RMC No. 49-2023 — Updates the fIoor price of Cigarettes, Heated Tobacco, Vaporized Nicotine and Non-Nicotine Products and reiterates the imposition of corresponding penalties, sanctions and liabilities for noncompliance therewith

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BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE 11 GLATI Z:53M MAY 0 5 20Z3 Htt I

RECORDS MGI.DiuISICN April 25, 2023

REVENUE MEMORANDUM CIRCULAR NO. 44-2023

SUBJECT: Updating the Floor Price of Cigarettes, Heated Tobacco,"Vaporized Nicotine and Non-Nicotine Products and Reiterating the Imposition of

Corresponding Penalties, Sanctions and Liabilities for Noncompliance Therewith

TO All Internal Revenue Officers, Employees, and Others Concerned

I. BACKGROUND

This Circular is being issued to update the Floor Price of Cigarettes, Heated Tobacco, Vaporized Nicotine and Non-Nicotine Products as set forth in Section 6 of Revenue Regulations (RR) No. 14-2022 and Revenue Memorandum Circular (RMC) No. 79-2022, in relation to RR No. 7-202 1.

Pursuant to Sections 144 (B) and (C), and 145 (B) of the National Internal Revenue Code (NIRC)

Heated Tobacco, Vaporized Nicotine and Non-Nicotine Products. of 1997, as amended by Republic Act (RA) Nos. 11346, 11467, and the provisions of RA No. 11900, which mandate the Bureau of Internal Revenue to prescribe the floor price of Cigarettes.

J. FLOOR PRICE OR MINIMUM PRICE

Floor Price is defined as the minimum retail price set by the BIR at which Cigarettes, Heated Tobacco, Vaporized Nicotine and Non-Nicotine Products may be sold, taking into account the sum of their excise tax, value-added tax, and reasonable production cost. Provided hereunder is the updated floor price for the following tobacco products:

A. Cigarettes

Packaging Ream Pack Content per Packaging 20 sticks 10 packs Total Landed Cost Production Cost/ p 423.20 P 42.32 Excise Tax P 600.00 60.00 P 122.80 R 12.28 VAT P 722.80 Total Tax # 72.28 Floor Price 1,146.00 #114.60

B. Heated Tobacco Products

Packaging Pack Content per Packaging 20 sticks Total Landed Cost Production Cost/ R 75.00 Excise Tax P 32.50 P 12.90 VAT Total Tax P 45.40 Floor Price P 120.40

C. Vapor Products

C.1 Nicotine Salt or Salt Nicotine

Packaging Pod Pod Pack! Fi Y Content per Packaging 2m 4m1 Landed Cost Production Cost/ Total P108.94 R 74.57 P 208.00 R 104.00 Excise Tax P 38.03 P 21.43 VAT Total Tax P 246.03 2 125.43 Floor Price P 354.97 P 200.00

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C.2 Conventional Freebase' or 'Classic' Nicotine

Packaging Bottle Bottle Pack/ Fil Content per Packaging 30ml 10m] Cost/ Total Landed Cost Production P 100.00 p180.00 R 180.00 P 60.00 Excise Tax R 19.20 R 43.20 VAT Total Tax R 223.20 R 79.20 Floor Price R 403.20 P 179.20

Selling of tobacco products at a price lower than the combined excise and value-added 'taxes imposed under the law shall be prohibited. The seller of such products shall be punished with the corresponding fine under the pertinent provisions of the 1997 NIRC, as amended.

"Seller" is defined under Republic Act No. 7394, otherwise known as the "Consumer Act of the Philippines," as follows:

affiliate of the supplier or distributor; (2) the seller interchanges personnel or "...a person engaged in the business of selling consumer products directly to consumers. It shall include a supplier or distributor if (l) the seller is a subsidiary or distributor: or (3) the supplier or distributor provides or exercises supervision. maintains common or overlapping officers or directors with the supplier or direction or control over the selling practices of the selleyy

Section 4 of the Joint Administrative Order (JA0) N6.22-01, Series of 2022. issued by the Department of Trade and Industry in collaboration/with other relevant government agencies. defines the following terms:

"Seller"" includes online seller or merchant, which the JAO defines as "ah organization or retailer selling products or services to customers through an e-marketplace.

(i E-marketplace "refers to an online intermediary that allows participating merchants to exchange information about products or services to enter into an electronic commerce transaction, which may or may not provide information/services about payments and

logistics."

(iii) E-commerce platform "refers to a natural or juridical person that solicits or facilitates the

purchase, procurement, or use of goods and services, with the presence and use of monetary transactions, including using, developing, creating, or promoting digital content through digital platforms, websites, and marketplaces, with functions which connects and encourages consumers, online merchants, sellers, and retailers to enter into commercial transactions."

The same JAO expressly states: "E-Commerce platforms. a-marketplaces. and the like. shall are regulated. prohibited. original. genuine. licensed, or unexpired." verify if the goods sold by online sellers or merchants. and e-retailers. in their respective platforms

HII. PENALTIES

Any violation of the floor price: under the pertinent provisions of the 1997 NIRC, as amended. to wit: s prescribed above shall be subject to the corresponding penalties

"SEC. 145. Cigars and Cigarettes. - 3 added taxes inposed under the lav: shall be prohibited. The seller of such products "Selling of tobacco products at a price lower than the combined excise md valire-

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vulue-udcled taxes chuie but not less than Two hundred thousund pesos (P200:000.00) shall be punished with a fine of not less than ten (I0) times the amount of excise plus

less than four (4) years but mot more than six (6) year's. nor more than Fhe hundred thousand pesos (500,000.00). and imprisonment of nof

(ii) -SEC. 254. Attempt to Evade or Defeat Tax. - Any person who willfully attenpts in vecirs but not more than Ten (10) yecurs: Provided. That the coviction or acyuitu amy marner to evade or defeat any tax imposed uncler this Cocle or the puyment thereof shall. in addition to other penalties provided by law, upon conviction thereof. he punished by a fine not less than Five hundrec thousund pesos (P500,000) hut mot more than Ten million pesos (P10,000.000) and suffer imprisonment of no1 less thun six (6) obtained under this Sectiori shall uot be a har to the filing of a civil sui for the collection of toxes. "

(iii)-Sec. 263-A. Selling of Heated Tobucco Products and Vapor Products ut a Lower Price than the Combined Excise and Value-udded Taxes. An per son who sells

amd value-added taxes shall be punished with a fine of ten (10) times the amount of excise tax plus value-added tax but not less than One hundred thousund pesos heated tobucco producis and vapor products at u price lover than the comhined excise (P 100,000.00). and imprisonment of not less tham tvo (2) vears but no1 nore than four (A) }e(tr^s.

In addition to the above penalties. the provisions of Sections 263 and 265 of the 1997 NIRC. as amended. shall likewise be applied.

Furthermore. Sec. 13 of JA0 No. 22-01, Series of 2022, provides: "E-Commerce platforms. e. marketplaces. and the like, shall be treated, and shall be held liable, in the s manner as online

by these rules." sellers, merchants. and e-retailers. when the latter commits any violation of the laws implemented

IV. EFFECTIYITY

All concerned are hereby enjoined to be guided accordingly and give this Circular as wide a publicity as possible.

This Circular shall take effect immediately.

ROMK UMAGUI, JR.

D-6/LTS-Excise Gor Fssioner of Internal Revenue 007183

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RECORD MGI.D:VISICN 3