Publishing the Provisions of Executive Order No. 22, Dated June 25, 1986, Amending Sections 110, 124 and 126 of the National Internal Revenue Code, as Amended

July 30, 1986 REVENUE MEMORANDUM CIRCULAR NO. 23-86 SUBJECT : Publishing the Provisions of Executive Order No. 22, Dated June 25, 1986, Amending Sections 110, 124 and 126 of the National Internal Revenue Code, as Amended TO : All Internal Revenue Officers Concerned For the information and guidance of all concerned, the pertinent provisions of Executive Order No. 22 are hereunder quoted: "Sec. 2. Section 110 of the National Internal Revenue Code, as amended, is hereby further amended by adding the following paragraph: "(d) Credit for excise tax on articles actually exported. When articles locally produced or manufactured are removed and actually exported without returning to the Philippines, whether so exported in their original state or as ingredients or parts of any manufactured articles or products, any excise tax paid thereon shall be credited or refunded upon submission of the proof of actual exportation and upon receipt of the corresponding foreign exchange." casia "Sec. 4. Section 124 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows: "Sec. 124. Ad valorem tax on fermented liquors. There shall be levied, assessed and collected an ad valorem tax equivalent to fifty (50%) percent of the brewer's wholesale selling price, excluding the ad valorem tax imposed under this Section, on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar domestic fermented liquors, but in no case shall the said ad valorem tax be less than P1.00 per regular 320 cc. bottle." "Sec. 5. Section 126 of the National Internal Revenue Code, as amended, is hereby further amended to read as follows: "Sec. 126. Cigars and Cigarettes. (a) Cigars There shall be levied, assessed and collected an ad valorem tax of fifteen (15%) percent of the manufacturer's or importer's registered wholesale price including the ad valorem tax imposed under this Section on all cigars manufactured in or imported into the Philippines. "(b) Cigarettes packed in thirties . There shall be levied, assessed and collected an ad valorem tax of twenty (20)% percent of the manufacturer's registered wholesale price including the ad valorem tax imposed under this Section on all cigarettes packed in thirties: Provided, however , that the rate prescribed in this paragraph shall be increased to twenty-five (25%) percent beginning July 1, 1987. "(c) Cigarettes packed in twenties . There shall be levied, assessed and collected an ad valorem tax at the rates prescribed below based on the manufacturer's registered wholesale price, including the ad valorem tax herein imposed on all cigarettes packed in twenties: casia (1) On locally manufactured cigarettes bearing a foreign brand, fifty (50%) percent beginning July 1, 1986 and sixty (60%) percent beginning January 1, 1987; Provided , that this rate shall apply regardless of whether or not the right to use of title to the foreign brand was sold or transferred by its owner to the local manufacturer. Whenever it has to be determined whether or not a cigarette is a foreign brand, the listing of brands manufactured in foreign countries appearing in the current World Tobacco Directory shall govern. (2) On other locally manufactured cigarettes forty (40%) percent beginning July 1, 1986 and fifty (50%) percent beginning January 1, 1987. Duly registered or existing brands of cigarettes packed in twenties shall not be allowed to be packed in thirties. Where the existing registered wholesale price, including tax, of cigarettes packed in 20's does not exceed P3.60 per pack, the rate for the cigarettes packed in 30's shall apply. "(d) Imported cigarettes . If the cigarettes are of foreign manufacture, regardless of the retail price and contents per pack, there shall be levied, assessed and collected an ad valorem tax of seventy-five (75%) percent of the importer's wholesale price including the tax imposed in this paragraph. . . ." "(e) Printing of rates of tax . There shall be printed on all packs of locally manufactured cigarettes the amount of the ad valorem tax per pack, except those to be used as samples. No cigarettes shall be allowed to be removed from any factory unless this requirement has been complied with." cd i Sec. 6. All orders, issuances, rules and regulations or any part thereof which are inconsistent with the provisions of this Executive Order are hereby repealed or modified accordingly. Sec. 7. This Executive Order shall take effect on July 1, 1986. Done in the City of Manila, this 25th day of June, in the Year of Our Lord, nineteen hundred and eighty-six. (Sgd.) CORAZON C. AQUINO President of the Philippines By the President: (Sgd.) JOKER P. ARROYO Executive Secretary Salient Features : 1. The Executive Order provides for a credit or refund under Section 110(d) of any excise tax paid on articles actually exported upon submission of the proof of actual exportation and upon receipt of the corresponding foreign exchange. 2. The specific tax of P1.80 per gauge liter previously imposed on fermented liquors was eliminated. In lieu thereof, a single tax on ad valorem basis at a higher rate is adopted. The ad valorem tax on fermented liquors is increased from 5% to 50% of the brewer's wholesale selling price, excluding the ad valorem tax imposed herein on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar domestic fermented liquors, but in no case shall the said ad valorem tax be less than P1.00 per regular 320 cc. bottle. 3. A single tax has been adopted for all cigars and cigarettes both locally manufactured and imported by eliminating the specific tax previously imposed thereon and in lieu thereof by imposing the ad valorem tax on the wholesale price, including in the computation the tax as a component of the wholesale price, viz: a. On all cigars locally manufactured or imported there is levied an ad valorem tax of 15% of the manufacturer's or importer's wholesale price, including the ad valorem tax imposed herein. b. On cigarettes packed in thirties there is levied an ad valorem tax of 20% of the manufacturer's registered wholesale price, including the ad valorem tax imposed herein effective July 1, 1986 and 25% beginning July 1, 1987. c. On cigarettes locally manufactured bearing local brands is levied an ad valorem tax of 40% effective July 1, 1986 and 50% beginning January 1, 1987 and those whose wholesale price does not exceed P3.60 per pack shall be taxed at the same rate and manner as cigarettes packed in thirties. d. On locally manufactured cigarettes bearing a foreign brand, is levied an ad valorem tax of 50% effective July 1, 1986 and 60% beginning January 1, 1987 including the tax. In determining whether or not a cigarette bears a foreign brand, the listing of brands manufactured in foreign countries appearing in the current World Tobacco Directory shall govern, regardless of whether or not the right to use or title to the foreign brand was sold or transferred by its owner to the local manufacturer. Duly registered or existing brands of cigarettes packed twenties shall not be allowed to be packed in thirties. The foregoing amendments shall take effect on July 1, 1986. All internal revenue officers and others concerned are hereby enjoined to give this Memorandum Circular as wide publicity as possible. (SGD.) BIENVENIDO A. TAN, JR. Commissioner