BIR sets guidelines on taxing liquor manufacturers

MANILA, Philippines - The Bureau of Internal Revenue (BIR) has laid down the guidelines on taxing liquor manufacturers in so far as ethyl alcohol is concerned.

In a memorandum circular, Internal Revenue Commissioner Kim Henares said the importation of ethyl alcohol or ethanol intended for re-sale or for the manufacture of compounded liquors shall be subject to excise tax unless the importer is a holder of a permit to operate as importer of ethyl alcohol, duly issued by the bureau and has posted a surety bond.

Henares said the amount of the surety bond shall be equivalent to the average total value of ethyl alcohol for a two-month period computed by the estimated total value of ethyl alcohol imported during the year divided by six months. This shall be the value used by the BIR in determining the tariff and customs duties.

In case of domestic sale of ethyl alcohol duly by distillery firms, the delivery of ethyl alcohol directly to manufacturers of compounded liquors shall be subject to excise tax, unless a surety bond shall be posted by the distillery, in addition to the manufacturer’s bond.

Henares said that in case the amount of the surety bond prescribed shall be less than the amount of excise tax due on the total actual importations or sales of ethyl alcohol for the two-month period, the difference which is not covered by the surety bond shall be immediately paid by the persons concerned to the BIR without prior notice of demand.

The duly registered importer of ethyl alcohol or ethanol intended for resale shall be liable to the excise tax on sale and delivery thereof to persons or entity other than to manufacturers of compounded liquors, Henares added.