Publishing Batas Pambansa Blg. 81, "An Act Further Amending Section 149 Subparagraph (b) of the National Internal Revenue Code and for Other Purposes"

September 17, 1980 REVENUE MEMORANDUM CIRCULAR NO. 48-80 SUBJECT : Publishing Batas Pambansa Blg. 81, "An Act Further Amending Section 149 Subparagraph (b) of the National Internal Revenue Code and for Other Purposes" TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, quoted hereunder are pertinent portions of Batas Pambansa Blg. 81: "Sec. 1. Section 149(b) of the National Internal Revenue Code of 1977, as amended, is hereby further amended to read as follows: "(b) Cigarettes "(1) On cigarettes packed in thirties, the retail price of which per pack does not exceed ninety centavos, on each thousand, three pesos; "(2) On cigarettes packed in thirties, the retail price of which per pack exceeds ninety centavos but does not exceed one peso and twenty-five centavos, on each thousand, five pesos; "(3) On cigarettes packed in thirties, the retail price of which per pack exceeds one peso and twenty-five centavos, on each thousand, eight pesos; "(4) On cigarettes packed in twenties, the retail price of which per pack does not exceed one peso and forty-five centavos, on each thousand, fourteen pesos; "(5) On cigarettes packed in twenties, the retail price of which exceeds one peso and forty-five centavos but does not exceed one peso and seventy-five centavos, on each thousand, twenty pesos; "(6) On cigarettes packed in twenties, the retail price of which exceeds one peso and seventy-five centavos but does not exceed two pesos and five centavos, on each thousand, twenty two pesos; aisa dc "(7) On cigarettes packed in twenties, the retail price of which exceeds two pesos and five centavos but does not exceed two pesos and forty centavos, on each thousand, twenty-five pesos; "(8) On cigarettes packed in twenties, the retail price of which exceeds two pesos and forty centavos but does not exceed two pesos and eighty-five centavos, on each thousand, thirty-seven pesos; "(9) On cigarettes packed in twenties, the retail price of which exceed two pesos and eighty-five centavos but does not exceed three pesos and thirty-five centavos, on each thousand, forty-five pesos; "(10) On cigarettes packed in twenties, the retail price of which exceeds three pesos and thirty-five centavos, on each thousand, fifty-five pesos; "(11) If the cigarettes of local manufacture are of foreign brands or trademarks and being manufactured locally under licensing agreements with the foreign brand or trademark owners, the tax shall be increased by fifty per centum per thousand: Provided , That any subsequent transfer or alienation of title or right over a cigarette brand or trademark by a foreign owner to a local manufacturer in whatever manner, form or description shall not affect the rates of tax then prevailing after the effectivity of this Code: Provided, further , That the maximum retail price per pack of cigarettes subject to the surcharge of fifty per centum may be increased beyond the price bracket range for the corresponding category of cigarettes not subject to the surcharge, but such increase shall not exceed the amount of the surcharge applicable to a pack of cigarettes within the same category; "(12) If the cigarettes are of foreign manufacture, regardless of the retail price or contents per pack, on each thousand, eighty-seven pesos. "Nothing under the foregoing subparagraph (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. "Cigarettes subject to tax at lower rates before the effectivity of the new tax rates herein prescribed shall automatically be subject to the corresponding higher rates and there is nothing under this subsection (b) which allows any downward reclassification of tax rates for existing brands of cigarettes duly registered at the time the herein rates become effective. "Duly registered and/or existing brands of cigarettes packed in twenties at the time of the new rates herein prescribed shall not be allowed to be packed in thirties. (For the sake of brevity in reproduction, the succeeding portions of Section 149 not amended by the new legislation have been omitted.) "Sec. 2. This Act shall take effect upon its approval." Salient Features of the