Publishing Batas Pambansa Blg. 3, Increasing the Rates of Tax on Cigarettes and thereby Amending Items (4) to (10) and (12) of Sub-paragraph (b) of the First Paragraph and the Second Paragraph of Section 149 of the NIRC of 1977, as Amended

October 3, 1978 REVENUE MEMORANDUM CIRCULAR NO. 092-78 SUBJECT : Publishing Ba tas Pambansa Bl g. 3, Increasing the Rates of Tax on Cigarettes and thereby Amending Items (4) to (10) and (12) of Sub-paragraph (b) of the First Paragraph and the Second Paragraph of Section 149 of the NIRC of 1977, as Amended TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, quoted hereunder is Batas Pambansa Blg. 3: "BA TAS PAMBANSA BL G. 3 "AN ACT INCREASING THE RATES OF TAX ON CIGARETTES AND AMENDING FOR THE PURPOSE, ITEMS 4, 5, 6, 7, 8, 9, 10 AND 12 OF SUB-PARAGRAPH (B) OF THE FIRST PARAGRAPH AND THE SECOND PARAGRAPH OF SECTION 149 OF THE NATIONAL INTERNAL REVENUE CODE OF 1977, AS AMENDED "Be it enacted by the Batasang Pambansa in session assembled: "SECTION 1. Items 4, 5, 6, 7, 8, 9, 10 and 12 of sub-paragraph (b) of the first paragraph and the second paragraph of Section 149 of the National Internal Revenue Code of 1977, are hereby amended to read as follows: "Sec. 149 Specific tax on cigars and cigarettes . On cigars and cigarettes there shall be collected the following taxes: "(a) Cigars "(1) Idem "(2) Idem "(3) Idem "(b) Cigarettes "(1) Idem "(2) Idem "(3) Idem "(4) On cigarettes packed in twenties, the retail price of which per pack does not exceed one peso and thirty-five centavos, on each thousand, twelve pesos; "(5) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and thirty-five centavos, but does not exceed one peso and sixty-five centavos, on each thousand, eighteen pesos; "(6) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and sixty-five centavos, but does not exceed one peso and ninety-five centavos, on each thousand, twenty pesos; "(7) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and ninety-five centavos, but does not exceed two pesos and twenty-five centavos, on each thousand, twenty-two pesos; "(8) On cigarettes packed in twenties, the retail price of which per pack exceeds two pesos and twenty-five centavos, but does not exceed two pesos and seventy centavos, on each thousand, thirty-four pesos; "(9) On cigarettes packed in twenties, the retail price of which per pack exceeds two pesos and seventy centavos, but does not exceed three pesos and twenty centavos, on each thousand, forty-two pesos; "(10) On cigarettes packed in twenties, the retail price of which per pack exceeds three pesos and twenty centavos, on each thousand, fifty-two pesos; "(11) Idem "(12) If the cigarettes are of foreign manufacture, regardless of the retail price or contents per pack, on each thousand, eighty-two pesos. "Nothing under the foregoing sub-paragraph (b) shall be deemed to allow a downward reclassification for tax purposes of any existing brand of cigarettes whenever there is a change in the tax rates or retail price ceilings thereof. "SEC. 2. This Act shall take effect upon its approval. "Approved, August 26, 1978." aisa dc Features of the Amendment : 1. Under above-quoted amendatory law, the maximum retail prices per pack and the corresponding rates of specific tax on locally-manufactured cigarettes packed in 20's have been increased as will be noted in the comparative tabulation, to wit: cdt Rate of Specific Item Retail Price per Pack (20's) Price Tax Per Thousand Tax No. Old New Increase Old New Increase (4) P1.10 or less P1.35 or less P0.25 P10.00 P12.00 P2.00 (5) 1.11-1.40 1.36-1.65 0.25 16.00 18.00 2.00 (6) 1.41-1.70 1.66-1.95 0.25 18.00 20.00 2.00 (7) 1.71-2.00 1.96-2.25 0.25 20.00 22.00 2.00 (8) 2.01-2.50 2.26-2.70 0.20 32.00 34.00 2.00 (9) 2.51-3.00 2.71-3.20 0.20 40.00 42.00 2.00 (10) Over P3.00 Over 3.20 50.00 52.00 2.00 2. The rate of specific tax on cigarettes of foreign manufacture regardless of the retail price or contents per pack, has been increased from P80 . 00 to P82 . 00 per thousand cigarettes . 3. The old provision of law imposing a tax surcharge or surtax of fifty per centum (50%) on cigarettes of foreign brands manufactured locally under licensing agreements with foreign brand or trade mark owners has been retained and therefore, still in force. As a consequence, the following rates of specific tax, including surcharge, shall now apply to such locally manufactured cigarettes of foreign brands being produced by local manufacturers under licensing agreements with the owners of foreign brands or trade marks: See. 149 Tax Plus 50% Sub-par(4) Tax for Surcharge Item No Retail Price/Pack Local Brands Foreign Brands Packed in 30's (1) P0.80 or less P3.00 P4.50 (2) 0.81-P1.00 5.00 7.50 (3) 1.01- 1.10 8.00 12.00 Packed in 20's (4) 1.35 or less 12.00 18.00 (5) 1.36-1.65 18.00 27.00 (6) 1.66-1.95 20.00 30.00 (7) 1.96-2.25 22.00 33.00 (8) 2.26-2.70 34.00 51.00 (9) 2.71-3.20 42.00 63.00 (10) Over P3.20 52.00 78.00 4. The second paragraph of Section 149 has been amended to read as follows: "Nothing under the foregoing sub-paragraph (b) shall be deemed to allow a downward reclassification for tax purposes of any existing brand of cigarettes whenever there is a change in the tax rates or retail price ceilings thereof." As now rephrased, the amended paragraph unequivocally prohibits any downward reclassification for tax purposes of any existing brand of cigarettes whenever there is any change in the tax rates or the statutory maximum retail price per pack thereof. Henceforth, all existing brands of cigarettes taxed at lower rates before any amendment shall automatically be subject to the new and higher tax rates prescribed by the amendatory law enacted for that purpose. 5. Effectivity Date : Although Batas Pambansa Blg. 3 was approved on August 26, 1978, it was only on September 8, 1978 when its approval was published in the newspapers. In fairness, therefore, to all concerned, the new rates of specific tax on locally manufactured cigarettes packed in 20's will be applied by this Office as of the date, on or after August 26 but prior to September 8, 1978, when any cigarette manufacturer concerned increased his selling price by reason of the tax increase under the amendatory law. However, where a manufacturer has not increased his selling price between August 26 and September 8, 1978, the new tax rates shall be effective on the latter date or September 8, 1978. cdt In the case of imported cigarettes where the selling price does not determine the applicable tax rate, the new rate of tax P82.00 per thousand, shall be applied as of September 8, 1978, date of publication of Batas Pambansa Blg. 3. All internal revenue officers and other personnel concerned are hereby enjoined to give this Revenue Memorandum Circular the widest publicity possible. cdt EFREN I. PLANA Acting Commissioner