RR No. 18-2021 — Pre cribe the Con olidated Revenue Regulation on the affixture of Internal Revenue Stamp on imported and locally manufactured cigarette , heated tobacco product and vapor product for dome tic ale or for export and the u e of the Enhanced Internal Revenue Stamp Integrated Sy tem (Enhanced IRSIS) for the ordering, di tribution, monitoring, report generation and incorporating t

REPUBLIC OF THE PHILIPPINES irtl oF tlfEntrAu RtvENU E DEPARTMENT OF FINANCE ffiPu BUREAU OF INTERNAL REVENUE 4 MGT. D VISIUN Quezon City .tE t,r-'XU$ 1 0 SbP 2021 REVENUE REGULATIONS NO. 18. *O LI SU BJECT Consolidated Revenue Regulations on the Affixture of lnternal Revenue Stamps on lmported and Locally Manufactured Cigarettes, Heated Tobacco Products and Vapor Products for Domestic Sale or for Export and the Use of the Enhanced Internal Revenue Stamp lntegrated System (Enhanced IRSIS) for the Ordering, Distribution, Monitoring, Report Generation and lncorporating the Strict Supervision of Production, Release, Affixture, lnventory and Sale of Cigarettes TO : All lnternal Revenue Officials and Others Concerned SECTION t. SCOPE. - Pursuant to the provisions of Section 8, in relation to Sectionsz44 and 245 of the National lnternal Revenue Code (NIRC) of t997, as amended, these Regulations are hereby promulgated in order to amend certain provisions of Revenue Regulations (RR) No. 7- 2014, RR No. 9-2a15, RR No. 6-zot7 and incorporating the applicable provisions of Republic Act (RA) Nos. tg46 and 'n467 for the affixture of new internal revenue stamps on imported and locally manufactured cigarettes, heated tobacco products and vapor products whether for domestic sale or for export, including the strict supervision of production, release, affixture, inventory and sales of cigarettes, heated tobacco products and vapor products by the Revenue Officer on Premise (ROOP) and the use of the Enhanced IRSIS for the ordering, distribution, monitoring and report generation thereof. SECTION z. DEFINITION OF TERMS. - For purposes of these Regulations, the following words and phrases shall be defined as follows: a. APO - shall refer to APO Production Unit, lnc., a government entity who undertakes the base printing of secured internal revenue stamps and together with the winning contractor, develop and maintain IRSIS; b. Bad Order Stamps - shall refer to damaged internal revenue stamps released by APO and received by taxpayer involving a deviation in any of the following specifications: Quick Reference (QR) Code, Unique ldentifier Cod,e (UlC), color, core, and dimension; c. Back Order - shall refer to the qyantity of the remaining or unissued stamps ordered by the taxpayr after its partial release from APO-designated plant due to factory defects subject to replacement of new stamps and new UlCs; ,,, t.l. t,f I \ I

d. Enhanced lnternal Revenue Stamp lntegrated System (Enhanced IRSIS) - shall refer to the web-based or online application system based on the existing system that introduces new and additional functionalities that manages the ordering, distribution and monitoring of internal revenue stamps, as well as the real-time monitoring and report generation of the said stamps upon its affixture on the cigarettes, heated tobacco products and vapor products; 6 Factory Defected Stamps - shall refer to damaged/defective tax stamps produced from APO-designated plant that did not pass the Quality Assurance (qA) standards; f. lnternal Revenue Stamp- shall referto the BIR-issued stamp with a dimensional size of 23 millimeters (*rn) by $ mm containing multi-layered security features and an Enhanced IRslS-assigned UIC and a qR Code containing information pertinent only to the cigarette, heated tobacco products and vapor container (e.9. pack, cartons, bottles, pods) to which the internal revenue stamp is affixed. The new (3'd generation) internal revenue stamp comes in ten (to) different color designs designated for locally manufactured and imported cigarettes, heated tobacco and vapor products and for constructive affixture of the stamps on exportation. lnternal Revenue Stamps may be ordered in banderols or pre-cut/stack according to the machine requirements of the importer or the local manufacturersl tdl' Quick Reference (QR) Code - shall refer to a two dimensional bar code that holds information on the internal revenue stamp; h. Return Material Authorization (RMA) - shall refer to the process of replacing returned Bad Order and Spoiled Stamps with equal number of stamps. RMA shall take the place of the previous process of credit back for returned stamps with the printing cost to be shouldered by the taxpayers in cases of spoiled stamps; t. Spoiled Stamps - shall refer to internal revenue stamps damaged during their affixture on packs and/or cartons at the production warehouse of the taxpayer where the UIC is still visible or QR Code is still verifiable by the machine; j. Top-up on Excise Tax shall refer to the additional excise tax levied to all local manufacturers and importers of cigarettes, heated tobacco products and vapor products as a result of an increase in excise tax rate due to enactment of law and implemented by revenue issuances. lt is assessed and collected by computing the differential increase between the new tax rate and the current tax rate multiplied by the number of unaffixed internal revenue stamps in the possession of the importer and/or local manufacturer, affixed stamps on cigarette, heated tobacco packs and cartons/bottles of vapor products not removed from the place of production of the local manufacturer, ordered stamps not released from APO-designated plant and imported cigarettes, heated tobacco products and vapor products affixed with internal revenue stamps not released from customshouse of the BOC at the time of the effectivity of the

new tax rate. lt is also applied to backorder and stamps subject to RMA if the same are released and received by the taxpayers after the effectivity of the new tax rates; and k. Unique ldentifier Code (UlC) - shall refer to the codelserial number that represents an internal revenue stamp. SECTION 3. ENROLLMENT OF IMPORTERS AND LOCAL MANUFACTURERS OF CIGARETTE, HEATED - TOBACCO PRODUCTS AND VAPOR PRODUCTS WITH ENHANCED lRSlS. A letter of intent for enrollment and registration with Enhanced IRSIS shall be filed by the importer and/or local manufacturer of cigarettes, heated tobacco products and vapor products with the Chief, Excise LT Field Operations Division (ELTFOD) of the BlR, togetherwith a duly notarized Board Resolution, in case the taxpayer is a juridical entity, or a Special Power of Attorney (SPA), in case of a sole proprietor statin$, among others, the names of his/her representatives who are authorized, in behalf of the taxpayer, to maintain a user account for purposes of using the Enhanced IRSIS. ln case of changes of the taxpayer's authorized representative, a separate Board Resolution or SPA shall be issued by the taxpayer for this purpose to warrant cancellation and replacement of user's name/account. The taxpayer, through its authorized user, shall subsequently proceed to the BIR website at www.bir.gov.ph and access the Enhanced IRSIS icon which is viewable in the system for purposes of initiating the enrollment process. All the fields as represented by blank boxes provided in the enrollment form screen shall be filled up and all instructions shall be complied in order to complete the enrollment process. Thereafter, the taxpayer, through its authorized representative, shall receive an electronic mail (email) notification validating the receipt and approval of the application. For this purpose, the email address to be used by the concerned taxpayers shall be the official business email address in case of corporations or partnerships, or the personal email address in case of sole proprietorships. However, for Sole proprietorships, the individual registered taxpayer may authorize his/her subordinate employees to use their respective personal email accounts; provided, that the latter's submission shall be deemed the submission of the individual registered taxpayer himself/herself. Accordingly, in case of violations committed by such subordinate employees, the individual registered taxpayer shall be liable for the corresponding penalties therefor. The BIR shall ensure that necessary briefings/trainings on Enhanced IRSIS are conducted to concerned taxpayers or its authorized representatives, including BIR's duly authorized revenue personnel, prior to the actual implementation of these Regulations in order to provide and clarify the details of the aforesaid enrollment and usage of the system. SECTION 4. ORDERING OF INTERNAL REVENUE STAMPS THROUGH ENHANCED IRSIS AND BIR APPROVAL THEREOF. - Each and every order shall be placed only through the stamp ordering module of Enhanced.lRSlS by the authcirized user. All orders submitted on or before twelve o'clock noon (rz:oo NN) shall be processed by BIR within the said working day. Accordingly, alt orders submitted after 12:oo NN of the working day shall be processed the following working *'{ xE Ct)xrls MG't'. uf vlsluN

