Request for Clarification of Specific Tax Rates under R.A. 8240 Applicable to Certain Cigarette Brands

September 24, 1998 BIR RULING NO. 135-98 142-00-000-00-135-98 La Suerte Cigar & Cigarette Factory South Superhighway, Paraaque Metro Manila Attention: Mr . Antonio B . Yao VP-Operations Gentlemen : This refers to your letter dated January 20, 1997, in effect, requesting for a clarification of the specific tax rates under R.A. 8240 effective January 1, 1997 applicable to the following brands of cigarettes, to wit: Cannon Menthol 100's, Cannon Menthol King and Forbes Extra. cdll It is represented that you are the manufacturer of the following tobacco products, Cannon Menthol 100's Cannon Menthol King and Forbes Extra; that pursuant to Revenue Regulations No. 1-97 which implemented R.A. 8240, the respective specific tax rates for the first tranche effective January 1, 1997 are as follows: Cannon Menthol 100's P2.97 per pack Cannon Menthol King 2.95 per pack Forbes Extra 2.95 per pack that since you are selling on a per case basis (of 500 packs per case), your computations will yield a slightly different rate per case compared to the tabulated specific tax rates per case under Revenue Regulations No. 1-97 as shown below: Cannon Menthol 100's - per case basis: Increase in tax rate = P2,500 464 = P2,036 Effective 1st tranche rate = P2,036 + 464 = P1,482 2 that based on the foregoing computation, the specific tax for one case of Cannon Menthol 100's in the amount of P1,482 (for the first tranche) translates to P2.964 per pack (for the first tranche), that similarly, Cannon Menthol King and Forbes Extra with specific tax rates per case (of 500 packs) in the amount of P1,476 (for the first tranche) translates to P2.952 per pack (for the first trance). In reply, please be informed that pursuant to Section 3 of Revenue Regulations 1-97, the tax base used in the computation of specific tax for cigarettes is "per pack", thus, the correct computation of your specific tax liability for the above brands of cigarettes are as follows: Cannon Cannon Forbes M 100's M King Extra Increase in Excise Tax Rate P4.07 P4.10 P4.10 Multiplied by Effective 1st Tranche Rate 0.50 0.50 0.50 Effective 1st Tranche Rate 2.04 2.05 2.05 Add: Excise Tax Due Prior to 01-01-97 0.93 0.90 0.90 Specific Tax Per Pack Effective January 1, 1997 P2.97 2.95 P2.95 ===== ===== ===== Very truly yours, (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue