BIR Releases New Rules on the Importation, Manufacture, Sale, Use, and Distribution of Vaporized Nicotine and Non-Nicotine Products

Under Bureau of Internal Revenue (“BIR”) Revenue Regulations No. 14-2022 or the “Rule and Regulations Implementing the Provisions of Republic Act No. 11900, Relative to the Importation, Manufacture, Sale, Packaging, Distribution, Use, and Communication of Vaporized Nicotine and Non-Nicotine Products, and Novel Tobacco Products” (“RR 14-2022”), excise taxes shall be imposed on heated tobacco products, vapor products, and novel tobacco products. The rates shall apply to any substance in solid, liquid, or gel form, regardless of nicotine content, including nicotine-free substance or any similar product.

Under RR 14-2022, the tax rate for heated tobacco products, ranges from Php10.00 starting 1 January 2020 to Php32.50 starting 1 January 2023 per pack of 20 units or any packaging combinations of not more than 20 units. For vapor products, the tax rates vary depending on the type of vapor products. For nicotine salt or salt nicotine, the rate is Php37.00 starting on 23 January 2020 increasing to Php52.00 starting 1 January 2023 per milliliter or a fraction thereof; meanwhile, for conventional freebase or classic nicotine, the rate is Php45.00 starting 23 January 2020 to Php60.00 starting 1 January 2023 per 10 milliliters or a fraction thereof. For these products, the rate shall be increased by 5% every year from 1 January 2024.

For novel tobacco products, the tax rate is Php2.50 starting on 10 August 2022 and shall be increased to Php2.60 from 1 January 2023. Starting 1 January 2024, the rate shall be increased by 4% every year.   

For the purposes of the payment of the above taxes, any person or entity who desires to engage in business as a manufacturer or importer of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall be required to register with the Excise LT Regulatory Division (“ELTRD”) of the BIR as an excise taxpayer before start of business operations. Aside from this, all manufacturers, importers, or exporters of the above products, prior to initial manufacture, importation or exportation of brands and variants thereof, must apply for registration of the brand and variants with the ELTRD. As a requirement for the initial registration of the products, every local manufacturer or importer must also submit a duly notarized Manufacturer’s or Importer’s Sworn Statement for Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products. This sworn statement shall be updated every end of the months of June and December of the year. In case there is a change in the cost to manufacture, produce and sell the brand or change in the actual selling price, an updated sworn statement must also be submitted to the ELTRD as least 5 days before actual removal of the product from the place of production or release from customs’ custody, as the case may be.