Upon approval by BIR of the order, an email notification shall be received by the said authorized user confirming the order with the date of release of the internal revenue stamps from the APO-designated plant. The internal revenue stamps shall be released by APO to the importer/local manufacturer of cigarettes, heated tobacco products and vapor products not later than fifteen (t5) calendar days from the date of approval by the BIR of the submitted order. All orders of internal revenue stamps, after having been duly approved by the BlR, are no longer allowed by Enhanced IRSIS to be cancelled or changed by the authorized users of importers and manufacturers of cigarettes, heated tobacco products and vapor products. Accordingly, the authorized users shall ensure that the correct information is encoded prior to the submission thereof in the ordering module of the Enhanced lRSlS. - sEcTloN 5. PRIoR PAYMENT OF EXCISE TAX ON ORDERS OF TNTERNAL REVENUE STAMPS. Each and every order of internal revenue stamp submitted by the authorized user of the importer or local manufacturer of cigarettes, heated tobacco products and vapor products shall be approved by the BlR. Provided, however, That the excise tax due on the total number of internal revenue stamps ordered has been paid by the importer or local manufacturer of cigarettes, heated tobacco products and vapor products. For purposes of placing the order of internal revenue stamps, through the Enhanced lRSlS, the excise tax payment shall only be made through the Electronic Filing and Payment System (eFPS) of the BlR. Accordingly, the importer or local manufacturer of cigarettes, heated tobacco products and vapor products shall be enrolled with the eFPS. Non-EFPS taxpayers shall use other mode of filing and payment to be captured through system integration or manual data entry. ln cases of eFPS downtime or unavailability, the excise tax return (BIR Form No. zzoo-T) shall be manually filed and the excise tax payment be made through the duly Authorized Agent Banks (AABs) of the BIR where the importer or local manufacturer of cigarettes, heated tobacco products and vapor products are enrolled. The copies of duly received excise tax return and proof of the excise tax payment shall be submitted to the Chief, ELTFOD for purposes of encoding the details of payment in the Enhanced lRSlS. Accordingly, tax return (initially filed manual return) should eventually be filed in the eFPS facility on or before the deadline stated in accordance with RMO No. 65-zo16. ln the event of an increase in excise tax rate, collection of Top-up on excise tax shall be recorded in the Enhanced IRSIS based on the remaining inventory of stamps. BIR user shatl adjust taxpayer ledger to apply the computed additional excise tax. Taxpayer should pay the additional charges due to top-up on excise tax thru EFPS and/or other filing/payment facility for Non-EFPS taxpayers in order to proceed on their next stamp order before the effectivity of the new rate for validation by ELTFOD. (d BUHEAU OF INTE RNAL RE'/E NtIE D Page 4 of 15 [\ll,ffi I} Dtvi rft

With respect to locally manufactured cigarettes, heated tobacco products and vapor products intended for export, the details of payment of the excise tax due thereon if made through the Product Replenishment Debit Memo (PRDM) prescribed under Revenue Regulations (RR) No.3-zoo8 shall be encoded in the Enhanced IRSIS by the authorized personnel of the ELTFOD. ln case of any additional excise tax paid through BIR Form No. o6o5, the said payment form shall strictly contain the phrase "Product Replenishment" in the boxes specifically provided for "Others/Specify" under the "Manner of Payment" thereof. Moreover, the Alphanumeric Tax Codes (ATCs) once available shall be provided in the BIR Form for the following products: a EXTI o - Excise Tax on Export of Tobacco Products o Excise Tax on Export of Heated Tobacco Products a Excise Tax on Export of Vapor Products Failure to provide the required description and ATC in the said BIR Form No. o6o5 shall not be considered as excise tax payment for Export in the Enhanced IRSIS. Taxpayers may opt to post an export bond prior to the removal from place of manufacture of locally manufactured cigarettes, heated tobacco products, and vapor products, which is equivalent to the amount of the excise tax due thereon if sold domestically or said products for export maybe transferred from the place of manufacture to a bonded facility, upon posting of a transfer bond prior to export, in accordance with RA No. try46.ln this case, Enhanced IRSIS must capture the details of the bond through manual data entry. SECTION 6. PAYMENT OF THE PRICE OF INTERNAL REVENUE STAMPS. ESCALATION PROVISIONS. - After the approval of the order of internal revenue stamps and prior to its release from the APO designated plant, the price thereof shall be paid by the importer or local manufacturer of cigarettes, heated tobacco products and vapor products to APO in the amount of TWENTY CENTAVOS (Po.zo) per piece of internal revenue stamp. Based on the orderreference numberissued bythe Enhanced lRSlS, the price of the said stamps shall be paid by the importer or local manufacturer of cigarettes, heated tobacco products and vapor products through the on-line payment facility, over-the-counter, or bills- payment on-line facility of APO: Provided, however, that in case of discrepancy between the said taxpayer's own record and the database of the Enhanced lRSlS, the latter shall prevail, after prior consultation with the concerned parties, for purposes of payment of the total price due on the internal revenue stamps that were previously ordered. ln case of occurrence of inflation, escalation and/or decrease in costs of raw materials and equipment to be used for stamps,production, APO and BIR shall jointly approved the adjustment of interhal revenue stamps, based on recommendation of APO and after consultation with all concerned stakeholders. The amendatory revenue regulations for the effective implementation of price escalation/adjustment shall be issued. E nrJ OF lN TERNAL iI \r-zt rft--r- rx. i] S qri

