the Provisions of Republic Act No. I 1900. and Communication of Vaporized Nicotine and Non-Nicotine Products, and

TO All Internai Revenue Officials and Others Concerned

(NIRC) of 1997, as amended, these Regulations are hereby promulgated to implement pertinent SECTION 1. SCOPE. -- Pursuant to Sections 244 and 245 of the National Internal Revenue Code provisions of Republic Act (RA) No. 11900 relative to the importation, manufacture, sale, packaging. Tobacco Products, effectively amending certain Sections of Revenue Regulations (RR) Nos. 18-2021 distribution, use and communication of Vaporized Nicotine and Non-Nicotine Products and Novel and 7-2021.

SECTION 2. DEFINITION OF TERMS. -- For purposes of these Regulations, the following terms shall be defined as follows:

A DISTRIBUTOR -- shall refer to any entity to whom Vaporized Nicotine and Non-Nicotine

distribution in commerce, except that such term does not include a manufacturer, retailer or Products or their devices, or Novel Tobacco Products is delivered or sold for purposes of

common carrier of such product.

B FLOOR PRICE - the minimum retail price set by the BIR at which Vaporized Nicotine and

Non-Nicotine Products or Novel Tobacco Products may be sold, taking into account the sum of their excise tax, value-added tax, and a reasonable production cost.

C. GRAPHIC HEALTH WARNING - the photographic image printed on the packaging of

Warnings Law", consistent with the textual health warning required under Sec. 4. A. II of Republic Act No. I 1900. Vaporized Nicotine and Non-Nicotine Products, HTPs, and Novel Tobacco Products prescribed under Republic Act No. 10643, otherwise known as "The Graphic Health

D GRAPHIC HEALTH WARNINGS LAW - refers to RA No. 10643, otherwise known as

"An Act to Effectively Instill Health Consciousness Through Graphic Health Warnings on Tobacco Products"

E HEATED TOBACCO PRODUCTS (HTPs) -- also referred to as Heated Tobacco Products

that are intended to be consumed through heating tobacco either electronically or through solutions and gels that are part of the product and are heated to generate an aerosol. HTPs may or may not operate by means of an HTP Device. other means, sufficient to release an aerosol that can be inhaled, without combustion of the tobacco. HTP Consumables or Heat-Not-Burn Product Consumables may also include liquid (HTP) Consumables or Heat-Not-Burn Product Consumables, shal! refer to tobacco products

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F HEAi'ED TOBACCO PRODUCT DEVICE or HTP Device - shall refer to the componcnt

or combination of components of an HTP System intended to be used in combination with HTP Consumables that generate an aerosol without combustion.

G. HEATED TOBACCO PRODUCT SYSTEM or HTP System - shall refer to an HTP

Consumable and HTP Device that are intended to be used together as a system.

H. and Non-Nicotine Products, and their devices, or HTPs, or Novel Tobacco Products. IMPORTER - any person or entity that is engaged in the importation of Vaporized Nicotine

or Novel Tobacco Products, including preparatory processing, compounding, formulating. purpose of its storage, sate or distribution. MANUFACTURER - shall refer to an establishment engaged in any and all operations involved in the production of Vaporized Nicotine and Non-Nicotine Products, or their devices. filling, refilling, packaging, repackaging, altering, ornamenting, finishing and labeling for the

H NICOTINE -- shall refer to nicotinic alkaloids, including any salt or complex of nicotine.

whether derived from tobacco or synthetically produced.

K NICOTINE MIXTURE - shali refer to the nicotine containing liquid, solid or other non-

tobacco substance in the product.

NICOTINE SHOTS -- shall refer to nicotine in liquid or any other form or substance that is thc dosage or nicotine concentration in a refill or cartridge. added to or mixed with Vapor Product Refills or cartridges that has the effect of increasing

M. NOVEL TOBACCO PRODUCTS -- shall refer to all non-combusted substances in solid or

nicotine from tobacco, intended to be used as a substitute for cigarettes or other combusted liquid form, and innovations, either made partly of tobacco leaf as raw material or containing

tobacco products.

N Nicotine and Non-Nicotine Products, and their devices, HTPs, or Novel Tobacco Products ONLINE SELLER OR MERCHANT n organization or retailer selling Vaporized

online.

