Government t sees more revenue from e-cigarette taxes

MANILA, Philippines — The domestic electronic cigarette and vape industry are expected to contribute in hitting the government’s revenue collection goal, as players are urged to pay the right taxes amid Filipinos’ shift to alternative smoking.

According to the Philippine E-Cigarette Industry Association (PECIA), their group is committed to complying with government regulations and laws covering sin products.

This comes after Finance Secretary Ralph Recto called for a more efficient tax administration system by running after and penalizing tax evaders to shore up revenues.

PECIA is the industry group composed of around 200 manufacturers and distributors of e-cigarettes and vapes in the country. Taxes from such products, alongside alcoholic beverages, are funding the government’s universal healthcare program.

PECIA president Joey Dulay assured that the e-cigarette and vape industry are well-placed to help the government achieve its collection goal, especially as more Filipinos shift to smoking alternatives.

“We have established internal mechanisms to ensure members adhere to tax obligations and we are open to collaborating with government authorities to address any concerns,” Dulay said.

“We urge legitimate players to pay the right amount of taxes in order to contribute to the economy,” he said.

The vape industry, however, is in hot water after Congress opened an investigation on popular brand Flava, which has been found to be marketing its vape devices to minors and has been depriving the government of tax revenues.

Dulay argued that the group takes any allegations of under-declaration seriously and is dedicated to upholding transparency and accountability among its members.

“And while we have no direct control among non-members in the industry, we continually remind and cascade through our information channels news and facts about compliance,” Dulay said.

Laboratory tests showed that Flava under-declared its imports from China by labeling them as having freebase nicotine rather than nicotine salt as an ingredient, which is subject to lower prevailing excise tax.

It was May last year when the Bureau of Internal Revenue (BIR) increased the floor price for cigarettes, but lowered the floor price for vape products, as the government took into account the latest market conditions.

This, as vapor products are fairly new products and manufacturers are constantly testing product mix and are pulling out and adding new variants.

The BIR maintained that selling of tobacco products at a price lower than the combined excise taxes and value added tax imposed under the law is prohibited.

It also reiterated penalties for violators selling at lower prices, including fines ranging from P200,000 to P500,000, and imprisonment of up to six years.