It shall be understood that payment of the price of internal revenue stamps shall be subject to the existing tax laws, rules and regulations governing withholding taxes. - SECTION Z. RELEASE OF INTERNAL REVENUE STAMPS FROM APO. The internal revenue stamps shall be released and received personally by the authorized representatives of the importer or local manufacturer of cigarettes, heated tobacco products and vapor products directly from the APO designated plant, within fifteen (r5) calendar days from the scheduled date of its release as indicated in the email notification. Failure to claim the internal revenue stamps from the said period shall authorize APO to charge the said taxpayer for the reasonable storage fees. The said authorized representatives should be able to present their identification cards duly issued by the importer or manufacturer of cigarettes, heated tobacco products and vapor products upon claiming the internal revenue stamps. The authorized BIR personnel shall always be present to witness and monitorthe actual release by APO of the internal revenue stamps to the said taxpayer's authorized representatives. Accordingly, the BIR personnel shall attest thereto by affixing his or her signature on the release document issued for the purpose. The attested document shall be used as reference in case of claim for RMA for spoiled/bad order stamps. Upon receipt of the internal revenue stamps by the authorized representatives, the ownership and responsibility thereon shall be transferred to the importer or local manufacturer of cigarettes, heated tobacco products and vapor products. Any damage to or loss of internal revenue stamps after release thereof shall be for the account of the importer or local manufacturer of the said excisable products. In case of partial release of ordered stamps due to factory defect,'the Enhanced IRSIS will record a Backorder for the remaining quantity of ordered stamps not released from APO- designated plant. The factory defected stamps will be replaced with new stamps and new UlCs uPom validation and certification byAPO and the Service Provider of the Enhanced IRSIS with Post Validation by BIR to ensure that the volume of defected stamps are the same with the volume for replacement. Basically, backorder will be the process of allowing partial release of ordered stamps and issuance of the remaining quantity after reproduction thereof. In such case, the following shall be undertaken/accomplished: 1. The taxpayer shall submit a request for replacement of Factory Defected Stamps to APO, copy furnished the BIR-ELTFOD; 2. APO shall facilitate the approval with confirmation by the Enhanced IRSIS provider and a joint report shall be provided to the BIR as basis for post validation. The report shall identify the following: I a. Taxpayer; b. Volume or quantity of Factory Defected Stamps; c. Date of Production; tsUHE AtJ OF IN ERNAL NUE { :to f'kt, Page 5 of 15 ]R\]Jt }il ,N {r.'

d. U lCs; e. QR Codes; and .f Other necessary details. 3. Replacement shall be processed upon approval/consideration by APO and the Service Provider with a joint report given to BIR-ELTFOD. Hence, APO and the Service Provider shall be the one responsible/accountable for the Factory Defected Stamp replacements since prior approval by BIR is no longer required; 4. The BIR shall conduct post validation of the Factory Defected Stamps replacement and the desctruction of stamps on a per taxpayer basis by ELTFOD in coordination with concerned Audit Group; and 5. The report of destruction shall be submitted by the Revenue Officers for approval by authorized Bl R Officials. sEcIoN 8. SPOILED INTERNAL REVENUE STAMpS, BAD ORDERS, LOSSES AND REPLACEMENTS THEREOF. ln cases where the internal revenue stamps already in the possession of the local manufacturer of cigarettes, heated tobacco products and vapor products became spoiled, were damaged or rendered unfit for affixture to the said excisable products orfound to be bad orders, the said stamps shall be surrendered to the BIR within six (6) months from the date of release by APO. ln the case of spoiled stamps and bad orders in the possession of the importers, the same shall be surrendered to the BIR within ten (ro) months immediately after receipt thereof from APO: Provided, that the importer or local manufacturer shall report the same in accordance with the provisions of Section rr of these Regulations. Bad Orders or spoiled stamps to be surrendered to the BIR by the importers or local manufacturers of cigarettes, heated tobacco products and vapor products shall be affixed and properly arranged in rows and columns on the sheet of paper specifically provided for the purpose by APO. The replacement of spoiled stamps shall be allowed only upon approval by the BIR using the online facility of the Enhanced lRSlS, with the corresponding payment of the printing cost prevailing at the time when the spoiled stamps were originally ordered subject to top-up if applicable. With respect to bad orders of internal revenue stamps, the price for the printing cost thereof shall no longer be paid by the importer or manufacturer of cigarettes, heated tobacco products and vapor products, subject to prior verification by APO upon the surrender thereof with corresponding approval by BlR. , The Enhanced IRSIS will utilize the process of Return Material Authorization (RMA) in handling the replacement of the returned tax stamps by the importer or local manufacturer of cigarettes, heated tobacco products and vapor products due to bad order and spoilage. Once F INTF.RNAL RE VE N['E )tIN Ir Page 7 of L5 ffi ,ilr,rIlrm lVllSr. rN

