Rules and Regulations Implementing R.A. No. 11900 on Importation, Manufacture, Sale, Packaging, Distribution, Use, etc. of Vaporized Nicotine and Non-Nicotine Products, and Novel Tobacco Products

October 24, 2022 REVENUE REGULATIONS NO. 14-2022 SUBJECT : Rules and Regulations Implementing the Provisions of Re public Act No. 11 900, Relative to the Importation, Manufacture, Sale, Packaging, Distribution, Use, and Communication of Vaporized Nicotine and Non-Nicotine Products, and Novel Tobacco Products TO : All Internal Revenue Officials and Others Concerned SECTION 1. Scope . Pursuant to Sections 244 and 245 of the National Internal Revenue Code (NIRC) of 1997, as amended, these Regulations are hereby promulgated to implement pertinent provisions of Republic Act (RA) No. 11900 relative to the importation, manufacture, sale, packaging, distribution, use and communication of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, effectively amending certain Sections of Revenue Regulations (RR) Nos. 18-2021 and 7-2021. SECTION 2. Definition of Terms . For purposes of these Regulations, the following terms shall be defined as follows: A. DISTRIBUTOR shall refer to any entity to whom Vaporized Nicotine and Non-Nicotine Products or their devices, or Novel Tobacco Products is delivered or sold for purposes of distribution in commerce, except that such term does not include a manufacturer, retailer or common carrier of such product. B. FLOOR PRICE the minimum retail price set by the BIR at which Vaporized Nicotine and Non-Nicotine Products or Novel Tobacco Products may be sold, taking into account the sum of their excise tax, value-added tax, and a reasonable production cost. C. GRAPHIC HEALTH WARNING the photographic image printed on the packaging of Vaporized Nicotine and Non-Nicotine Products, HTPs, and Novel Tobacco Products prescribed under Republic Act No. 10643, otherwise known as "The Graphic Health Warnings Law," consistent with the textual health warning required under Sec. 4. A. II of Republic Act No. 11900. D. GRAPHIC HEALTH WARNINGS LAW refers to RA No. 10643, otherwise known as "An Act to Effectively Instill Health Consciousness Through Graphic Health Warnings on Tobacco Products." E. HEATED TOBACCO PRODUCTS (HTPs) also referred to as Heated Tobacco Products (HTP) Consumables or Heat-Not-Burn Product Consumables, shall refer to tobacco products that are intended to be consumed through heating tobacco either electronically or through other means, sufficient to release an aerosol that can be inhaled, without combustion of the tobacco. HTP Consumables or Heat-Not-Burn Product Consumables may also include liquid solutions and gels that are part of the product and are heated to generate an aerosol. HTPs may or may not operate by means of an HTP Device. F. HEATED TOBACCO PRODUCT DEVICE or HTP Device shall refer to the component or combination of components of an HTP System intended to be used in combination with HTP Consumables that generate an aerosol without combustion. G. HEATED TOBACCO PRODUCT SYSTEM or HTP System shall refer to an HTP Consumable and HTP Device that are intended to be used together as a system. H. IMPORTER any person or entity that is engaged in the importation of Vaporized Nicotine and Non-Nicotine Products, and their devices, or HTPs, or Novel Tobacco Products. I. MANUFACTURER shall refer to an establishment engaged in any and all operations involved in the production of Vaporized Nicotine and Non-Nicotine Products, or their devices, or Novel Tobacco Products, including preparatory processing, compounding, formulating, filling, refilling, packaging, repackaging, altering, ornamenting, finishing and labeling for the purpose of its storage, sale or distribution. J. NICOTINE shall refer to nicotinic alkaloids, including any salt or complex of nicotine, whether derived from tobacco or synthetically produced. K. NICOTINE MIXTURE shall refer to the nicotine containing liquid, solid or other non-tobacco substance in the product. L. NICOTINE SHOTS shall refer to nicotine in liquid or any other form or substance that is added to or mixed with Vapor Product Refills or cartridges that has the effect of increasing the dosage or nicotine concentration in a refill or cartridge. M. NOVEL TOBACCO PRODUCTS shall refer to all non-combusted substances in solid or liquid form, and innovations, either made partly of tobacco leaf as raw material or containing nicotine from tobacco, intended to be used as a substitute for cigarettes or other combusted tobacco products. N. ONLINE SELLER OR MERCHANT an organization or retailer selling Vaporized Nicotine and Non-Nicotine Products, and their devices, HTPs, or Novel Tobacco Products online. O. PACKAGE shall refer to packs, boxes, cartons, or containers of any kind in which Vapor Products or HTPs, or Novel Tobacco Products are contained when offered for sale to consumers. P. PRINCIPAL DISPLAY SURFACE shall refer to the panel of the package that faces the consumer when displayed for sale. Q. PRODUCT REGISTRATION shall refer to the Certification issued by the Bureau of Philippine Standards (BPS) of the Department of Trade and Industry (DTI) in accordance with its Technical Regulations. R. PRODUCT STATEMENT shall refer to an explicit communication to consumers in the product label or marketing which pertains to product performance attributes or an objective description of the contents of the product, quantity of chemicals produced, or how a product works or operates. S. PROMOTION shall refer to an event or activity organized by or on behalf of a Vaporized Nicotine and Non-Nicotine Product or Novel Tobacco Product manufacturer, importer, distributor, or retailer with the aim of promoting a brand of a Vaporized Nicotine and Non-Nicotine Product or Novel Tobacco Product, which event or activity would not occur if not the support given to it by or on behalf of the Vaporized Nicotine and Non-Nicotine Product or Novel Tobacco Product manufacturer, importer, distributor, or retailer. This includes the paid use of Vaporized Nicotine and Non-Nicotine Products or Novel Tobacco Products bearing the brand names, trademarks, logos, and the like by performers in movies, television and other forms of entertainment as well as in other live promotional events such as fairs, trade shows, concerts and similar events. For the purpose of this Act, promotion shall be understood as Vaporized Nicotine and Non-Nicotine Product or Novel Tobacco Product promotion. T. PROMOTIONAL shall refer to the act of publicizing a product to an individual, group or the general public, or promoting awareness of the product brands, for the sole purpose of increasing sales. U. REDUCED RISK STATEMENT shall refer to an explicit communication to consumers in the product label or marketing materials which states that the product presents less risk of harm to the user's health or is less harmful to the user's health than continued smoking of combustible cigarettes. V. REFILL shall refer to a container for holding electronic liquid or Nicotine Mixture. W. RETAILER shall refer to any establishment which sells or offers to sell any Vaporized Nicotine and Non-Nicotine Products or their devices, or Novel Tobacco Products directly to an individual group or the general public. X. VAPING shall refer to the use of Vaporized Nicotine and Non-Nicotine Products. Y. VAPOR PRODUCTS also referred to as Vapor Product Refills, shall refer to the liquid, solid, or gel, or any combination thereof, which may or may not contain nicotine, that is transformed into an aerosol without combustion by a Vapor Product Device. Z. VAPOR PRODUCT DEVICE shall refer to a device or a combination of devices used to heat a Vapor Product, to produce an aerosol, mist, or vapor that users inhale. These may include combinations of a liquid solution or gel that are heated and transformed into an aerosol without combustion through the employment of a mechanical or electronic heating element, battery, or circuit, and includes, but is not limited to, a cartridge, a tank, or a device without a cartridge or tank. AA. VAPOR PRODUCT SYSTEM also referred to as electronic nicotine or non-nicotine delivery systems, shall refer to the specific combination consisting of the Vapor Product Refill and Vapor Product Device which, based on the information made available to the consumer by the provider, are intended to be used together. BB. VAPORIZED NICOTINE OR NON-NICOTINE PRODUCTS shall refer to both Heated Tobacco Products and Vapor Products, as defined herein, which are novel consumer goods that generate a nicotine-containing or non-nicotine-containing aerosol without combustion. SECTION 3. Tax Rates and Bases of Excise Taxes . There shall be levied, assessed and collected an excise tax on Vaporized Nicotine and Non-Nicotine Products at the rate of tax prescribed under RA Nos. 11346 and 11467 as implemented by RR No. 7-2021, and Novel Tobacco Products under Section 144 (A) (b) of National Internal Revenue Code (NIRC) of 1997, as amended. A. TOBACCO PRODUCTS, HEATED TOBACCO PRODUCTS, VAPOR PRODUCTS, AND NOVEL TOBACCO PRODUCTS 1. HEATED TOBACCO PRODUCTS Date of Effectivity Quantity Excise Tax January 1, 2020 Per pack of 20 units or any packaging combinations of not more than twenty (20) units P10.00 January 23, 2020 P25.00 January 1, 2021 P27.50 January 1, 2022 P30.00 January 1, 2023 P32.50 2024 Onwards Specific tax rate shall be increased by 5% every year effective January 1, 2024 2. VAPOR PRODUCTS a. Nicotine Salt or Salt Nicotine Date of Effectivity Quantity Excise Tax January 23, 2020 Per milliliter or a fraction thereof P37.00 January 1, 2021 P42.00 January 1, 2022 P47.00 January 1, 2023 P52.00 2024 Onwards Rate shall be increased by 5% every year effective January 1, 2024 b. Conventional 'Freebase' or 'Classic' Nicotine Date of Effectivity Quantity Excise Tax January 23, 2020 Per ten (10) milliliters or a fraction thereof P45.00 January 1, 2021 P50.00 January 1, 2022 P55.00 January 1, 2023 P60.00 2024 Onwards Rate shall be increased by 5% every year effective January 1, 2024 3. NOVEL TOBACCO PRODUCTS Date of Effectivity Quantity Excise Tax August 10, 2022 Per kilogram P2.50 January 1, 2023 P2.60 2024 Onwards Rate shall be increased by 4% every year effective January 1, 2024 The rates of tax imposed herein shall apply to any substance in solid, liquid, or gel form, regardless of nicotine content, including nicotine-free substance or any similar product. B. INSPECTION FEES There shall be collected inspection fees on Vaporized Nicotine and Non-Nicotine Products as prescribed under RA Nos. 11346 and 11467 as implemented by RR No. 7-2021, and Novel Tobacco Products under Section 146 of NIRC of 1997, as amended, detailed as follows: PRODUCT INSPECTION FEE UNIT OF MEASURE Heated Tobacco P0.10 1,000 sticks Vapor Products P0.01 1 ml Novel Tobacco Products P0.03 1 kg ILLUSTRATION NO. 1: A. Heated Tobacco Products Case: Removal of 50 cases from place of production in which 1 case contains 50 reams while 1 ream contains 10 packs. How much is the excise tax due and inspection fee? Solution: No. of cases 50 Multiplied by the no. of reams per case 50 Total no. of reams 2,500 Multiplied by the no. of packs per ream 10 Total no. of packs 25,000 Multiplied by tax rate P30.00 Total Excise Tax Due P750,000.00 =========== Total no. of packs 25,000 Multiplied by the no. of sticks per pack 20 Total no. of sticks 500,000 Divided by no. of sticks 1,000 Total no. of thousand sticks 500 Multiplied by inspection fee rate P0.10 Total Inspection Fee Due P50.00 =========== ILLUSTRATION NO. 2: B. Nicotine Salt or Salt Nicotine containing more than 1 ml. Product Type: Nicotine Salt or Salt Nicotine with volume content of 1.9 ml, 500 packs of vapor products with 2 pods per pack No. of packs 500 Multiplied by no. of pods per pack 2 Total no. of pods 1,000 Multiplied by tax rate 1st ml P47.00 Next fraction .9ml P47.00 P94.00 Total Excise Tax Due P94,000.00 ========== Total no. of pods 1,000 Multiplied by milliliter (ml) per pod 1.9 Total ml 1,900 Multiplied by inspection fee rate P0.01 Total Inspection Fee Due P19.00 ========== ILLUSTRATION NO. 3: C. Conventional Freebase or Classic Nicotine containing more than 10 ml. Product Type: Conventional 'Freebase' or 'Classic' Nicotine with container size of 15ml, 100 bottles of vapor products No. of bottles 100 Multiplied by tax rate 1st 10ml P55.00 Next fraction 5ml P55.00 P110.00 Total Excise Tax Due P11,000.00 ========== No. of bottles 100 Multiplied by milliliter (ml) per bottle 15 Total ml 1,500 Multiplied by inspection fee rate P0.01 Total Inspection Fee Due P15.00 ========== ILLUSTRATION NO. 4: D. Novel Tobacco Products. Product Type: Novel Tobacco Products with weight/volume content of 40 grams per can, 1,000 cans of Snus No. of cans 1,000 Multiplied by no. of grams per can 40 Total grams 40,000 Divide by no. of grams per kg 1,000 Total kgs 40 Multiplied by excise tax