Duty-free shops taxable
By Lawrence Agcaoili, Manila Standard
The Bureau of Internal Revenue has issued a new regulation stating that alcohol and tobacco products imported and sold by duty-free shop operators inside free ports and economic zones are subject to excise tax.
Finance Secretary Margarito Teves signed the new revenue order imposing all applicable taxes on such products peddled in duty-free shops inside Subic Bay, Cagayan, Zamboanga and other free ports.
The regulation said the order supersedes general laws such as Republic Act 7227 (Subic Special Economic and Freeport Zone), RA 7922 (Cagayan Special Economic Zone and Freeport), RA 7903 (Zamboanga City Special Economic Zone) and other free ports that may be established by law.
The regulation clarified that government-owned and -operated duty-free shops such as the Duty Free Philippines are exempted from all applicable duties but must pay the corresponding excise tax and value added tax (VAT).
President Gloria Macapagal Arroyo in December 2004 signed Republic Act 9334, or the law raising the excise tax on sin products, particularly tobacco and alcohol products.
Importers and transhippers, however, obtained a preliminary injunction from a regional trial court in Olongapo City preventing the Department of Finance from imposing the excise tax on sin products inside Subic Bay Freeport zone.
Excise tax collections from both alcohol and tobacco products account for about 65 percent of the total excise tax collections of the BIR. The BIR collected P39.03 billion worth of excise taxes from alcohol and tobacco products in 2004.
The government had hoped to raise an additional amount of P15 billion for both the BIR and the Bureau of Customs in 2005 from the implementation of RA 9224.
However, the excise tax payments made by tobacco and alcohol products to the BIR was P990 million below the goal of P38.95 billion from January to November last year.
The shortfall was incurred from excise tax collections from sin products despite an 11.32 percent increase to P37.96 billion in the first 11 months of last year compared to P34.1 billion in the same period in 2004.
Excise tax payments made by producers of alcohol grew 10.22 percent to P15.63 billion during the first 11 months of the year versus P14.18 billion in the same period last year but was P210 million short of the programmed collection of P15.84 billion.
On the other hand, excise tax collections from tobacco makers rose 12.1 percent to P22.33 billion from P19.92 billion but were P780 million short of the goal of P23.11 billion.
Teves had ordered an investigation on the excise tax payments made by manufacturers of tobacco and alcohol products as the projected revenue under the new law would not likely to be attained.
The finance department earlier said the government was likely to raise only less than half or P7.5 billion of the projected incremental revenues from the new excise tax scheme.
The Bureau of Internal Revenue has issued a new regulation stating that alcohol and tobacco products imported and sold by duty-free shop operators inside free ports and economic zones are subject to excise tax.
Finance Secretary Margarito Teves signed the new revenue order imposing all applicable taxes on such products peddled in duty-free shops inside Subic Bay, Cagayan, Zamboanga and other free ports.
The regulation said the order supersedes general laws such as Republic Act 7227 (Subic Special Economic and Freeport Zone), RA 7922 (Cagayan Special Economic Zone and Freeport), RA 7903 (Zamboanga City Special Economic Zone) and other free ports that may be established by law.
The regulation clarified that government-owned and -operated duty-free shops such as the Duty Free Philippines are exempted from all applicable duties but must pay the corresponding excise tax and value added tax (VAT).
President Gloria Macapagal Arroyo in December 2004 signed Republic Act 9334, or the law raising the excise tax on sin products, particularly tobacco and alcohol products.
Importers and transhippers, however, obtained a preliminary injunction from a regional trial court in Olongapo City preventing the Department of Finance from imposing the excise tax on sin products inside Subic Bay Freeport zone.
Excise tax collections from both alcohol and tobacco products account for about 65 percent of the total excise tax collections of the BIR. The BIR collected P39.03 billion worth of excise taxes from alcohol and tobacco products in 2004.
The government had hoped to raise an additional amount of P15 billion for both the BIR and the Bureau of Customs in 2005 from the implementation of RA 9224.
However, the excise tax payments made by tobacco and alcohol products to the BIR was P990 million below the goal of P38.95 billion from January to November last year.
The shortfall was incurred from excise tax collections from sin products despite an 11.32 percent increase to P37.96 billion in the first 11 months of last year compared to P34.1 billion in the same period in 2004.
Excise tax payments made by producers of alcohol grew 10.22 percent to P15.63 billion during the first 11 months of the year versus P14.18 billion in the same period last year but was P210 million short of the programmed collection of P15.84 billion.
On the other hand, excise tax collections from tobacco makers rose 12.1 percent to P22.33 billion from P19.92 billion but were P780 million short of the goal of P23.11 billion.
Teves had ordered an investigation on the excise tax payments made by manufacturers of tobacco and alcohol products as the projected revenue under the new law would not likely to be attained.
The finance department earlier said the government was likely to raise only less than half or P7.5 billion of the projected incremental revenues from the new excise tax scheme.
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