Implementing Sections 141, 142, 143 and 145 (A) and (C) (1), (2), (3) and (4) of the National Internal Revenue Code of 1997 relative to the increase of the excise tax on distilled spirits, wines, fermented liquors and cigars and cigarettes packed by machine by twelve percent (12%) on January 1, 2000

December 16, 1999 REVENUE REGULATIONS NO. 17-99 TO : Implementing Sections 141, 142, 143 and 145 (A) and (C) (1), (2), (3) and (4) of the National Internal Revenue Code of 1997 relative to the increase of the excise tax on distilled spirits, wines, fermented liquors and cigars and cigarettes packed by machine by twelve percent (12%) on January 1, 2000 SUBJECT : All Internal Revenue Officers and Others Concerned Pursuant to Section 244 in relation to Sections 141, 142, 143 and 145 of the National Internal Revenue Code of 1997, these Regulations are hereby promulgated to implement the twelve percent (12%) increase of the excise tax on distilled spirits, wines, fermented liquors and cigars and cigarettes packed by machine by January 1, 2000. SECTION 1 . New Rates of Specific Tax .The specific tax rates imposed under the following sections are hereby increased by twelve percent (12%) and the new rates to be levied, assessed, and collected are as follows: Provided, however, that the new specific tax rate for any existing brand of cigars, cigarettes packed by machine, distilled spirits, wines and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1, 2000. SECTION 2 . Illustrations . I. New specific tax rate per pack is lower than the specific tax that is actually being paid prior to January 1, 2000. FLS CORPORATION, a manufacturer will remove 1,000 cases of "MAA Cigarettes" from its place of production. Each case contains 500 packs of cigarettes. Prior to January 1, 2000, the actual specific tax being paid is P3.30 per pack and the specific tax rate is classified under the tax bracket of P1.00 per pack. The excise tax due shall be computed as follows: Computation: Actual specific tax being paid prior to January 1, 2000 P3.30/pack Specific tax prescribed under Sec. 145(c)(4) P1.00/pack New Specific Tax Rate (P1.00 x 112%) P1.12 Note: Inasmuch as the prescribed specific tax due per pack is lower than the actual specific tax currently being paid, the latter shall apply. Thus, Volume of removals ( 1,000 cases x 500 packs) 500,000 packs Multiplied by actual specific tax being paid P3.30 Excise Tax Due P1,650,000 II. New specific tax rate per pack is higher than the actual specific tax rate currently being paid. A manufacturer will remove 1,000 cases of "JAA Cigarettes" his place of production. Each case contains 500 packs of cigarettes. Prior to January 1, 2000, the actual specific tax being paid is P5.50 and the specific tax rate is classified under the P5.00 tax class bracket. The excise tax due shall be computed as follows: Computation: Actual specific tax being paid prior to January 1, 2000 P5.50/pack Specific tax prescribed under Sec. 145(c)(3) P5.00/pack New Specific Tax Rate (P5.00 x 112%) P5.60/pack Volume of removals (1,000 cases x 500 packs) 500,000 packs Multiplied by the new specific tax rate per pack P5.60 Excise Tax Due P2,800,000 SECTION 3 . Transitory Provisions .For the effective implementation of these regulations, the following guidelines shall be followed during the transitory period: 1. The BIR shall conduct a physical inventory of all finished products for all brands of distilled spirits, wines, fermented liquors, cigars and cigarettes on January 1, 2000 in the presence of authorized representative of the concerned manufacturer 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. 2. Every manufacturer, producer and importer of distilled spirits, wines, fermented liquors, cigars, and cigarettes packed by machine shall submit a duly notarized updated list of existing registered brands indicating the following: net wholesale price per case, Excise Tax, VAT and suggested retail price (excluding VAT and Excise Tax),within ten (10) days from the date of effectivity of these regulations. SECTION 4 . Repealing Clause .All existing rules and regulations or parts thereof which are inconsistent with the provisions of these regulations are hereby revoked. SECTION 5 . Effectivity .These regulations shall take effect on January 1, 2000. (SGD.) EDGARDO B. ESPIRITU Secretary of Finance Recommending Approval: (SGD.) BEETHOVEN L. RUALO Commissioner of Internal Revenue