approved, this will correspond to the production order for tax stamps with new UlCs, subject to Top-Ups, if applicable. ln no case shall replacement be allowed under the following instances: a. Failure by the importer or manufacturer of cigarettes, heated tobacco products and vapor products to surrender any spoiled stamp or bad order within the required period as provided herein. Stamps surrendered beyond the period required under these Regulations shall be processed in accordance with Section zoa $) of the Tax Code. b. Unaccounted internal revenue stamps, except in cases of losses due to force majeure or other fortuitous events beyond the control of man. C. Spoiled internal revenue stamps that were surrendered to the BIR that do not beartheir respective UIC or QR Codes. d. Spoiled internal revenue stamps that were surrendered to the BIR containing their respective UIC or QR Codes but no longer verifiable by the mobile device. Factory Defected Stamps, Bad order or spoiled stamps that were not surrendered within the prescriptive periods to surrender such stamps shall be allowed disposal by the importer or local manufacturer subject to verification by the BIR. Cuidelines, policies and procedures shall be prescribed for the inspection or supervision of the disposal of bad orders, unreadable or spoiled stamps that shall not be subjected for replacement under the Enhanced lnternal Revenue Stamp lntegrated System (Enhanced IRSIS) due to expiration of the prescriptive period to surrender such stamps and no claim for refund/TCC was submitted. lf the taxpayer applies for Refund/Tax Credit under Section zoa (C) of the NIRC, as amended, the disposal/destruction shall be,the responsibility of the concerned Audit Office in coordination with ELTFOD. SECTION 9. AFFIXTURE OF STAMPS. - Subject to the transitory provisions of Section r5 hereof, all importations and removals from the place of production of cigarettes, heated tobacco products and vapor products shall be affixed with the internal revenue stamps prescribed by these Regulations. Cigarettes, Heated Tobacco Products and Vapor Products manufactured for export by the taxpayer irrespective of location shall (a) comply strictly with all existing BIR rules and regulations, terms and conditions for operating in relation to registration of brands, manufacture, import, utilization and withdrawal of raw materials, work in process and finished products, labels and posting of export bonds, among others; (b) have labels stating clearly that the cigarettes, heated tobacco products,and vapor products are strictly for sale in the country of destination for which it was allowed to be manufactured for; (c) have labels that are not similar in any way to the labels of cigarettes, heated tobacco products and vapor products sold in the Philippines; and (d) provide proof that the cigarettes, heated tobacco products and vapor products authorized to be manufactured for a foreign destination were actually shipped to the RNAL Page 8 of 15 9:?D f. 14'

country of destination for which it was authorized to be manufactured as evidenced by a certified true copy of the bill of lading and/or shipping manifest clearly identifying the quantity (as to number of packs/pods/bottles) and brand of cigarettes, heated tobacco products and vapor products actually shipped to the country of destination which is clearly identified. For cigarettes, heated tobacco and vapor products manufactured for export by Special Economic and Freeport Zones locators, in addition to the requirements under their respective lnvestment Promotion Agency-registration, the taxpayer shall comply with the following requirements before they could be authorized to order or affix stamps: a. Secure a BIR Permit to Operate as Manufacturer of Tobacco Products, Heated Tobacco Products and Vapor Products; b. Secure a BIR Permit to Operate Leaf Tobacco and/or Non-Tobacco Material (NTM) Warehouses; c. BIR Registration of brands and variants produced for export, which includes proposed packaging "artwork" that complies with the Philippine labelling requirementsl d. Enrollment and encoding of all manufacturing transactions in BIR's Official Registry Book System to monitor all movements of raw materials and finished goods and/or submission of all transcription sheet of Official Registry Books (ORBs) to the concerned BIR Office on or before the Bth day of the month immediately following the month of operation and every 8th day of every month thereafter in the form prescribed under existing rules and regulations; e. Submission of a Plat and Plan of the manufacturing facility with list of machineries and equipment to be used in the operations; and f. Designation and access by a BIR Revenue Officer on Premise (ROOp) in and to the manufacturing facility at any time. All cigarettes, heated tobacco and vapor products manufactured for export shatl be provided the range of UICs of internal revenue stamps, thru lRSIS, intended for affixture to the cigarettes, heated tobacco and vaporproducts forexport, and said UIC shall be released to the manufacturer. Provided, further, that the price of Four Centavos (Po.o4), per piece of internal revenue stamp on such cigarettes, heated tobacco and vapor products for export, shall be paid by the manufacturer-exporter. The payment thereof shall be considered constructive affixture of the internal revenue stamps on such cigarettes, heated tobacco and vapor products for export that shall be integrated in the system for monitoring of volume, brand/variant, country of destination and report purposes: Provided, finally, that the range of UlCs that were reteased to the manufacturer-dxportershall be reported to the BlR, thru Enhanced lRSIS. ln the event of failure to comply with the aforementioned requirements, the internal revenue stamps prescribed by these Regulations shall be duly affixed on the packs of cigarettes, heated tobacco dproducts and vapor products before removal from the place of production. Page 9 of 15 UX tl 6r lxreRuru ETrE E ill 4 tvrG I'. Vf Slt-t I

