Clarifications on the Application of the Eighteen (18)-Month Transitory Period in the Vaporized Nicotine and Non-Nicotine Product Regulation Act

On 13 March 2023, the Bureau of Internal Revenue (“BIR”) issued Revenue Memorandum Circular No. 35-2023 (“RMC 35-2023”) to clarify the application of the 18-month transitory period in Republic Act (“RA”) No. 11900, or the “Vaporized Nicotine and Non-Nicotine Product Regulation Act,” in order for the manufacturers, distributors, importers and retailers of Vaporized Nicotine and Non-Nicotine Products or their devices, and Novel Tobacco Products (“Covered Entities”) to comply with the requirements set forth therein.

Briefly, RA No. 19900 that lapsed into law on 25 July 2022, regulates the importation, assembly, manufacture, sale, packaging distribution, use, advertisement, promotion, and sponsorship of Vaporized Nicotine and Non-Nicotine Products, and their devices, and Novel Tobacco Products. Under the law, Covered Entities were given an 18-month transitory period from the issuance of the Implementing Rules and Regulations (“IRR”) to comply with its requirements. 

On 24 October 2022, Revenue Regulations (“RR”) 14-2022 was issued to implement the provisions of RA No. 11900 by providing for, among others, the (i) tax rate and base of excise tax on Novel Tobacco Products, (ii) registration of the business as manufacturer or importer of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, including registration of online sellers or distributors, and, (iii) registration of brand variants of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products. Furthermore, the Covered Entities shall be given an 18-month transitory period from the issuance of IRR to comply with its requirements.

Meanwhile, the IRR was issued on 5 December 2022. In relation to the issuance of the IRR, reports have been received by the BIR that some taxpayers are using the 18-month transitory period in the law to delay compliance with the requirements set forth in RA No. 11900, as reiterated in its IRR and RR 14-2022.

Through RMC 35-2023, the BIR clarified that the 18-month transitory period applies only to the requirements of Product Standards and Product Registration. The rest of the executory provisions of the law, or other requirements, are effective immediately citing Section 2, Rule XVII of the IRR. 

Thus, the requirements set forth in RA No. 11900, its IRR, and RR 14-2022 other than those relating to Products Standards and Product Registration shall be effective immediately. Among those important requirements are:

1. Registration with the BIR of the business as manufacturer or importer of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, including registration of online sellers or distributors;
2. Registration with the BIR of brand and variants of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products;
3. E-marketplaces, e-commerce platforms, selling facilities embedded in social media websites/applications, and/or other similar platforms shall only allow the Department of Trade and Industry (“DTI”) and BIR duly registered distributors, merchants or retailers of Vaporized Nicotine and Non-Nicotine Products, their devices, and Novel Tobacco Products to sell in their website or platform;
4. For duly-registered distributors, merchants and retailers of Vaporized Nicotine and Non-Nicotine Products, their devices, and Novel Tobacco Products selling on their own websites and/or selling platforms, the required government certificates and approval shall be posted conspicuously at the landing page of their websites and/or selling platforms; and
5. Duly-registered distributors, merchants or retailers of Vaporized Nicotine and Non-Nicotine Products, their devices, and Novel Tobacco Products shall conspicuously post in their brick-and-mortar stores the required government certificates and approvals of the products.

Please note that non-compliance with the requirements above, and those found in RA No. 11900, its IRR and RR 14-2022 shall warrant the imposition of corresponding penalties.