Publishing the Provisions of Executive Order No. 923, Amending Sections 145, 146, 147, 157 and 177 of the National Internal Revenue Code

December 1, 1983 REVENUE MEMORANDUM CIRCULAR NO. 38-83 SUBJECT : Publishing the Provisions of Executive Order No. 923, Amending Sections 145, 146, 147, 157 and 177 of the National Internal Revenue Code TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, the provisions of Executive Order No. 923 are hereunder quoted: "Sec. 1. Section 145 of the National Internal Revenue Code, as amended, is hereby amended as follows: Sec. 145. Specific Tax on Distilled Spirits . On distilled spirits there shall be collected, subject to the provisions of Section one hundred thirty-nine of this Code, except as hereinafter provided, specific taxes as follows: (a) If produced from sap of nipa, coconut, cassava, camote or buri palm or from the juice, syrup, or sugar of the cane, provided such materials are grown commercially in the country where the distilled spirits are produced, per proof liter, three pesos : Provided , That if produced in a pot still or other similar primary distilling apparatus, by a distiller producing not more than one hundred liters a day, containing not more than fifty per centum of alcohol by volume, per proof liter, one peso and fifty-six centavos ; (b) If imported or produced from imported raw materials or from raw materials other than (a) hereof, per proof liter, thirty-five pesos . This tax shall be proportionately increased for any strength of the spirits taxed over proof spirits, and the tax shall attach to this substance as soon as it is in existence as such, whether it be subsequently separated as pure or impure spirits, or be immediately or at any subsequent time transformed into any other substance either in the process of original production or by any subsequent process. " Spirits or distilled spirits " is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions and mixtures thereof, from whatever source by whatever process produced, and shall include whisky, brandy, rum, gin and vodka, and other similar products or mixtures including compounded liquors and all other preparations, except toilet preparations, of which excluding water distilled spirits is the chief ingredient. " Proof spirits " is liquor containing one-half of its volume of alcohol of a specific gravity of seven thousand nine hundred and thirty-nine ten thousandths at fifteen degrees centigrade. A proof liter means a liter of proof spirits." "Sec. 2. Section 146 of the National Internal Revenue Code, as amended, is hereby amended as follows: Sec. 146. Specific Tax on Wines . On wines there shall be collected per liter of volume capacity, the following taxes: (a) Sparkling wines, regardless of proof, eighteen pesos ; if imported twenty-six pesos and fifty centavos ; (b) Still wines containing fourteen per centum of alcohol or less, three pesos ; if imported, four pesos and forty centavos ; (c) Still wines containing more than fourteen per centum of alcohol, six pesos ; if imported, eight pesos and eighty centavos ; and Fortified wines containing more than twenty-five per centum of alcohol shall be taxed as distilled spirits." "Sec. 3. Section 147 of the National Internal Revenue Code, as amended, is hereby amended as follows: Sec. 147. Specific Tax on Fermented Liquors . On beer, lager beer, ale, porter, and other fermented liquors (except tuba, basi, tapuy and similar domestic fermented liquors), there shall be collected, on each liter of volume capacity, one peso and fifty centavos . "Sec. 4. Section 157 of the National Internal Revenue Code, as amended, is hereby amended as follows: Sec. 157. Specific Tax on Cinematographic Films . There shall be collected, once only, on cinematographic films, including television films, regardless of width, a tax amounting to thirty-five centavos per linear meter . If the films are imported, the tax shall be forty-five centavos per linear meter . cd i Educational films or cinematographic films used for visual education, whether manufactured in the Philippines or imported, shall be exempt from the tax prescribed in this section. This tax shall not be collected on any tax-paid cinematographic films subsequently returned to the Philippines or on any negative film or unprinted positive film, and on any reversal film used in the amateur photography of sixteen millimeters or less, and any tax heretofore paid on cinematographic films so returned, or on any negative film or unprinted positive film, or on any reversal film shall be refunded subject to the provisions of Section two hundred ninety-five." "Sec. 5. Section 177 of the National Internal Revenue Code, as amended, is hereby amended