The internal revenue stamp for imported products and locally manufactured products for domestic market shall be affixed at the upper portion of the immediate container of cigarettes, heated tobacco products and vapor products (e.g. hard pack, soft pack, cartons, tin can, pod, bottle, etc.) including exported products, if applicable, regardless of the number of sticks units/pods, bottles contained therein, overlapping the intended opening of the immediate container in such manner as to effectively seal the container and prevent the removal of sticks units, pods, bottles of cigarettes, heated tobacco products and vapor products without breaking the said stamp and before the immediate container is wrapped in cellophane or transparent wrapper. However, for containers of cigarettes, heated tobacco and vapor products with pictogram, the internal revenue stamp may be affixed at the side overlapping the intended opening of the immediate container in a manner as to effectively seal the container and prevent the removal of sticks units, pods bottles, etc. of cigarettes, heated tobacco and vapor products without breaking the said stamp and before the immediate container is wrapped in cellophane or transparent wrapper. Moreover, the internal revenue stamp shall be affixed on the cigarette, heated tobacco and vapor products container in a manner without violating the health warning requirements prescribed under existing law, rules and regulations. Provided further, that cigarettes and heated tobacco products in ten (ro) sticks and unlts bundled in packs of twenties (zos) and other packaging combinations of not more than twenty (zo) shall be taxed as one, but the internal revenue stamps affixed to the cigarettes and heated tobacco products shall be equivalent to the number of packs bundled together. ln order to facilitate the monitoring of internal revenue stamps duly issued to the importers and local manufacturers by the BIR, through APO, the stamps shall be affixed to the immediate containers of cigarettes, heated tobacco products and vapor products on a first-in- first-out (Fl FO) basis. Any cigarettes, heated tobacco products and vapor products found in any area in the Philippines without any internal revenue stamp affixed shall be presumed to have been withdrawn without the payment of the excise tax due thereon, and shall be subject to the penalties provided for in the National lnternal Revenue Code, as amended and the related rules and regulations. sEcTloN 1o. PRODUCT REGTSTRATION REqUIREMENTS, EXPORT COMPLTANCE AND SUPERVISION BY REVENUE OFFICERS ON PREMISE (ROOP) The BlR, through the Excise LT Regulatory Division (ELTRD), shall ensure that all manufacturers, whether domestic or a lpecial Economic and Freeport Zone-registered Export Enterprise or distributor shall register their brands/variant of products and comply with the labelling and packaging requirements. The Excise LT Field Operations Division (ELTFOD) shall supervise the establishments where articles subject to excise tax are made or kept, including those located within the Special Economic and Freeport Zones to ensure compliance with the ;.ffiREV-Er-eNrCrU-lS E Page 10 of 15 : 0D P'tt'1'

administrative requirements on monitoring of the production/affixture, removal, and release of stamps on a per product per taxpayer basis. The following existing requirements under Revenue Regulations (RR) No. 3-zoo6 and related issuances shall be complied by all exporters within thirty (lo) days from the date of actual removal from the place of production subject to extension for meritorious reasons as approved by BIR: a. Export Permit/Export Entry Declaration duly filed with Bureau of Customs/ Special Economic and Freeport Zones; b. Commercial/Sales lnvoice; c. Packing List; d. Bill of Lading/ Sea Way Bill/Air Way Bill; e. Cargo Manifest, if applicable; f. lnward Bank Remittance in Foreign Currency Acceptable to Bangko Sentral ng Pilipinas; g. Proforma lnvoice, if applicable; h. lnspection Fees, if applicable; i. lmport Entry Filed in the Port of Destination (or equivalent document); and j. BIR Form No. t4z5 or Official Delivery lnvoice (CUIA) or any BIR prescribed forms, such as but not limited to BIR Form No. zzgg or Excise Taxpayer's Removal Declaration (ETRD) to document the removal of excisable articles from the place of production For taxpayer's availing of Product Replenishment, the documentary requirements under RR No. 3-zoo8 shall be submitted accordingly. For Special Economic and Freeport Zones, the exporter may'provide equivalent documents used in their respective zones duly confirmed by the Zone. The BIR shall coordinate with the respective zone administrations to ensure harmonious and unimpeded flow of business operation. Submission of the above documents shall warrant the actual shipment of the product to the country of destination. SECTION 11. REPORTING REqUIREMENTS FOR AFFIXTURE OF STAMPS, REMOVALS OF CIGARETTE, HEATED TOBACCO PRODUCTS AND VAPOR PRODUCTS WtrH AFFTXED STAMPS, INCLUDING SPOILED, LOST STAMPS AND BAD ORDERS. - The importers and local manufacturers of cigarettes, heated tobacco products and vapor products shall submit the reports enumerated below through the Enhanced IRSIS reporting facilities within the deadlines prescribed as follows: Type of Report Deadline of Submission a. Affixture of Stamps Within ten (ro) working days from the end of the month of affixture. ln the case of imported cigarettes, heated IN ffifiEVENuE { VISIUN