rate 2.50 Total Excise Tax Due P100.00 ========== No. of cans 1,000 Multiplied by no. of gram per can 40 Total grams 40,000 Divide by no. of grams per kg 1,000 Total kgs 40 Multiplied by inspection fee rate P0.03 Total Inspection Fee Due P1.20 ========== SECTION 4. Compliance and Administrative Requirements . A. REGISTRATION OF THE BUSINESS AS MANUFACTURER OR IMPORTER OF VAPORIZED NICOTINE AND NON-NICOTINE PRODUCTS AND NOVEL TOBACCO PRODUCTS For excise tax purposes, any person or entity who desires to engage in business as a manufacturer or importer of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall, before the start of the business operations, be required to register with the Excise LT Regulatory Division (ELTRD) BIR National Office as an excise taxpayer. 1. Application for a Permit to Engage in Business as Manufacturer or Importer of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products Every applicant shall file a written application for the Permit addressed to the Commissioner of Internal Revenue, Attention: Chief, ELTRD, together with the following supporting documents: a) Certificate of Registration (COR) issued by the Securities and Exchange Commission (SEC), together with Articles of Incorporation/Partnership and By-Laws, for corporation or partnership, or COR issued by the Department of Trade and Industry (DTI), for individuals; b) Mayor's Permit issued by the concerned Local Government Unit (LGU); c) BIR Certificate of Registration (BIR Form No. 2303) including Registration Fee (BIR Form No. 0605); d) Latest copy of Income Tax Return duly filed and received by the BIR, if applicable; e) Importer/Manufacturer's Surety Bond with an initial coverage of P100,000.00; and f) Location map, and plat and plan of the Production Plant/Warehouse, and if manufacturer, the blueprint. B. ASSESSMENT NUMBERS OF MANUFACTURERS OR IMPORTERS OF VAPORIZED NICOTINE AND NON-NICOTINE PRODUCTS AND NOVEL TOBACCO PRODUCTS For administrative purposes, permits shall be assigned assessment numbers in the following order: Administrative Schedule Paragraph Description A 8 Manufacturer of Heated Tobacco Products A 8(I) Importer of Heated Tobacco Products A 9 Manufacturer of Vapor Products A 9(I) Importer of Vapor Products A 10 Manufacturer of Novel Tobacco Products A 10(I) Importer of Novel Tobacco Products TM 8 Toll-Manufacturer of Heated Tobacco Products TM 9 Toll-Manufacturer of Vapor Products TM 10 Toll-Manufacturer of Novel Tobacco Products Month Issued 2 numeric Year Issued 2 numeric Sequence Number 4 numeric Example: [Permit Issued on September, 2022] A-8-09-22-0001 - For Manufacturer of Heated Tobacco Products A-8(I)-09-22-0001 - For Importer of Heated Tobacco Products TM-8-09-22-0000 - For Toll-Manufacturer of Heated Tobacco Products [Permit Issued on September, 2022] A-9-09-22-0001 - For Manufacturer of Vapor Products A-9(I)-09-22-0001 - For Importer of Vapor Products TM-9-09-22-0001 - For Toll-Manufacturer of Vapor Products [Permit Issued on September, 2022] A-10-09-22-0001 - For Manufacturer of Novel Tobacco Products A-10(I)-09-22-0001 - For Importer of Novel Tobacco Products TM-10-09-22-0001 - For Toll-Manufacturer of Novel Tobacco Products C. REGISTRATION OF BRAND AND VARIANTS THEREOF All manufacturers, importers or exporters of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, prior to the initial manufacture, importation or exportation of brands and its variants, an application for registration thereof shall be filed with the ELTRD. The application shall be accompanied by the following: 1. Manufacturer's or Importer's Sworn Statement Every manufacturer or importer shall file with the Commissioner, through ELTRD, a sworn statement on the goods or products manufactured/produced, imported or exported, and their corresponding gross selling price or market value, together with the cost of manufacture, production, or importation and the expenses incurred or to be incurred until the goods or products are finally sold. The manufacturer's or importer's sworn statement shall be submitted as a supporting document to the prescribed application for the initial registration. An updated sworn statement shall also be submitted on or before the end of the months of June and December thereafter. 