Publishing Presidential Decree No. 441-A, further amending Section 137(b) of the National Internal Revenue Code, as earlier amended by Presidential Decrees Nos. 69, 88 and 149

May 17, 1974 REVENUE MEMORANDUM CIRCULAR NO. 37-74 SUBJECT : Publishing Presidential Decree No. 441-A, further amending Section 137(b) of the National Internal Revenue Code, as earlier amended by Presidential Decrees Nos. 69, 88 and 149 TO : All Internal Revenue Officers and others concerned For the information and guidance of all concerned, quoted hereunder are pertinent portions of Presidential Decree No. 441-A, further amending Section 137(b) of the Tax Code, by raising the statutory maximum retail prices per pack of local cigarettes, prescribing a new rate of specific tax on high-priced or luxury type local cigarettes and increasing the specific tax on imported cigarettes: "1. Section 137(b), Title IV, of the National Internal Revenue Code, as amended, is hereby further amended to read as follows: "SEC. 137. Specific tax on cigars and cigarettes . On cigars and cigarettes there shall be collected the following taxes: xxx xxx xxx "(b) Cigarettes "(1) On cigarettes packed in thirties, the retail price of which per pack does not exceed sixty centavos, on each thousand, three pesos . "(2) On cigarettes packed in thirties, the retail price of which per pack exceeds sixty centavos, but does not exceed eighty centavos, on each thousand, five pesos . "(3) On cigarettes packed in twenties, the retail price of which per pack does not exceed ninety centavos, on each thousand, eight pesos . "(4) On cigarettes packed in twenties, the retail price of which per pack exceeds ninety centavos but does not exceed one peso and twenty centavos, on each thousand, fourteen pesos . "(5) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and twenty centavos but does not exceed one peso and fifty centavos, on each thousand, sixteen pesos . "(6) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and fifty centavos but does not exceed one peso and eighty centavos, on each thousand, eighteen pesos . "(7) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and eighty centavos but does not exceed three pesos, on each thousand, twenty-five pesos . "(8) On cigarettes packed in twenties, the retail price of which per pack exceeds three pesos, on each thousand, thirty-two pesos . "(9) If the cigarettes of local manufacture are mechanically wrapped or packed, the tax shall be increased by one hundred and twenty per centum per thousand cigarettes. "Cigarettes shall be considered mechanically wrapped or packed when at any stage of the wrapping or packing a machine or any mechanical contrivance shall have been used. "(10) If the cigarettes are of foreign manufacture, regardless of the retail price per pack or the manner of wrapping or packing thereof, an each thousand, sixty pesos ." xxx xxx xxx "2. The foregoing amendment to Section 137(b) of the National Internal Revenue Code, as amended, revising the maximum retail prices per pack of local cigarettes shall not be construed to mean as allowing any downgrade reclassification of said cigarettes whereby any existing brand or brands of local cigarettes duly registered with the Bureau of Internal Revenue under a particular tax rate or class at the time of the effectivity of this Decree shall be allowed to be reclassified and be subject to a lower rate of specific tax by reason of the revised maximum retail prices herein prescribed." "3. During the period of sixty (60) days from the date of the effectivity of this Decree, all cigarette manufacturers concerned shall be allowed to use their cigarette labels imprinted with the old maximum retail prices per pack of their products, after which they shall comply with the statutory requirement under Section 137(b) of the National Internal Revenue Code, as amended, regarding the printing of the maximum retail price on each pack of local cigarettes. That statutory requirement does not, however, apply to cigarettes of local manufacture, not mechanically wrapped or packed, subject to the highest rate of specific tax and for which the law does not set any maximum retail price per pack." "4. The Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, shall issue the necessary rules and regulations to implement this Decree." "5. This Decree shall form part of the law of the land and take effect on May 1, 1974." Features of the Amendments 1. In accordance with the amendatory provisions of Presidential Decree No. 441-A, effective May 1, 1974, the maximum retail prices per pack of locally-manufactured cigarettes shall be as follows: Rate of Maximum Retail Specific Tax Price Per Pack (a) Cigarettes packed in 30's P3.00 per M P0.60 5.00 per M P0.80 (b) Cigarettes packed in 20's P8. 00 per M P0.90 14.00 per M 1.20 16.00 per M 1.50 18.00 per M 1.80 25.00 per M 3.00 32.00 per M (Retail price over P3.00 (New tax rate) per pack; PD 441-A sets no maximum retail price.) 2. As above-indicated, Presidential Decree No. 441-A prescribes the new rate of specific tax at P32.00 per M on local cigarettes, packed in 20's, with a retail price of over P3.00 per pack, effective May 1, 1974. 3. The decree likewise increased the specific tax on imported cigarettes, regardless of the retail price per pack or the manner of wrapping or packing thereof, from P55.00 per M to P60.00 per M, also effective May 1, 1974. 4. The decree prohibits any downgrade reclassification of cigarettes of existing brands duly registered with the Bureau of Internal Revenue under a particular tax rate or class as of May 1, 1974, such that the reclassification will result in the payment of a lower rate of specific tax. 5. During the period of sixty (60) days starting from May 1, 1974, all cigarette manufacturers concerned shall be allowed to use their cigarette labels imprinted with the old maximum retail prices per pack of their products and thereafter they shall comply with the statutory requirement regarding the printing of the maximum retail price on each pack of local cigarettes in accordance with increased retail prices prescribed under Presidential Decree No. 441-A. That statutory requirement, however, shall not apply to local cigarettes not mechanically wrapped or packed, subject to the highest rate of specific tax at P32.00 per M and for which the law does not set any maximum retail price per pack. All internal revenue officers and others concerned are hereby enjoined to give this Revenue Memorandum Circular as wide publicity as possible. MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5