b. Removal of Cigarettes, tobacco products and vapor products, date of affixture Heated Tobacco shall refer to date of release from Customs custody Products and Vapor Within fifteen (r5) working days from the date of removal Products from the finished goods warehouse (n-S), (A-8) & (A-9) for c. Spoiled, Lost Stamps and local manufacturers, and/or tax-paid depots,f or importers Bad Orders Stamps Within six (6) months from the date of release by APO and in case of importer, within ten (ro) months after receipt from APO. SECTION tz. MONITORING OF STAMPS, CIGARETTES, HEATED TOBACCO PRODUCTS AND VAPOR PRODUCTS THROUGH MOBILE VERIFICATION DEVICES. - For purposes of verification of the authenticity of internal revenue stamps, as well as the determination of whether or not the proper excise taxes were paid on domestically manufactured or imported cigarettes, heated tobacco products and vapor products, the BlR, through its authorized representatives, shall conduct on-the-spot surveillance of cigarettes, heated tobacco products and vapor products either in the place of production, storage facilities, or in the domestic market, as the case may be, through the use of mobile verification devices issued for the purpose. ln case of discrepancies found during the conduct of surveillance, the appropriate excise taxes shall be assessed and collected after verification from all persons who are found liable thereto, inclusive of the appropriate penalties, without prejudice to the confiscation and forfeiture of any untaxed cigarettes, heated tobacco products and vapor products and the filing of the appropriate criminal case. SECTION 13. DESTRUCTION OF SPOILED, BAD ORDER AND FACTORY DEFECTED STAMPS. - The taxpayer shall apply for destruction of the approved spoiled, bad order, ahd factory defected stamps within six (6) months from date of replacement. The ELTFOD in coordination with the concerned Audit Croup shall process the application for destruction with validation of records and/or audit enforcement, if warranted. SECTION 14. PROHIBITION AGAINST POSSESSION AND/OR ACCUMULATION OF PREVTOUSLY AFFIXED INTERNAL REVENUE STAMpS OR USED/CONSUMED PACKS/CARTONS OF CIGARETTES, HEATED TOBACCO PRODUCTS AND VAPOR PRODUCTS WtrH AFFTXED TNTERNAL REVENUE STAMPS. - The possession and/or accumulation, sale, transfer or delivery of previously affixed internal revenue staffips, or of used/consumed packs/cartons of cigarettes, heated tobacco products and vapor products with internal revenue stamps affixed thereto, shall be prohibited. lt shall be a prima facie evidence that the previously affixed internal revenue stamps are re-used or affixed on packs/cartons of untaxed cigarettes, heated tobacco products and vapor products, or that the used/consumed packs/cartons of cigarettes, heated tobacco products ind vapor products are recycled, reprocessed or refilled with sticks/units/pods/bottles of cigarettes, heated tobacco products and vapor products for subsequent sale or removal from the place of production, for purposes of avoiding the payment ff lTil]Tfu P't"t' PageL2'r15 Srp 1o,2j2l [[}l, rlr)xLls Mr.iI. lllv

of excise tax for which it is due. Accordingly, any person who shall violate the said prohibition and the importer or manufacturer of cigarettes, heated tobacco products and vapor products, as buyer-transferee thereof, who shall re-use or affix the previously affixed internal revenue stamps on packs/cartons of untaxed cigarettes, heated tobacco products and vapor products or, who shall recycle, reprocess or refill used/consumed packs/cartons of cigarettes, heated tobacco products and vapor products, shall be jointly and severally liable for the excise tax otherwise due on such packs/cartons of cigarettes, heated tobacco products and vapor products, without prejudice to the filing of the appropriate criminal actions against them. SECTION r5. TRANSITORY PROVISIONS. - The following transitory provisions shall be strictly observed: a. All concerned importers and local manufacturers of cigarettes, heated tobacco products and vapor products shall enroll with the Enhanced IRSIS and the orders for the NEW internal revenue stamps prescribed herein may be submittedforapproval bythe BIR not later than fifteen (t5) calendar days before the effectivity of these Regulations. b. No later than October 1, 2ozi, all locally manufactured packs/cartons of cigarettes, heated tobacco products and vapor products shall be affixed with the NEW internal revenue stamps prescribed by these Regulations. c. With respect to imported cigarettes, heated tobacco products and vapor products, no importation and subsequent release of such excisable articles from the customs house shall be allowed unless the NEW internal revenue stamps shall have been affixed thereto effective January 1, 2ozz. d. Effective January 1, zozz, all cigarettes, heated tobacco products and vapor products manufactured in the Philippines and/or imported in to the Philippines shall be affixed with the said stamps. e. Pending application for replacement of factory defected, spoiled and bad order stamps; t. All applications for replacement of spoiled and bad order stamps having UlCs generated from previous system will be processed manually in accordance with existing procedures and shall be subjected to RMA. ii. All application for replacement by reason of factory defects which were filed prior to March 1, zozl will be manually processed and shall be subjected to backorder process. For manually processed applications, Enhanced IRSIS Support shall set the status of stamp UlCs to "Returned BO" and "Returned SS" based on the Memoran(um for RMA apprbved by the ACIR- LTS. The replacement of Factory Defected Stamps shall be justified by the validation/certification accomplished by dAPO and Enhanced IRSIS Service Provider. a;,1t',t<',' : '/', i [. LJlYStt'"