O PACKAGE -- shall refer to packs, boxes, cartons, or containers of any kind in which Vapor

Products or HTPs, or Novel Tobacco Products are contained when offered for sale to consumers.

D PRINCIPAL DISPLAY SURFACE - shall refer to the panel of the package that faces the consumer when displayed for sale.

Q PRODUCT REGISTRATION - shall refer to the Certification issued by the Bureau of

its Technical Regulations. Phitippine Standards (BPS) of the Department of Trade and industry (DTi) in accordance with

R. PRODUCT STATEMENT -- shall refer to an explicit communication to consumers in the

product label or marketing which pertains to product performance attributes or an objective description of the contents of the product, quantity of chemicals produced, or how a product works or operates.

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S PROMOTION -- shall refer to an event or activity organized by or on behalf of a Vaporized Nicotine and Non-Nicotine Product or Novel Tobacco Product manufacturer, importer. distributor, or retailer with the aim of promoting a brand of a Vaporized Nicotine and Non- Nicotine Product or Novel Tobacco Product, which event or activity would not occur if not

the support given to it by or on behalf of the Vaporized Nicotine and Non-Nicotine Product or Novel Tobacco Product manufacturer, importer, distributor, or retailer. This includes the

trade shows, concerts and similar events. For the purpose of this Act, promotion shall be understood as Vaporized Nicotine and Non-Nicotine Product or Novel Tobacco Product and other forms of entertainment as well as in other live promotional events such as fairs, paid use of Vaporized Nicotine and Non-Nicotine Products or Novel Tobacco Products bearing the brand names, trademarks, logos, and the like by performers in movies, television

promotion.

I PROMOTIONAL -- shall refer to the act of publicizing a product to an individual, group or

the general public, or promoting awareness of the product brands, for the sole purpose of increasing sales.

U. REDUCED RISK STATEMENT - shall refer to an explicit communication to consumers

harm to the user's health or is less harmful to the user's health than continued smoking of in the product labe! or marketing materials which states that the product presents less risk of combustible cigarettes.

V. REFILL -- shall refer to a container for holding electronic liquid or Nicotine Mixture.

W. RETAILER - shall refer to any establishment which sells or offers to sell any Vaporized Nicotine and Non-Nicotine Products or their devices, or Novel Tobacco Products directly to an individuai group or the general public.

X VAPING -- shall refer to the use of Vaporized Nicotine and Non-Nicotine Products.

Y. VAPOR PRODUCTS -- also referred to as Vapor Product Refills, shall refer to the liquid.

transformed into an aerosol without combustion by a Vapor Product Device. solid, or gei, or any combination thereof, which may or may not contain nicotine, that is

Z VAPOR PRODUCT DEVICE -- shall refer to a device or a combination of devices used tc include combinations of a liquid solution or gel that are heated and transformed into an aeroso battery, or circuit, and includes, but is not limited to, a cartridge, a tank, or a device without a heat a Vapor Product, to produce an aerosot, mist, or vapor that users inhale. These may without combustion through the employment of a mechanical or electronic heating ciement, cartridge or tank.

AA. VAPOR PRODUCT SYSTEM - also referred to as electronic nicotine or non-nicotine

delivery systems, shall refer to the specific combination consisting of the Vapor Product Refill and Vapor Product Device which, based on the information made available to the consumer by the provider, are intended to be used together.

BB. VAPORIZED NICOTINE OR NON-NICOTINE PRODUCTS - shall refer to both Heated Tobacco Products and Vapor Products, as defined herein, which are novel consumer goods that generate a nicotine-containing or non-nicotine-containing aerosol without combustion.

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SECTION 3. TAX RATES AND BASES OF EXCISE TAXES.