2. Replica of the Proposed Label, Package and/or Container Exact replica of the proposed label, package and/or container, as well as the 'artwork' of the secondary containers ( e.g. , cartons, boxes, etc.), of the brand in three (3) copies with a graphic health warning in compliance with the packaging and health warnings requirement provided under Section 4 of Republic Act No. 11900, otherwise known as "Vaporized Nicotine and Non-Nicotine Products Regulation Act" and Republic Act No. 10643, otherwise known as "The Graphic Health Warnings Law," as implemented by Revenue Memorandum Circular (RMC) No. 23-2016. The following shall be conspicuously printed in easily recognizable and readable manner on the secondary containers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, pursuant to RMC No. 26-2006: i. For locally manufactured products, the name, address and assessment number of the manufacturer. In case the manufacturer has two or more production plants, the address and the assessment number of the production plant where the brand of the excisable product was manufactured shall be printed on the label; For imported products, the name and address of the foreign manufacturer, as well as the name, address and assessment number of the importer shall be indicated on the label; ii. The phrase "FOR DOMESTIC SALE ONLY," in case the brand shall be sold in the domestic market or the phrase "FOR EXPORT ONLY," in case the brand shall be exported. No exportation by any person shall be allowed unless the required export markings are prominently printed on the said containers. Exportation of products bearing the phrase "FOR DOMESTIC SALE ONLY" is strictly prohibited in any case; iii. The phrase "DUTY-FREE AND NOT FOR RESALE," in case of importation by Duty Free Philippines (DFP); and iv. The phrase "FOR EXPORT TO THE PHILIPPINES; TAX AND DUTY PAID," in case the brand shall be imported for domestic market. All proposed label, package and/or container, as well as the 'artwork' of the secondary containers ( e.g. , cartons, boxes, etc.), of the brand of vaporized nicotine and non-nicotine products or novel tobacco products shall be pre-approved by the BIR, otherwise, it shall be a ground for confiscation or seizure by any authorized BIR personnel. D. MANUFACTURER'S OR IMPORTER'S SWORN STATEMENT Every local manufacturer or importer of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall submit a duly notarized Manufacturer's or Importer's Sworn Statement for Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products showing among others, the following information: 1) Name, address, TIN and assessment number of the manufacturer or importer; 2) Complete root name of the brand as well as the complete brand name with modifiers, if any; 3) Complete specifications of the brand detailing the specific measurements, weights, manner of packaging, etc.; 4) Name(s) of the region(s) where the brand is/are to be marketed; 5) Wholesale price per case, gross and net of VAT and excise tax; 6) Suggested retail price, gross and net of VAT and excise tax, per pack, per pod, or per bottle/container, as the case may be; 7) Detailed production/importation costs and all other expenses incurred or to be incurred until the product is finally sold ( e.g. , material, labor, overhead, selling and administrative expenses) per case; 8) Applicable excise tax rates; and 9) Corresponding excise and value-added taxes per pack, per pod, or per bottle/container, as the case may be. The manufacturer's or importer's sworn statement shall be submitted as a supporting document to the prescribed application for the initial registration of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products and thereafter submit an updated sworn statement on or before the end of the months of June and December of the year. If there is any change in the cost to manufacture, produce and sell the brand or change in the actual selling price of the brand, an updated sworn statement shall be submitted at least five (5) days before the actual removal of the product from the place of production or release from the customs' custody, as the case may be. E. MANUFACTURERS' AND IMPORTERS' SURETY BOND Manufacturers and importers of articles subject to excise tax shall post a surety bond subject to the following conditions: a) Initial Bond. In case of initial bond, the amount shall