f . No later than November 15, zoz1, all concerned importers and local manufacturers of cigarettes, heated tobacco products and vapor products shall comply with the submission of the required monthly reports. SECTION 16. PENALTIES. 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 BlR. The corresponding excise tax due shall be computed, assessed and collected, inclusive of penalties, under the following instances: a. Subject to the pertinent provisions prescribed under the preceding Section of these Regulations, any seller, importer or local manufacturer of cigarettes, heated tobacco products and vapor products who are found in possession of fake, spurious or old internal revenue stamps or the same are affixed to their cigarettes, heated tobacco products and vapor products whether found in the storage facility and/or place of production, or in the domestic market. b. Removal of cigarettes, heated tobacco products and vapor products from the place of production or release from the customs house without the corresponding internal revenue stamps prescribed by these Regulations duly affixed on the said products. c. Failure of the importer or local manufacturer to account lost or missing internal revenue stamps. d. Failure of the local manufacturer-exporter to affix the stamps prescribed by the country of destination to the packs/cartons of cigarettes, heated tobacco products and vapor products for export before the removal from the place of production and subsequent exportation thereof. In addition to the said excise tax liabilities, the provisions of Sectionz65 of the NIRC of 1997, as amended, shall likewise be applied, in so far as applicable, to wit: ttSEC. 265. Offenses Relating to Stamps. - Any person who commits any of the acts enumerated hereunder shall, upon conviction thereof, be punished by a fine of not less than Ten Million pesos (Pro,ooo,ooo.oo) but not more than Five Hundred Million pesos (P5oo,ooo,ooo.oo) and imprisonment of not less than five () years but not more than eight (8) years: l. Making, importing, selling, using or possessing without express authority from the Commissioner, any dye for printing or making stamps, labels, tags or playing cards; It. Reusing' previously affixed stamps, erasing the cancellation marks of any stamp previously used, or altering the written figures or letters or cancellation marks on internal r ev enue stamp s; Page 14 of t5 {'

lll. Possessing false, counterfeit, restored or oltered stamps, labels or tags or causing the commission of any such offense by another; lV. Selling or offering for sale any box or package containing articles subject to excise tax with folse, spurious or counterfeit stamps or labels or selling from any such fraudulent box, package or container as aforementioned; or V. Giving away or occepting from another, or selling, buying or using containers on which the stamps are not completely destroyed. Provided, Thot the cumulotive possession of falselcounterfeitlrecycled tax stomps in excess of the amount of Fifty Million pesos (p5o,ooo,ooo.oo) shall be punishable by a fine of Five Hundred Million pesos (P5oo,ooo,ooo,oo) or up to ten (ro) times the value of the illegal stamps seized, whichever is higher, ond imprisonment of not less than ten (to) years but not more than fifteen (r5) years." SECTION t7. SEPARABILITY CLAUSE. - lf any provision of these Regulations is declared invalid by a competent court, the remainder of these Regulations or any provision not affected by such declaration of invalidity shall remain in force and effect. SECTION t8. REPEALING CLAUSE. - The provisions of any existing regulations, rulings or orders, or portions thereof inconsistent with the provisions of these Regulations are hereby revoked, repealed or amended accordingly. SECTION 19. EFFECTIVITY. These Regulations shall take effect fifteen (tS) days after publication thereof in leading newspaper of general ciculation. Recommend ing Approval: CARLOS G. DOM[N Secretary of Finance ffi4^$"1t stP 0 7 2l,:.1 CAESAR R. DULAY UUXeITU OF INTERNAL REVE h o44s Commissioner of lnternal Revenue 0:9? tr'M' 11 sEP. Lo il21- D- FL4A3 rrnd I'. DlVlSlu I HREA, LTS-EXCIS El bsm I gtr