Nicotine Products at the rate of tax prescribed under RA Nos. 11346 and 11467 as implemented by RR No. 7-2021, and Novel Tobacco Products under Section 144 (A) (b) of National Internal Revenue Code (NIRC) of 1997, as amended. There shall be ievied, assessed and collected an excise tax on Vaporized Nicotine and Non-

A TOBACCO PRODUCTS, HEATED TOBACCO PRODUCTS, VAPOR

PRODUCTS, AND NOVEL TOBACCO PRODUCTS

Date of Effectivity January 23, 2020 January 1, 2022 January 1, 2021 January 1, 2023 1 January 1, 2020 2024 Onwards HEATED TOBACCO PRODUCTS Per pack of 20 units or any packaging combinations of not more than twenty (20) Quantity. units increased by 5% every year effective January 1, 2024 Specific tax rate shall be Excise Tax P27.50 P10.00 P25.00 P32.50 P30.00

2 VAPOR PRODUCTS

Date of Effectivity January 23, 2020 January 1, 2022 January 1,2021 January 1,2023 2024 Onwards Nicotine Salt or Salt Nicotine Per milliliter or a fraction Quantity thereof Rate shall be increased by 5% every year effective January 1, 2024 Excise Tax P47.00 P37.00 P42.00 P52.00

Date of Effectivity January 23, 2020 January I, 202] January 1, 2022 January 1, 2023 2024 Onwards b Conventional Freebase' or Classic' Nicotine Per ten (10) milliliters or a fraction thereof Quantity "Rate shall be increased by 5% every year effective January 1, 2024 Excise Tax P55.00 P60.00 P45.00 P50.00

Date of Effectivity August 10, 2022 January 1, 2023 2024 Onwards 3 NOVEL TOBACCO PRODUCTS Per kilogram Quantity Rate shall be increased by 4% every year effective January 1, 2024 Excise Tax P2.50 P2.60

regardless of nicotine content, including nicotine-free substance or any similar product. The rates of tax imposed herein shall apply to any substance in solid, liquid, or gel form,

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B. INSPECTION FEES.

There shall be collected inspection fees on Vaporized Nicotine and Non-Nicotine Products as prescribed under RA Nos. 11346 and 11467 as implemented by RR No. 7-2021, and Novel Tobacco Products under Section 146 of NIRC of 1997, as amended, detailed as follows:

PRODUCT INSPECTION FEE MEASURE UNIT OF

Novel Tobacco Products Heated Tobacco Vapor Products PO.03 PO.10 PO.01 I,000 sticks I m] I kg

ILLUSTRATION NO. 1:

A Heated Tobacco Products

while I ream contains 10 packs. How much is the excise tax due and inspection fee? Case: Removal of 50 cases from place of production in which 1 case contains 50 reams

Solution: Multiplied by the no. of reams per case Multiplied by tax rate Multiplied by the no. of packs per ream Total no. of packs No. of cases Total no. of reams P 30.00 25,000 2, 500 50 50 10

Total Excise Tax Due P 750,000.00

Multiplied by the no. of sticks per pack Total no. of packs 25,000 20 Total no. of sticks 500.000 Divided by no. of sticks 1,000

Multiplied by inspection fee rate Total Inspection Fee Due Total no. of thousand sticks P 50.00 P 0.10 500

ILLUSTRATION NO. 2:

B. Nicotine Salt or Salt Nicotine -- containing morc than I ml.

vapor products with 2 pods per pack Product Type: Nicotine Salt or Salt Nicotine with volume content of !.9 mI, 500 packs of

No. of packs 500 Multiplied by no. of pods per pack 2

Multiplied by tax rate Total no. of pods Total Excise Tax Due Next fraction .9ml Ist m1 P47.00 P47.00 94,000.00 94.00 1,000

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Total no. of pods Total m! Multiplied by inspection fee rate Total Inspection Fec Due Multiplied by milliliter (ml) per pod P 19.00 1 0.01 1,900 1,000 1.9

ILLUSTRATION NO. 3:

C. Conventional Freebase or Classic Nicotine -- containing more than 10 mi. Product Type: Conventional Freebase' or Classic' Nicotine with container size of I5ml. 100 bottles of vapor products

No. of bottles. 10 Multiplied by tax rate Total Excise Tax Due Next fraction 5ml Ist 10ml 855.00 855.00 P 11,000.00 P 110.00

Multiplied by milliliter (mi) per bottle No. of bottles 100 1

Multiplied by inspection fee rate Total ml P 0.01 1,500

Total Inspection Fec Duc P 15.00

ILLUSTRATION NO. 4:

