May 2020 EXCISE TAXES Atty. C. - Inaddition to the VAT (or OPT) Liamado ~ Taxes which apply to certain goods manufactured or produced in the Philippines for domestic sale or consumption, and to things imported. ~ Excise tax shall also apply to certain services performed in the Philippines.’ Deductible for income tax purposes Purposes of Excise Tax: 1) To raise revenue; 2) To curtail the consumption of certain commodities; 3) To protect domestic industries; Type of Excise Taxes Specific Tax — excise tax imposed on goods | or articles based on weight or volume capacity or any other physical unit of measurement. ‘Ad Valorem Tax — excise tax imposed on goods or articles based on the selling price or other specified value of the goods, exclusive of VAT and_tariff_and_ customs duties (if Imported), (Note: But in computing VAT on importation, excise tax and tariff and customs duties are included in the tax base.) Excise tax on: ALCOHOL PRODUCTS 1) Distilled spirits (including proof spirits) — whisky, brandy, rum, gin, and vodka, fortified wines; | 2) Wines — sparkling wines, champagne, | still wines ! 3) Fermented liquor — beer, lager beer, ale, porter and other fermented liquors Excise tax on: 1) Distilled sprits 2) Cigars 3) Automobiles excluding: a) Buses, trucks”, b) Cargo vans; ¢) Jeepneys/jeepney substitutes,” except tuba, pasi, tapuy. d) Single cab chassis; €) Special-purpose vehicles; and TOBACCO PRODUCTS f) Automobiles used exclusively 4) Tobacco products (except stemmed leaf’ within the Freeport zones. tobacco or tobacco by-products which are to be exported or used in the Provided: manufacture of cigars and cigarettes) = Includes tobacco specially 1) Purely electric vehicles and pick- prepared for chewing ups are exempt from excise tax. ~ Heated tobacco products” 2) Hybrid vehicles shall be taxed at ‘TRAIN. ? Heated swbacco products refer 1 tobacco produuts that may be consumed through heating tobacco, either electrically or through other means sufficiently to release an acrosol that can be inhaled, without burning or any combustion of the tobscco. Heated tobacco products include liquid solutions and gels ‘that are part of the product, and are heated to generate an aeroscl.May 2020 = Vapor products” 50% of the applicable excise tax 5) Cigars rates. 6) Cigarettes NON-ESSENTIAL GOODS PETROLEUM PRODUCTS 7) Lubricating oils and greases; 4) Jewelry, whether real or imitation; 8) Processed gas; pearls; precious and semi-precious 9) Waxes and petrolatum; stones and imitations; 10) Denatured alcohol to be used for} 5) Goods made of or omamented, motive power; ‘mounted or fitted with precious metals 11) Naphtha, regular gasoline, and other or imitations thereof or ivory; similar products of distillation; Except: 12) Leaded and unleaded premium a) surgical and dental instruments; gasoline; b) silver-plated wares, frames, or 13) Aviation turbo jet fuel; mountings for spectacles. or 14) Asphalts eyeglasses; and 15) Kerosene; ©) dental gold or gold alloys and other 16) Diese! fuel oil; precious metals used in filling, 17) Liquefied petroleum gas; mounting, or fitting the teeth. 18) Bunker fuel oi 6) Opera glasses and lorgnettes; 7), Perfumes and toilet waters; MINERAL PRODUCTS 8) Yachts and other vessels intended for 19) Coal and coke pleasure or sports. SWEETENED BEVERAGES’ - imposes a | MINERAL PRODUCTS tax per liter of volume capacity on sweetened | 9) Non-metallic minerals and quarry beverages.” resources such as marble, granite, volcanic cinders, basalt, tuff and rock The following products are excluded from the phosphate, excise tax on sweetened beverages: 10)Metallic minerals: @ All milk products, a) Copper and other metallic minerals, (b) 100% natural fruit juices; b) Gold and chromite (©) 100% natural vegetable juices; 11) Indigenous petroleum including locally- (@ Meal replacement and medically extracted mineral oil, hydrocarbon gas, indicated beverages; and bitumen, crude asphalt, mineral gas. (©) Coffee - ground coffee, instant Except: soluble coffee, and pre-packaged a) Locally-extracted natural gas, and powdered coffee products. b) Locally-extracted liquefied natural gas. ‘ Pick-ups are considered trucks, and therefore exempt from excise tax. 7 Jeeps are considered