Amendatory Law : (a) The maximum retail prices per pack and the corresponding rates of specific tax on cigarettes have been increased, except in the case of those packed in 30's, the retail prices of which have been raised but the existing tax rates have been maintained or left unchanged . Shown hereunder are the changes in retail prices and corresponding specific tax rates provided for under the amendatory law: Sec. 149(b) Cigarettes Rate of Tax per 1,000 Maximum Retail Price per Pack Old New Item No. Old Price New Price Inc. Rate Rate Inc. Packed in 30's (1) P0.80 or less P0.90 or less P0.10 P3.00 (no change) - (2) 0.81 - 1.00 0.91 - 1.25 0.25 5.00 (no change) - (3) 1.01 - 1.10 Over 1.25 0.15 8.00 (no change) - (4) P1.35 or less P1.45 or less P0.10 P12.00 P14.00 P2.00 (5) 1.36 - 1.65 1.46 - 1.75 0.10 18.00 20.00 2.00 (6) 1.66 - 1.95 1.76 - 2.05 0.10 20.00 22.00 2.00 (7) 1.96 - 2.25 2.06 - 2.40 0.15 22.00 25.00 3.00 (8) 2.26 - 2.70 2.41 - 2.85 0.15 34.00 37.00 3.00 (9) 2.71 - 3.20 2.86 - 3.35 0.15 42.00 45.00 3.00 (10) Over 3.20 Over 3.35 0.15 52.00 55.00 3.00 (11) The old provision imposing 50% surcharge on locally manufactured cigarettes of foreign brands has been retained in the new tax legislation. Consequently, the rates of tax applicable to foreign brands have likewise been increased due to the increase in rates for local brands upon which the 50% surcharge is based, to wit: Old Rates of New Rates of Tax per M Tax Per M Increase Local Brand (x) - Foreign Brand Foreign Brand Per M Per Pack P14.00 P21.00 P18.00 P3.00 P0.06 20.00 30.00 27.00 3.00 0.06 22.00 33.00 30.00 3.00 0.06 25.00 37.50 33.00 4.50 0.09 37.00 55.50 51.00 4.50 0.09 45.00 67.00 63.00 4.50 0.09 55.00 82.50 78.00 4.50 0.09 (x) - Surcharge of 50% included. Old Rate New Rate Increase (12) Imported cigarettes P82.00 P87.00 P5.00 (b) Since the imposition of the 50% surcharge on local cigarettes of foreign brands, their maximum retail prices per pack have heretofore been subject to the same statutory price limits prescribed for corresponding local brands not subject to such surcharge, the big disparity in tax burden notwithstanding . acd To rectify this inequity in retail prices, the new law has authorized local manufacturers of foreign brand cigarettes subject to the 50% surcharge to increase their maximum retail prices beyond the price bracket range for corresponding category of local brand cigarettes not subject to such surcharge. However, the increase in retail prices shall not exceed the amount of surcharge applicable to a pack of cigarettes within the same category. For the guidance of all concerned, particularly those charged with the enforcement of the cigarette tax law and the collection of specific tax on said articles, the following tabulation illustrates the application of the retail pricing amendment and the resultant maximum retail prices per pack of foreign brand cigarettes produced locally. Local Brand (20's) Foreign Brand (20's) New Max. New Tax Rate New Tax Rate Tax Differential Max. Rate Price Per M Per Pack Per M Per Pack Per Pack Ret. Price (1) (2) (3) (4) (5) (6) (7) P1.45 or less P14.00 P0.28 P21.00 P0.42 P0.14 P1.59 or less 1.46 - 1.75 20.00 0.40 30.00 0.60 0.20 1.60 - 1.95 1.76 - 2.05 22.00 0.44 33.00 0.66 0.22 1.96 - 2.27 2.06 - 2.40 25.00 0.50 37.50 0.75 0.25 2.28 - 2.65 2.41 - 2.85 37.00 0.74 55.50 1.11 0.37 2.66 - 3.22 2.86 - 3.35 45.00 0.90 67.50 1.35 0.45 3.23 - 3.80 Over 3.35 55.00 1.10 82.50 1.65 0.55 Over 3.80 Helpful guides for the use of the foregoing tabulation : (a) Equivalent tax per pack (20's) - (a) Local Brands: = Col. (2) x 20 Col. (3) 1000 (b) Foreign Brands = Col. (4) x 20 Col. (5) 1000 (b) Tax differential per pack of foreign brand cigarettes Col. (6) = Col. (5) less Col. (3) (c) Resultant Maximum Retail Price per Pack of Foreign Brands Upper limit Col. (7) = Upper limit of Col. (1) plus Col. 6 Effectivity Date . The new rates of specific tax on cigarettes packed in 20's and the corresponding maximum retail prices per pack are effective on September 17, 1980 , the date of the approval of Batas Pambansa Blg. 81 . cd i All internal revenue officers and others concerned are hereby enjoined to give this Revenue Memorandum Circular as wide publicity as possible. RUBEN B. ANCHETA Acting Commissioner