D Novel Tobacco Products

Produet Type: Novel Tobacco Products with weight/volume content of 40 grams per can. 1,000 cans of Snus Multiplied by no. of grams per can No. of cans 1,000 40

Multiplied by excise tax rate Total grams Total kgs Divide by no. of grams per kg 40.000 1,000 2.50 40

Total Excise Tax Due E 100.00

No. of cans Multiplied by no. of gram per can Divide by no. of grams per kg. Total grams 40,000 1,000 1,000 40

Multiplied by inspection fee rate Total kgs P 0.03 40

Total Inspection Fee Due P 1.20

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SECTION 4. COMPLIANCE AND ADMINISTRATIVE REQUIREMENTS.

A REGISTRATION OF THE BUSINESS AS MANUFACTURER OR IMPORTER OF VAPORIZED NICOTINE AND NON-NICOTINE PRODUCTS AND NOVEL TOBACCO

PRODUCTS

or importer of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shal!. Division (ELTRD) BIR National Office as an excise taxpayer. before the start of the business operations, be required to register with the Excise LT Regulatory For excise tax purposes, any person or entity who desires to engage in business as a manufacturer

1. Application for a Permit to Engage in Business as Manufacturer or Importer of Vaporized a written application for the Permit addressed to the Commissioner of Internal Revenue. Nicotine and Non-Nicotine Products and Novel Tobacco Products -- Every applicant shall file Attention: Chief, ELTRD, together with the following supporting documents:

a} Certificate of Registration (COR) issued by the Securities and Exchange Commission

b) Mayor's Permit issued by the concerned Local Government Unit (LGU): C} BIR Certificate of Registration (BIR Form No. 2303) including Registration Fee (BiR Form individuals: (SEC), together with Articles of Incorporation/Partnership and By-Laws, for corporation or partnership, or COR issued by the Department of Trade and Industry (DTI), for

C Latest copy of Income Tax Return duly filed and received by the BIR, if applicable. Importer/Manufacturer's Surety Bond with an initial coverage of P100,000.00; and No. 0605):

f Location map, and plat and plan of the Production Plant/Warehouse, and if manufacturer.

the blueprint.

B VAPORIZED NICOTINE AND NON-NICOTINE PRODUCTS AND NOVEL TOBACCO ASSESSMENT NUMBERS OF MANUFACTURERS OR IMPORTERS. PRODUCTS OF

order: For administrative purposes, permits shall be assigned assessment numbers in the following

Administrative Schedule A A Paragraph 81 8 Manufacturer of Heated Tobacco Products Importer of Heated Tobacco Products Description

TM TM TM A A A A 1 ) 9 9 10 9 10 1 Toll-Manufacturer of Heated Tobacco Products Toll-Manufacturer of Novel Tobacco Products Manufacturer of Novel Tobacco Products Toll-Manufacturer of Vapor Products Importer of Novel Tobacco Products Manufacturer of Vapor Products Importer of Vapor Products

Sequence Number Month Issued Year Issued 2 numeric 2 numeric 4 numeric

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Example: [Permit Issued on September, 2022] A-8(I)-09-22-000: TM-8-09-22-0000 A-8-09-22-000: For Manufacturer of Heated Tobacco Products For Importer of Heated Tobacco Products For Toll-Manufacturer of Heated Tobacco Products

TM-9-09-22-0001 [Permit Issued on September, 2022] A-9(1)-09-22-0001 A-9-09-22-0001 For Manufacturer of Vapor Products For Toll-Manufacturer of Vapor Products For Importer of Vapor Products

[Permit Issued on September, 2022] A-10-09-22-0001 A-10(I)-09-22-0001 TM-:0-09-22-0001 For Toll-Manufacturer of Novel Tobacco For Manufacturer of Novel Tobacco Products For Importer of Novel Tobacco Products Products

C. REGISTRATION OF BRAND AND VARIANTS THEREOF

All manufacturers, importers or exporters of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, prior to the initial manufacture, importation or exportation of brands and its variants, an application for registration thereof shall be filed with the ELTRD. The application shall be accompanied by the following:

Manufacturer's or Importer's Sworn Statement

Every manufacturer or importer shall file with the Commissioner, through ELTRD, a sworn statement on the goods or products manufactured/produced, imported or exported. and their corresponding gross sclling price or market value, together with the cost of manufacture, production, or importation and the expenses incurred or to be incurred until the goods or products are finally sold. The manufacturer's or importer's sworn statement shall be submitted as a supporting document to the prescribed application for the initial registration. An updated sworn statement shall also be submitted on or before the end of the months of June and December thereafter.