automobiles subject to excise tax. ° Vapor products shall mean any liquid solution or gel which contains nicotine that transforms into an aerosol without combustion through the employment of a mechanical heating clement, battery, of circuit ‘that can be used to heat such solution or gel, and includes but is not limited to a cartridge, a tank, and the device without a cartridge or tank. It is commonly known as e-liguids for e-cigarettes. * Added by TRAIN. + The excise tax shall be based on the following schedule: Using purely caloric sweetener, purely non-caloric sweetener, or mixture or | PO/liter both ‘Using purely high-fructose com syrup, or in combination with any caloric | P12/liter ‘or non-caloric sweetener Using purely coconut sap sugar/purely steviol glycosides: ExemptMay 2020 NON-ESSENTIAL SERVICES’ - 5% tax on gross receipts, net of excise tax and VAT, derived from the performance of invasive cosmetic surgeries, procedures, and body enhancements for _aesthetic/cosmetic purposes. The following shall be exempt from the 5% excise tax: (@) Procedures to ameliorate a deformity arising from or directly related to a congenital or developmental defect or abnormality, a personal injury resulting from an accident or trauma, or disfiguring disease, tumor, virus, ot infection; and (b) Cases or treatments covered by the National Health Insurance Program. Gross Selling Price of Goods Subject to Ad Valorem Tax 1) The price, excluding the VAT, at which the goods are sold at wholesale or through sales agents, 2) If the manufacturer also sells the goods st wholesale in another establishment of which he is the owner, the wholesale price in the latter establishment shall be the gross selling price, 3) If the price is less than the cost of manufacturing plus expenses, the gross selling price shall equal such cost + expenses + a proportionate margin of profit (= 10% of the cost + expenses). Persons Subject to Excise Tax 1) Domestic Products a) Generally, the manufacturer or producer of the domestic products shall file the return and pay the excise taxes before the removal of the domestic products from the place of production; or b) Owner or person having possession of domestic products which were removed from place of production without payment of the excise tax; or ) The first buyer, purchaser, or travsferee for local sale or transfer in the case of indigenous petroleum, natural gas, or liquefied natural gas; 2) Imported Products * Added by TRAIN.May 2020 a) The importer shall file the retum and pay the tax before removal of the imported goods from the customhouse or customs custody; or 4) The person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption. Credit for Excise Taxes on Goods Actually Exported Excise taxes paid on goods actually exported shall be credited or refunded upon submission of proof of actual exportation and upon receipt ofthe foreign exchange payment. Provided: Excise tax on mineral products (except coal and coke) shall not be creditable nor refundable even if the mineral products are actually exported. Changes under the TRAIN: 1) Cigarettes packed by hand, and packed by machines follow the same schedule of specific excise taxes. 2) Excise taxes on the following products were increased: (a) Cigarettes packed by hand, and cigarettes packed by machine; () Manufactured oils and other fuel oils,” (c) Locally manufactured and imported automobiles; (d) Domestic or imported coal and coke; (©) Non-metallic and metallic minerals; (Indigenous petroleum. 3) The following are exempt from excise tax: (@) Naptha a pyrolysis gasoline used as raw material in the production of petrochemical products or in the refining of petroleum products, or as replacement fue! for natural-gas-fired-combined cycle power plant; (b) Production of petroleum products, whether or not they are classified as products of distillation, and for use solely for production of gasoline; (©) Liquefied petroleum gas when used as a raw material in the production of petrochemical products; (@) Petroleum coke, when used as feedstock to any power generating facility, © vi and pick-u) 4) The Secretary of Finance shall require the use of an official fuel marking or similar technology on petroleum products