Vape products in the Philippines have played a major role in driving excise tax collections, which rose 10 percent in the first half of the year to 135 billion pesos (about $2.4 billion). Of this, tobacco excise taxes grew by 34% and taxes on vape products grew by 738%. The Bureau of Internal Revenue (BIR) has taken full control of excise tax collection on related products by including vapes in the stamp duty system.
Core Watch:
- vape products drove a 10% increase in Philippine excise taxes in the first half of the year to 135 billion pesos (about $2.4 billion).
- Tobacco excise taxes grew by 34%, with taxes on vape products soaring 738% to P1.5 billion (~$26.42 million) from P179 million (~$3.15 million).
- The Bureau of Internal Revenue (BIR) has full control of vape excise tax collection through the stamp duty system.
- Industry compliance improves as legitimate companies move to formalize their operations and consumers are better protected.
E-cigarette tax revenue surges 738% in Philippines in H1
Vape products are increasingly playing an important role in driving excise tax collections, which rose 10% to 135 billion pesos ($2.4 billion) in the first half of the year as the Philippine government brought them under the stamp duty system, the Philippine Star reported on July 16th.
Data showed that excise taxes rose nearly 10 percent to 134.54 billion pesos (about $2.35 billion) from January to June compared to 123 billion pesos (about $2.18 billion) in the same period last year. This growth was mainly due to a 34% increase in the tobacco excise tax component, from 43.95 billion pesos (about $770 million) to 58.97 billion pesos (about $1.04 billion). In particular, tax collections on vape products have increased significantly by 738% to 1.5 billion pesos (about $26.42 million) from 179 million pesos (about $3.15 million) a year ago.
The total amount exceeded 26.42 million dollars
The Bureau of Internal Revenue (BIR) took full control of the excise tax collection on vape products, whether imported or domestically produced, after bringing them under the cigarette stamp duty system.
- “As a result, we can regulate and monitor the taxability of the products. This, coupled with the clampdown on illegal products, has led to an increase in tax collections.”
Philippine Revenue Authority Assistant Commissioner Jethro Sabariaga told The Philippine Star.
In 2024, the Philippine Revenue Authority (PRA) is requiring the use of fourth-generation stamps for all imported and locally manufactured vape products.
The Bureau of Internal Revenue (BIR) has full control of vape excise tax collection through the stamp duty system
Lack of stamps means unpaid excise taxes, which will result in the seizure of vape products and may lead to tax evasion cases.
On the other hand, the increase in excise tax collection is an indication that the vape law is working, according to the Philippine Electronic Cigarette Industry Association (PECIA), an industry organization comprising some 300 vape and vape manufacturers and distributors in the country.
PECIA President Joey Dulay said the improvement is largely attributed to increased industry compliance, with more players now properly registered, licensed and paying the correct excise tax.
- “Legitimate businesses have moved from the informal market to formal operations. Compliance has improved, taxes have increased and consumers are better protected.”
Dulay told The Philippine Star.
Aside from vapes, almost all items in the tobacco category, such as cigarettes, cigars, and heated tobacco products, saw growth.
Sabariaga said this could be attributed to the increase in consumption of legal or tax-paid products, as well as the decrease in the proliferation of illegal white cigarettes due to the agency’s clampdown and saturation of smuggled tobacco products.
- “This is a new paradigm in tax administration – where the main focus used to be on tax collection, it has now shifted to reducing the proliferation of illicit products and removing untaxed products from the market.”
He said.
Overall, tobacco and alcohol products accounted for 81 percent of total excise tax collections in the first half of the year.
Excise tax is a tax imposed on the production, sale, or consumption of goods. It accounts for about 12 percent of the total collections of the Philippine Revenue Authority. Taxable products include alcohol, tobacco, petroleum and minerals.