2 Replica of the Proposed Label, Package and/or Container

Exact replica of the proposed label, package and/or container, as well as the 'artwork' of the secondary containers (e.g. cartons, boxes, etc.), of the brand in three (3) copies with a graphic health warning in compliance with the packaging and health warnings requirement provided under Section 4 of Republic Act No. 11900, otherwise known as "Vaporized Nicotine and Non-Nicotine Products Regulation Act" and Republic Act No. 10643, otherwise known as "The Graphic Health Warnings Law". " as implemented by Revenue Memorandum Circular (RMC) No. 23-2016.The following shall be conspicuously printed in easily recognizable and readable manner on the secondary containers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, pursuant to RMC No. 26-2006:

For locally manufactured products, the name, address and assessment number of the manufacturer. In case the manufacturer has two or more production plants. the address and the assessment number of the production plant where the brand of the excisabie product was manufactured shall be printed on the label;

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on the label; For imported products, the name and address of the foreign manufacturer, as welf as the name, address and assessment number of the importer shall be indicated

I The phrase "FOR DOMESTIC SALE ONLY", in case the brand shall be sold in

shall be exported. No exportation by any person shail be allowed unless the Exportation of products bearing the phrase "FOR DOMESTIC SALE ONLY"" is strictly prohibited in any case; the domestic market or the phrase "FOR EXPORT ONLY", in case the brand required export markings are prominently printed on the said containers.

iii. The phrase "DUTY-FREE AND NOT FOR RESALE", in case of importation by Duty Free Philippines (DFP); and

Iv The phrase "FOR EXPORT TO THE PHILIPPINES; TAX AND DUTY PAID", in case the brand shall be imported for domestic market.

be a ground for confiscation or seizure by any authorized BIR personnel. products or novel tobacco products shall be pre-approved by the BIR, otherwise, it shall All proposed label, package and/or container, as well as the "artwork' of the secondary containers (e.g. cartons, boxes, etc.), of the brand of vaporized nicotine and non-nicotine

D. MANUFACTURER'S OR IMPORTER'S OF SWORN STATEMENT

others, the following information: for Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products showing among Novei Tobacco Products shall submit a duly notarized Manufacturer's or Importer's Sworn Statement Every local manufacturer or importer of Vaporized Nicotine and Non-Nicotinc Products and

2) 5) 6 T} 8} 9) 3) 4) the case may be. Corresponding excise and value-added taxes per pack, per pod, or per bottle/container, as Detailed production/importation costs and all other expenses incurred or to be incurred until the product is finally sold (e.g. material, labor, overhead, selling and administrative Name, address, TIN and assessment number of the manufacturer or importer Complete specifications of the brand detailing the specific measurements, weights, manner Wholesale price per case, gross and net of VAT and excise tax; Suggested retail price, gross and net of VAT and excise tax, per pack, per pod, or per bottle/container, as the case may be; Applicable excise tax rates; and Complete root name of the brand as well as the complete brand name with modifiers, if any: of packaging, etc.; Name(s) of the region(s) where the brand is/are to be marketed: expenses) per case;

the end of the months of June and December of the year. If there is any change in the cost to the place of production or release from the customs' custody, as the case may be. to the prescribed application for the initial registration of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products and thereafter submit an updated sworn statement on or before manufacture, produce and sell the brand or change in the actual selling price of the brand, an updated sworn statement shall be submitted at least five (5) days before the actual removal of the product from The manufacturer's or importer's sworn statement shall be submitted as a supporting document

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E MANUFACTURERS' AND IMPORTERS' SURETY BOND.