be equal to One Hundred Thousand pesos (P100,000). However, after six (6) months of operation, if the amount of initial bond is less than the amount of the total excise tax paid during the said period, the amount of the bond shall be adjusted to twice the tax actually paid for the period. b) Bond for the Succeeding Years of Operation. The bond for the succeeding years of operation shall be based on the actual total excise tax paid during the year immediately preceding the current year. However, for taxpayers availing of the tax prepayment, advance deposit, or similar schemes, the amount of bond herein prescribed shall be in accordance with the following schedule: Excise Tax Payment Minimum Amount of Bond P1,000,000 and below P100,000 Over P1,000,000 up to P5,000,000 P500,000 Over P5,000,000 up to P10,000,000 P1,000,000 Over P10,000,000 up to P25,000,000 P2,500,000 Over P25,000,000 up to P50,000,000 P5,000,000 Over P50,000,000 up to P100,000,000 P10,000,000 Over P100,000,000 up to P500,000,000 P15,000,000 Over P500,000,000 up to P1,000,000,000 P30,000,000 Over P1,000,000,000 up to P10,000,000,000 P50,000,000 Over P10,000,000,000 up to P20,000,000,000 P75,000,000 Over P20,000,000,000 P100,000,000 The bond shall be conditioned upon faithful compliance with the pertinent laws, rules and regulations and for the satisfaction of all fines and penalties imposed by the Tax Code of 1997, as amended. Provided, however, that a higher amount of bond may be required from any manufacturer or importer, for meritorious reasons, subject to the prior written approval by the Commissioner of Internal Revenue. F. APPLICATION FOR AN ELECTRONIC AUTHORITY TO RELEASE IMPORTED GOODS (eATRIG) BEFORE RELEASE FROM CUSTOMS' CUSTODY All importers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall file an application for an eATRIG for excise tax purposes. The application shall be done online and processed in the ELTRD, BIR-National Office. The Chief of ELTRD shall be the designated approving officer. No ATRIG shall be issued in case the imported products are already released from the customs' custody. Likewise, no subsequent application for ATRIG shall be processed unless the importer has submitted proof of payment of the excise tax due on the imported products covered by previously issued ATRIG. G. USE OF BIR FORM NO. 2200-T AND BIR FORM NO. 2299 Excise Tax Returns (BIR Form No. 2200-T) and Excise Taxpayer's Removal Declaration (ETRD) (BIR Form No. 2299) are hereby prescribed to be used and issued by all registered manufacturers for all removals of Tobacco Products, Vaporized Nicotine and Non-Nicotine Products, and Novel Tobacco Products. The ETRD shall be requisitioned from the Excise Large Taxpayers Field Operations Division (ELTFOD) in the BIR National Office, or from the Excise Tax Area offices of the concerned BIR Revenue Regional Offices, having respective jurisdiction over the manufacturers of Tobacco Products, Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products. The manner of preparation, issuance and cancellation thereof, as well as the applicable reportorial requirements, shall be in accordance with the existing rules, regulations and procedures issued for this purpose. H. AFFIXTURE OF INTERNAL REVENUE STAMPS FOR VAPORIZED NICOTINE AND NON-NICOTINE PRODUCTS AND NOVEL TOBACCO PRODUCTS All manufacturers and importers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall comply with the requirements provided under Revenue Regulations No. 18-2021 on the affixture of internal revenue stamps and the use of Enhanced Internal Revenue Stamps Integrated System (E-IRSIS). I. NOTICE OF STOPPAGE OF PRODUCTION OF A PARTICULAR BRAND A written notice shall be filed with the ELTRD, BIR-National Office that a particular brand(s) shall not be manufactured on a permanent or temporary basis. For temporary stoppage, the required notice shall be applicable in cases of production shutdown due to scheduled maintenance program, major repairs, labor strikes, orders by appropriate government agencies, and such other similar incidents, or due to occurrence of fortuitous events such as typhoons, floods, fire, etc. The notice of stoppage shall be filed at least five (5) days before the actual date of production stoppage of the brand(s). However, in case of fortuitous events, the