as follows: Sec. 177. Requirements governing rectification and compounding of liquors . Persons engaged in the rectification of or compounding of liquors shall, as to the mode of conducting their business and supervision over the same, be subject to all the requirements of law applicable to distilleries: Provided , That where a rectifier makes use of spirits upon which the specific tax has been paid, no further tax shall be collected on any rectified spirits produced exclusively therefrom: And Provided, further , That compounders in the manufacture of any intoxicating beverage whatever, shall not be allowed to make use of spirits upon which the specific tax has not been previously paid. No further tax shall be collected on any compounded liquor produced exclusively therefrom. For the purpose of this section, "compounded liquors" shall include any intoxicating beverage whatever, concocted by or resulting from the mixture of or addition to distilled spirits taxed under Section 145(A) of this Code, either before or after rectification, or any coloring matter, flavoring extract or essence or other kind of wine, liquor or other ingredient. Fortified wines are natural wines with increased alcohol content as a result of added distilled spirits." "Sec. 6. The Minister of Finance, upon recommendation of the Commissioner of Internal Revenue, shall promulgate the necessary rules and regulations for the implementation of this Executive Order." "Sec. 7. All laws, decrees, executive orders, rules and regulations and other issuances or parts thereof which are inconsistent with this order are hereby repealed, amended or modified accordingly." casia "Sec. 8. This Order shall take effect on December 1, 1983." Salient Features of Executive Order No. 923 Revision of specific taxes on the following articles : 1. Distilled spirits (Sec. 145, NIRC) 1.1 Change of basis of taxing distilled spirits - from situs of production of raw materials used (locally produced or foreign) to the kind of raw materials used in the preparation of distilled spirits as follows: 1.1.1 Produced from sap of nipa, coconut, cassava, camote or buri palm or from the juice, syrup, or sugar of the cane where su ch raw materials are grown commercially in the country where the distilled spirits are produced P3.00 per proof liter . 1.1.2 Produced in a pot still or other similar primary distilling apparatus by a distiller producing not more than 100 liters a day containing not more than 50% of alcohol by volume P1.56 per proof liter . 1.1.3 Imported or produced from other raw materials P35.00 per proof liter 1.2. Domestic compounded liquors are taxed as distilled spirits. 2. Wines (Sec. 146, NIRC) 2.1. Sparkling wines, regardless of proof per liter of volume capacity Old Rates New Rates If locally produced P12.00 P18.00 If imported P26.40 P26.50 2.2. Still wines, containing 14% of alcohol or less Old Rates New Rates If locally produced P2.00 P3.00 If imported P4.40 P4.40 2.3. Still wines, containing more than 14% of alcohol Old Rates New Rates If locally produced P4.00 P6.00 If imported P8.80 P8.80 3. Fermented liquor (Sec. 147) The specific tax rate is P1.50 on each liter of volume capacity whether locally produced or imported. 4. Cinematographic films (Sec. 157) 4.1. Per linear meter, Old Rates New Rates If locally produced P0.26 P0.35 If imported P0.39 P0.45 Requirements governing rectification and compounding of liquors (Sec. 177) Any compounder who manufactures any intoxicating beverage whatever, for domestic sale or consumption must use only distilled spirits, the specific tax on which has been previously paid, and no further tax shall be collected therefrom. This includes what was previously known as imitation wines. However, compounders who manufacture any intoxicating beverage for export, without returning to the Philippines in its original state or as an ingredient of another product, may use untaxed alcohol. aisa dc The specific tax on distilled spirits, therefore, used in the manufacture or compounded liquors for domestic sale shall be paid before the removal from the place of production. No importation of flavoring extracts, essence or other similar preparations for use as raw materials in the manufacture of compounded liquors shall be released from customs custody without an "Authority to Release Imported Goods" being issued by the Revenue Office Chief (Specific Tax Office) or his authorized representative. The amendments covering all of the above articles shall take effect on December 1, 1983. All internal revenue officers and others concerned are hereby enjoined to give this Revenue Memorandum Circular as wide publicity as possible. (SGD.) RUBEN B. ANCHETA Acting Commissioner