the following conditions: Manufacturers and importers of articies subject to excise tax shall post a surety bond subject to a} Initial Bond. - In case of initial bond, the amount shall be equal to One Hundred Thousand the bond shall be adjusted to twice the tax actually paid for the period. pesos (P100,000). However, after six (6) months of operation, if the amount of initial bond is tess than the amount of the total excise tax paid during the said period, the amount of

b operation shall be based on the actuat total excise tax paid during the year immediately Bond for the Succeeding Years of Operation. - The bond for the succeeding years of preceding the current year. However, for taxpayers availing of the tax prepayment, advance

deposit, or similar schemes, the amount of bond herein prescribed shall be in accordance with the following schedule:

Excise Tax Payment Minimum Amount of Bond #1,000,000 and below P100,000 Over R1,000,000 up to 5,000,000 P500.000 Over P5,000,000 up to 10,000,000 Over :P10,000,000 up to #25,000,000 1,000,000 #2,500,000 Over #25,000,000 up to R50,000,000 5,000,000 Over 50,000,000 up to R100,000,000 P10,000,000 Over R100,000,000 up to P500,000,000 15,000,000

Over #1,000,000,000 up to#10,000,000,000 Over #500,000,000 up to 1,000.000,000 P30,000,000 P50,000,000

Over-P20,000,000,000 0ver #10,000,000,000 up to #20,000,000,000 #100,000,000 #75,000.000

The bond shall be conditioned upon faithful compliance with the pertinent laws, rules and regulations and for the satisfaction of all fines and penalties imposed by the Tax Code of 1997, as ameided.

Provided, however, that a higher amount of bond may be required from any manufacturer or importer, for meritorious reasons, subject to the prior written approval by the Commissioner of Internal Revenue.

F GOODS (eATRIG) BEFORE RELEASE FROM CUSTOM'S CUSTODY APPLICATION FOR AN ELECTRONIC AUTHORITY TO RELEASE IMPORTED

All importers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall file an application for an eATRIG for excise tax purposes. The application shall be done online and processed in the ELTRD, BIR-National Office. The Chief of ELTRD shall be the designated approving officer.

No ATRIG shall be issued in case the imported products are already released from the customs custody. Likewise, no subsequent application for ATRIG shall be processed unless the importer has submitted proof of payment of the excise tax due on the imported products covered by previously issued ATRIG.

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G USE OF BIR FORM NO. 2200-T AND BIR FORM NO. 2299

manufacturers for all removals of Tobacco Products, Vaporized Nicotine and Non-Nicotine Products, and Novel Tobacco Products. (ETRD) (BIR Form No. 2299) are hereby prescribed to be used and issued by all registered Excise Tax Returns (BIR Form No. 2200-T) and Excise Taxpayer's Removal Declaration

(ELTFOD) in the BIR National Office, or from the Excise Tax Area offices of the concerned BIR The ETRD shall be requisitioned from the Excise Large Taxpayers Field Operations Division

be in accordance with the existing rules, regulations and procedures issued for this purposc. Revenue Regional Offices, having respective jurisdiction over the manufacturers of Tobacco Products, Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products. The manner of preparation, issuance and cancellation thereof, as well as the applicable reportorial requirements, shall

H. AFFIXTURE OF INTERNAL REVENUE STAMPS FOR VAPORIZED NICOTINE AND NON-NICOTINE PRODUCTS AND NOVEL TOBACCO PRODUCTS

All manufacturers and importers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shal! comply with the requirements provided under Revenue Regutations No. 18- 2021 on the affixture of internal revenue stamps and the use of Enhanced Internal Revenue Stamps Integrated System (E-IRSIS).

NOTICE OF STOPPAGE OF PRODUCTION OF A PARTICULAR BRAND

A written notice shall be filed with the ELTRD, BIR-National Office that a particular brand(s) shall not be manufactured on a permanent or temporary basis.

due to scheduled maintenance program, major repairs, labor strikes, orders by appropriate government agencies, and such other similar incidents, or due to occurrence of fortuitous events such as typhoons, For temporary stoppage, the required notice shall be applicable in cases of production shutdown

floods, fire, etc.

The notice of stoppage shall be filed at least five (5) days before the actual date of production stoppage of the brand(s). However, in case of fortuitous events, the BIR shall be notified within three (3) days from the temporary stoppage of production.

J BOOKS AND RECORDS TO BE KEPT AND MAINTAINED.