BIR shall be notified within three (3) days from the temporary stoppage of production. J. BOOKS AND RECORDS TO BE KEPT AND MAINTAINED Every person or entity engaged in the manufacture or importation of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall keep and maintain Official Register Books (ORB) and such other forms or records that may be prescribed by the Commissioner of Internal Revenue, which must be kept within the place of production/importer's warehouse and shall at all times be made available for inspection by duly authorized internal revenue officer(s). The submission of all transcript sheets of ORBs by all manufacturers and importers, including toll manufacturers or sub-contractors to the LT Performance Monitoring and Programs Division (LTPMPD) in BIR National Office or to the concerned Excise Tax Area (EXTA) having jurisdiction of the place of production/warehouse shall be on or before the eighth (8th) day of the month immediately following the month of operation. K. REMOVAL OF TAX-PAID VAPORIZED NICOTINE AND NON-NICOTINE PRODUCTS AND NOVEL TOBACCO PRODUCTS When the excise tax has already been paid for Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products the same shall not thereafter be stored or permitted to remain in the manufacturing plant or place of production. L. SUPERVISION AND CONTROL OF THE MANUFACTURING PLANT OR PLACE OF PRODUCTION There shall be deployed/assigned, on a day-to-day basis, Revenue Officers on Premises (ROOPs) to check or supervise the operation from receipt of raw materials, in process and removal of finished products of any establishment producing or manufacturing Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products. M. SIGNAGE ON THE OUTSIDE OF PRODUCTION PLANT/FACTORY AND WAREHOUSE A signage in letters of not less than 6 centimeters high shall be placed and kept in a conspicuous position on the outside of every building used as a production plant/factory or warehouse of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products, showing the registered name and assessment number. N. CONDUCT OF STOCKTAKING, VERIFICATION AND INSPECTION The BIR shall conduct a physical stocktaking inventory by actual count and/or volume of the entire stocks (raw materials, in process or intermediate, and finished goods) on hand, in the presence of the manufacturer's or importer's authorized representative who shall jointly attest to the fact of witnessing and verifying the results thereof by affixing their signatures on the attestation clause in the inventory certificate. SECTION 5. Online Trade . The sale or distribution of Vaporized Nicotine and Non-Nicotine Products, Novel Tobacco Products and their devices through internet websites or via e-commerce and/or other similar media platforms shall only be made by online sellers or distributors registered with the Department of Trade and Industry (DTI) or the Securities and Exchange Commission (SEC), and the products being sold and advertised online shall be compliant with the health warning requirements provided under Revenue Memorandum Circular (RMC) No. 23-2016, as well as other BIR requirements including tax stamp, minimum floor price or other fiscal marks. The delivery of Vaporized Nicotine and Non-Nicotine Products or their devices, or Novel Tobacco Products purchased online shall also comply with Section 7 of RA 11900. The BIR shall maintain a list on their websites to be updated monthly, of brands of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products registered with DTI and the BIR that are eligible to be sold online. Internet websites and/or e-commerce and/or other similar media selling platform providers shall only allow duly registered online sellers or retailers with the DTI and the BIR. SECTION 6. Floor Price or Minimum Price . The minimum floor price of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products shall be the total production cost/expenses/landed cost of the cheapest brand per tobacco product including the sum of excise tax and VAT. EXAMPLES OF FLOOR PRICE OR MINIMUM PRICE 1. Heated Tobacco Products Description Unit Stick Production Cost/ Landed Cost/Net of Excise and VAT Excise Tax VAT Floor Price Amount 2022 HTP Pack 20 95.00 30.00 15.00 140.00 2. Vapor Products 1.1 Nicotine Salt or Salt Nicotine a. Production cost