refined, manufactured, or imported in the Philippines, and that are subject to the payment of taxes and duties. ° Diesel fuel, liquefied petroleum gas, kerosene, and bunker fuel oil which were all not taxed before the effectivity of the TRAIN are now taxed under the TRAIN. '° Hybrid vehicles shall be subject to 50% of the applicable excise tax rates on automobiles.May 2020, DOCUMENTARY STAMP TAX (DST) - Annational tax whose purpose is to raise revenue; - Deductible for income tax purposes - Defined as a tax upon documents, instruments, loan agreements, papers evidencing acceptances, assignments, sales and transfers of obligations, rights or properties, and in_respect of the transaction so had or accomplished. It is levied and collected whenever the document is made, signed, issued, accepted, or transferred when the obligation or right arises from Philippine sources, or the property is situated in the Philippines. hk However, the DST is actually an excise tax because it is imposed on the transaction rather than on the document.’ The transactions entered into by the taxpayer need not be embodied in a document or debt instrument for them to be subjected to DST. Documents and Papers Subject to |Documents and Papers Not Subject to DsT2 _|DsT Pr a) Original issue of shares of stock ) Policies of insurance or annuities made by a b) Bonds, debentures, certificates of fraternal or beneficiary society operated on the stock/indebtedness issued in foreign lodge system or local cooperation plan; countries b)Certificates of oaths administered to any ©) Sales, agreements to sell, memoranda of | — government official in his official capacity sales; deliveries or transfer of shares or | c) Papers filed in court by or for the national, certificates of stock provincial, or municipal governments d) Certificates of profits or interest in d) Affidavits to prove poverty; property or accumulations ¢) Statements and other compulsory information e) Bank checks, drafts, certificates of required of persons exclusively for statistical deposit not bearing interest, and other purposes and for the use of the government instruments f) Certificates of the assessed value of lands < f) Debt instruments; 200 ) Bills of exchange or drafts; 8) Bozrowing and lending of securities executed h) Acceptance of bills of exchange; under the Securities Borrowing and Lending i) Foreign bills of exchange and letters of Program (“SBL”) of a registered exchange credit; hh) Loan agreements < P250,000 executed by an j) Life insurance policies; individual for the purchase of a house and lot, k) Insurance upon property; motor vehicle, appliance, or furniture for 1) Fidelity bonds and other insurance policies | personal use km) Policies of annuities, and pre-need plans | i) Sale, barter, or exchange of shares listed and 1) Indemnity bonds traded through the local stock exchange 0) Warehouse receipts i) Assignment or transfer of mortgage, lease, or p) Jai-alai, horse race tickets, lotto, or other | insurance policy if there is no change in the authorized numbers games maturity date @) Bills of nding or receipts k) Fixed income and other securities traded in the 1) Proxies secondary market or through an exchange; 8) Powers of attorney 1) Derivatives t) Leases and other hiring agreements m) Interbranch or interdepartmental advances u) Mortgages, pledges, and deeds of trust within the same legal entity v) Deeds of sale and conveyances of real n)Forebearances arising from sales or service property’ | contracts w)Charter parties and similar instruments | 0) Bank deposit accounts without a fixed term 1 San ‘Miguel Paper Packaging Corporation vs. CIR, CEA Case No. 9288, July 2, 2019. [TRAIN increased the DST rates for the transactions in BOLD. ‘Transfers exempt from donor's tax are exempted from DST.May 2020 x) Assignments and renewals of certain P) Contracts, deeds, documents and transactions instruments related to the conduct of business of the BSP y) Certificates q) Transfer of property pursuant to tax-free exchanges 1) _Interbranch call loans with maturity < 7 days to cover deficiency in reserves including those betwoen or among banks and quasi-banks Persons Subject: The person making, signing, issuing, accepting, or transferring the