Non-Nicotine Products and Novel Tobacco Products shall keep and maintain Official Register Books Every person or entity engaged in the manufacture or importation of Vaporized Nicotine and

Revenue, which must be kept within the place of production/importer's warehouse and shall at all times be made available for inspection by duly authorized internal revenue officer(s). (ORB) and such other forms or records that may be prescribed by the Commissioner of Internal

toll manufacturers or sub-contractors to the LT Performance Monitoring and Programs Division The submission of all transcript sheets of ORBs by all manufacturers and importers, including

(LTPMPD) in BiR National Office or to the concerned Excise Tax Area (EXTA) having jurisdiction of following the month of operation. the place of production/warehouse shall be on or before the eighth (8th) day of the month immediately

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K REMOVAL OF T'AX-PAID VAPORIZED NICOTINE AND NON-NICOTINE

PRODUCTS AND NOVEL TOBACCO PRODUCTS

manufacturing plant or place of production. and Novel Tobacco Products the same shall not thereafter be stored or permitted to remain in the When the cxcise tax has already been paid for Vaporized Nicotine and Non-Nicotine Products

L SUPERVIS|ON AND CONTROL OF THE MANUFACTURING PLANT OR PLACE OF

PRODUCTION

to check or supervise the operation from receipt of raw materials, in process and removal of finished products of any establishment producing or manufacturing Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products. There shall be deployed/assigned, on a day-to-day basis, Revenue Officers on Premise (ROOPs)

M. SIGNAGE ON THE OUTSIDE OF PRODUCTION PLANT/FACTORY AND

WAREHOUSE

A signage in letters of not less than 6 centimeters high shall be placed and kept in a conspicuous position on the outside of every building used as a production plant/factory or warehouse of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, showing the registered name and assessment number.

N. CONDUCT OF STOCKTAKING, VERIFICATION AND INSPECTION

The BIR shall conduct a physical stocktaking inventory by actual count and/or volume of the entire stocks (raw materials, in process or intermediate, and finished goods) on hand, in the presence of the manufacturer's or importer's authorized representative who shall jointly attest to the fact of witnessing and verifying the results thereof by affixing their signatures on the attestation clause in the inventory certificate.

SECTION 5. ONLINE TRADE

The sale or distribution of Vaporized Nicotine and Non-Nicotine Products, Novel Tobacco Products and their devices through internet websites or via e-commerce and/or other simiiar media platforms shall only be made by online sellers or distributors registered with the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SEC), and the products being sold and advertised online shall be compliant with the health warning requirements provided under Revenue

Products or their devices, or Novel Tobacco Products purchased online shall also comply with Section Memorandum Circular (RMC) No. 23-2016, as well as other BIR requirements including tax stamp. minimum floor price or other fiscal marks. The delivery of Vaporized Nicotine and Non-Nicotine

7 of RA 11900.

Nicotine and Non-Nicotine Products and Novel Tobacco Products registered with DTI and the BIR that The BIR shall maintain a list on their website, to be updated monthly, of brands of Vaporized

are eligible to be sold online.

Internet websites and/or e-commerce and/or other similar media selling platform providers shall only allow duly registered onjine sellers or retailers with the DTI and the BIR.

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SECTION 6. FLOOR PRICE OR MINIMUM PRICE.

product including the sum of excise tax and VAT. Products shall be the total production cost/expenses/landed cost of the cheapest brand per tobacco The minimum floor price of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco

EXAMPLES OF FLOOR PRICE OR MINIMUM PRICE

1 Heated Tobacco Products

Description Unit Stick Landed Cost / Net of Production Cost / Excise and VAT Excise Tax VAT Floor Price

Amount 2022 HTP Pack 20 95.00 30.00 15.00 140.00

Y Vapor Products I.1 Nicotine Salt or Salt Nicotine a. Production cost of P 10.00 per 0.1 ml content, volume per pod is 0.7 ml b. Production cost of P 10.00 per 0.1 ml content, volume per pod is 1.8 m! c. Production cost of 10.00 per 0.1 ml content, volume per pod is 1.9 ml

1.2 Conventional 'Freebase' or 'Classic Nicotine a. Production cost of 5.00 per I ml content, volume per bottle is 15 m! b. Production cost of P 5.00 per l ml content, volume per bottle is 30 ml