of P10.00 per 0.1 ml content, volume per pod is 0.7 ml b. Production cost of P10.00 per 0.1 ml content, volume per pod is 1.8 ml c. Production cost of P10.00 per 0.1 ml content, volume per pod is 1.9 ml 1.2 Conventional 'Freebase' or 'Classic' Nicotine a. Production cost of P5.00 per 1 ml content, volume per bottle is 15 ml b. Production cost of P5.00 per 1 ml content, volume per bottle is 30 ml Nicotine Formulation Unit Pack/ Fill Volume Content (ml) Production Cost/ Landed Cost/Net of Excise and VAT Excise Tax VAT Floor Price Per Unit Amount 2022 a. Nicotine Salt or Salt Nicotine Pod 1 0.7 ml 10.00/0.1 ml 70.00 47.00 14.04 131.04 b. Nicotine Salt or Salt Nicotine Pod 1 1.8 ml 10.00/0.1 ml 180.00 94.00 32.88 306.88 c. Nicotine Salt or Salt Nicotine Pod 1 1.9 ml 10.00/0.1 ml 190.00 94.00 34.08 318.08 a. Conventional 'Freebase' or 'Classic' Nicotine Bottle 1 15 ml 5.00/1 ml 75.00 110.00 22.20 207.20 b. Conventional 'Freebase' or 'Classic' Nicotine Bottle 1 30 ml 5.00/1 ml 150.00 165.00 37.80 352.80 3. Novel Tobacco Products Description Unit Weight/Volume Content per can or container (g) Production Cost/ Landed Cost/Net of Excise and VAT Excise Tax VAT Floor Price Amount 2022 3.1 Novel-Snus Can 10 g 200.00 0.03 24.00 224.03 3.2 Novel-Snus Can 15.84 g 225.00 0.04 27.00 252.04 3.3 Novel-Snus Can 40 g 250.00 0.10 30.01 280.11 SECTION 7. Usage of Local Tobacco Products . Manufacturers of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products are encouraged to use local tobacco products to be sold in the Philippines. SECTION 8. Penalties for Non-Compliance . Any violation of these Regulations shall be subject to the corresponding penalties under the pertinent provisions of the NIRC of 1997, as amended, and applicable regulations issued by the BIR. For any violation of Section 4 of this Act, if the offender is a manufacturer, importer, distributor, or retailer, the following shall be imposed: i. On the first offense, a fine of Two million pesos (P2,000,000.00) and imprisonment of two (2) years; ii. On the second offense, a fine of Four million pesos (P4,000,000.00) and imprisonment of four (4) years; iii. On the third offense, a fine of Five million pesos (P5,000,000.00) and imprisonment of six (6) years; iv. That the business permits and licenses, in the case of a business entity or establishment, shall be revoked and cancelled. v. The BIR shall order the immediate recall, ban or seizure from public sale or distribution of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products not registered with the BIR, including those sold online. This is without prejudice to the filing of the appropriate cases and collection of correct taxes and duties, including applicable fines and penalties under RA No. 8424, as amended, and RA No. 10863, otherwise known as the "Customs Modernization and Tariff Act (CMTA)." The BIR shall order the immediate recall, ban or seizure from public sale or distribution of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products not registered with the BIR, including those sold online. This is without prejudice to the filing of the appropriate cases and collection of correct taxes, including applicable fines and penalties under Republic Act No. 8424, as amended. SECTION 9. Transitory Provision . Upon effectivity of the Implementing Rules and Regulations (IRR) of RA 11900, the manufacturers, importers, distributors and retailers of Novel Tobacco Products shall be given an eighteen (18)-month transitory period to comply with the requirements of these regulations. SECTION 10. Separability Clause . If any provisions of these Regulations shall be held unconstitutional or invalid, the other provisions not otherwise affected shall remain in full force and effect. SECTION 11. Repealing Clause . The provisions of any existing regulations, rulings, orders, issuances or portions thereof inconsistent with the provisions of these Regulations are hereby revoked, repealed, or modified accordingly. SECTION 12. Effectivity . These Regulations shall take effect immediately fifteen (15) days after its publication in the Official Gazette thereof or in at least two (2) leading newspapers of general circulation. (SGD.) BENJAMIN E. DIOKNO Secretary of Finance Recommending Approval: (SGD.) LILIA CATRIS GUILLERMO Commissioner of Internal Revenue