• Distilled spirits is the substance known as ethyl alcohol, ethanol, or spirits of wine, including

dilutions, purification, and mixtures thereof, from whatever source, by whatever process
produced, and shall include, whisky, brandy, rum, gin and vodka, and other similar products or
mixtures.

• Distilled spirits have an additional ad valorem tax of 20% of the NRP excluding the VAT and
excise tax.

• The specific tax per proof liter is subject to 4% adjustment every year.

• WINES

• Wines normally have carbon dioxide (CO2) on them due to the fermentation process.
CO2 is normally released when yeast and sugar mix making the wine bubbly, sparkling
or fizzy, thus the term “sparkling wine”.

• Wines with CO2 removed are not bubbly or fizzy thus the term still wines.

• Carbonated wines one which is artificially added with carbon dioxide to influence
character or taste of wine.

• Fortified wines means natural wines to which distilled spirits are added to increase their
alcohol strength, shall be taxed as distilled spirits.

• FERMENTED LIQUORS

• Fermented liquors includes beer, lager beer, ale, porter and similar products, EXCEPT
tuba, basi, tapuy, and similar products.

Net Retail Price – shall mean the price which the distilled spirits is sold on retail in at least 5 major
supermarkets in Metro Manila. For distilled spirits marketed outside Metro Manila, NRP shall mean the
price at which the distilled spirits is sold on retail in at least 5 major supermarkets in the region.

Proof Liter – means a liter of proof spirits. A proof means 50% of alcohol content, thus 70 proof means
70/2 or 35% alcohol content.

WHAT ARE THE CONDITIONS TO BECOME TAX FREE?

a. Removal of wines and distilled spirits for treatment of tobacco leaf

b. Removal of spirits for rectification

c. Removal of fermented liquor to bonded warehouses

d. Removal of damaged liquors

a. Denaturation of alcohol
 - When wines and distilled spirits are to be used for the treatment of tobacco leaf by
manufacturers of cigars and cigarettes, this is not a human consumption; hence tax
free, but such wines and distilled spirits must first be suitable denatured.

b. Rectification of spirits

- Spirits requiring rectification may be removed from the place of production to

another establishment for purposes of rectification without prepayment of taxes
but this requires submission of a joint bond by the distiller and the rectifier
conditioned on the rectifiers payment of the excise tax on the rectified alcohol.

c. Removal of fermented liquors to bonded warehouses

- Fermented liquors may be removed or transported from the brewery or other place
of manufacture to a bonded warehouse used by him exclusively for storage or sale
in bulk of fermented liquor, not less than 1000 liters at one removal without
prepayment of the tax under a permit which shall be granted by the CIR.

d. Removal of damaged liquors

- When fermented liquor has become sour or otherwise damaged so as to be unfit for
use as such, brewers may sell and after securing a special permit from the CIR,
remove the same without the payment of tax thereon.