Salt Nicotine a. Nicotine Salt or b. Nicotine Salt or Salt Nicotine Formulation Nicotine Unit Pod Pod I Fill Pack 1 Content Volume 0.7 ml 1.8 ml (m) 10.00/0.1 ml 10.00/0.1 ml Landed Cost / Net of Per Unit Production Cost / Excise and VAT Amount 180.00 70.00 Excise 94.00 47.00 Tax 14.04 32.88 VAT 306.88 131.04 Floor Price 2022

a. Conventional Salt Nicotine c. Nicotine Salt or 'Freebase' or Bottle Pod 1 1.9 ml 15 ml 10.00/0.1 ml 5.00/1 ml 190.00 75.00 110.00 94.00 34.08 22.20 207.20 318.08

b. Conventional 'Freebase' or Classic' Nicotine Classic' Nicotine Bottle 30 ml 5.00/1 ml 150.00 165.00 37.80 352.80

3 Novel Tobacco Products

3.3 Novel -Snus 3.1 Novel -Snus 3.2 Novel -Snus. Description Can Unit Can Can Weight/ Volume[ Landed Cost / Net Content per can or container (g) 15.84 g 10 g 40 g of Excise and VAT Production Cost Amount 225.00 200.00 250.00 Excise 0.04 0.03 0.10 Tax 27.00 30.01 24.00 VAT 224.03 252.04 280.11 Price Floor 2022

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SECTION 7. USAGE OF LOCAL TOBACCO PRODUCTS.

are encouraged to use local tobacco products to be sold in the Philippines. Manufacturers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products

SECTION 8. PENALTIES FOR NON-COMPLIANCE.

Any violation of these Regulations shall be subject to the corresponding penalties under the pertinent provisions of the NIRC of 1997, as amended, and applicable regulations issued by the BIR.

For any violation of Section 4 of this Act, if the offender is a manufacturer, importer, distributor, or retailer, the following shall be imposed:

I On the first offense, a fine of Two million pesos (P2,000,000.00) and imprisonment of

On the second offense, a fine of Four million pesos (P4,000,000.00) and imprisonment two (2) years:

H On the third offense, a fine of Five million pesos (P5,000,000.00) and imprisonment of of four (4) years:

Iv. That the business permits and licenses, in the case of a business entity or establishment, The BIR shall order the immediate recall, ban or seizure from public sale or distribution shall be revoked and cancelled. six (6) years;

of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products not registered with the BIR, including those sold online. This is without prejudice to the filing of the appropriate cases and collection of correct taxes and duties, including appiicable fines and penalties under RA No. 8424, as amended, and RA No. 10863, otherwise known as the "Customs Modernization and Tariff Act (CMTA)

The BIR shall order the immediate recall, ban or seizure from public sale or distribution of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products not registered with the BIR, including those sold online. This is without prejudice to the filing of the appropriate cases and collection of correct taxes, including applicable fines and penalties under Republic Act No. 8424, as amended.

SECTION 9. TRANSITORY PROVISION

Upon effectivity of the Implementing Rules and Regulations (IRR) of RA 11900, the manufacturers, importers. distributors and retailers of Novel Tobacco Products shall be given an eighteen (18)-month transitory period to comply with the requirements of these regulations.

SECTION 10. SEPARABILITY CLAUSE.

If any provisions of these Regulations shall be held unconstitutional or invalid, the other provisions not otherwise affected shall remain in full force and effect.

SECTION 11. REPEALING CLAUSE.

The provisions of any existing regulations, rulings, orders, issuances or portions thereof inconsistent with the provisions of these Regulations are hereby revoked, repealed, or modified accordingly.

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SECTION I2. EFFECTIVITY.

Official Gazette thereof or in at least two (2) teading newspapers of general circulation. These Regulations shall take effect immediately fifteen (15) days after its publication in the

C BENJAMIN E. DIOKNO

Secretary of Finance

Recommending Approval: NCV 0 7 2322

Commissioner of Intermat Revenue LILIA CATRIS GUILLERMO

002338 BUREAU OF YNTPRNALREV ENUE

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