document. When one party enjoys exemption, the other party who is not exempt shall be the one directly liable for the tax. Time of Filing and Payment: Generally, the tax return shall be filed within 5 days after the close of the month when the document was made, signed, accepted or transferred. Place of Filing and Payment: 1) Authorized agent bank (AAB) within the territorial jurisdiction of the RDO which has jurisdiction over the residence or principal place of business of the taxpayer; or 2) If there be no AAB, with the Revenue District Officer, collection agent, or duly authorized treasurer of the city or municipality in which the taxpayer has his legal residence or principal place of business. Modes of Payment: 1) The tax due on the return is paid at the time the retum is filed; or 2) The tax may be paid through purchase and actual affixture of the DSTs on the document; or 3) By imprinting the DSTs, through a DST metering machine, on the taxable document. Effect of Failure to Stamp a Taxable Document: 1) Shall not be recorded; 2) Shall not be admitted or used in evidence in any court; 3) The notary public shall not add his jurat or acknowledgement to the document Until the DSTs are paidDocumentary St Tax (DST) Stock with par value Documents/Transactions Tax Rate Tn general | Original Issue of Shares of Stocks P2.00/P 200, Sales, Agreements to Sell, Memoranda of Sales, Deliveries or Transfer of Shares or Certificates of | P1.50/P 200 In ease Stock without par value 30% of DST paid on original issue ‘Bonds, Debentures, Certificates of Stock or Indebtedness issued in Foreign Countries ‘Same tax rate on similar instrument Certificates of Profits or Interest in Property or Accumulations P1.00/P 200 ‘Bank Checks, Drafts, Certificates of Deposit not P 3.00/piece of check, draft, Bearing Interest, and Other Instruments certificate, etc. P 1.50/P 200 of issue price ora Original issue of all Debt Instruments fraction of 365 days for instruments _____| with term of less than one (1) year Acceptance of Bills of Exchange or Order drawn ina | P.0.60/P 200 Foreign Country but payable in the Philippines Foreign Bills of Exchange and Letters of Credit P0.60/ P 200 Life Insurance Policies amount: Does not exceed P 100,000 Exempt Exceeds P 100,000 but does not exceed P 300,000 | P 20.00 Exceeds P 300,000 but does not exceed P 500,000 |P 50.00 Exceeds P 500,000 but does not exceed P 750,000 | P 100.00 Exceeds P 750,000 but does not exceed P 1,000,000 | P 150.00 Exceeds P 1,000,000 _|P 200.00 Policies of Insurance upon Property P0.50/P 4.00 Fidelity Bonds and Other Insurance Policies P0.50/P 4.00 P 1.00/P 200 of the premium or Policies of Annuities installment payment on Contract Price __ {collected Pre-need Plans | P.0.40/P 200 of the premium or — { contribution collected Indemnity Bonds P.0.30/P 4.00 Certificates (Sec. 188 of the Tax Code) P20,00/certificate ‘Warehouse Receipts : "| P30.00 w/ value above P 200 Tai-alai, Horse Rave Tickets, Lotto, or Other if low | P0.20 Authorized Number Games AboveP 1.00 | P.0.20/P 1.00 Bills of Lading or Receipts P100ioP 1000 | P-2.00 ___ [Above P 1000 | P-20.00. Proxies for Voting at Any Election % P 30,00/issued proxy Powers of Attorney ___ | P.30.00/power of Attorney ‘Leases and Other Hiring Agreements I*P 2,000 [P 6.00 In excess P2.00/P 1,000 ‘Mortgages, Pledges and Deeds of Trust TH P 5000 40.00 [Ih excess P.20.00/P 5000 ‘On Assignments & Renewals of Certain instruments | Same rate as original instrument Bills of Exchange or Drafts —__| P 0,60 on each P 200 (On Deeds of Sale, Conveyances, and Donations of | First P 1,000 of || P15 Real Property | the consideration | | or FMV (zonal or Note: Transfers exempt from the donor's tax shall be | assessor's value), exempt from the DST imposed under Section 196. _| whichever ishighest” Inexcess of P 15/P1,000 P1,000 Charter Parties and Similar Instrument if gross tonnage of the Ship, Vessel or Steamer is: 1" 6 months P 1,000 1,000 tons and below Inexcess +P 100/month 1,001 to 10,000 tons 16 months P 2,000 In excess +P 200/month Over 10,000 tons 16 months 3,000 In excess +P 300/month + When one of the contracting parties is the government, the tax herein imposed shall be based on the actual consideration.