May 2020

EXCISE TAXES
Atty. C. Llamado

- In addition to the VAT (or OPT)

- Taxes which apply to certain goods manufactured or produced in the Philippines
for domestic sale or consumption, and to things imported.
- Excise tax shall also apply to certain services performed in the Philippines.1
- Deductible for income tax purposes

Purposes of Excise Tax:

1) To raise revenue;
2) To curtail the consumption of certain commodities;
3) To protect domestic industries;

Type of Excise Taxes

Specific Tax – excise tax imposed on goods or Ad Valorem Tax – excise tax imposed on
articles based on weight or volume capacity or goods or articles based on the selling price or
any other physical unit of measurement. other specified value of the goods, exclusive of
VAT and tariff and customs duties (if
imported).

(Note: But in computing VAT on importation,

excise tax and tariff and customs duties are
included in the tax base.)
Excise tax on: Excise tax on:

ALCOHOL PRODUCTS 1) Distilled sprits

1) Distilled spirits (including proof spirits)
– whisky, brandy, rum, gin, and vodka, 2) Cigars
fortified wines;
2) Wines – sparkling wines, champagne, 3) Automobiles excluding:
still wines a) Buses, trucks6;
3) Fermented liquor – beer, lager beer, ale, b) Cargo vans;
porter and other fermented liquors c) Jeepneys/jeepney substitutes;7
except tuba, pasi, tapuy. d) Single cab chassis;
e) Special-purpose vehicles; and
TOBACCO PRODUCTS f) Automobiles used exclusively
4) Tobacco products (except stemmed leaf within the Freeport zones.
tobacco or tobacco by-products which
are to be exported or used in the Provided:
manufacture of cigars and cigarettes)
- Includes tobacco specially 1) Purely electric vehicles and pick-ups
prepared for chewing are exempt from excise tax.
2) Hybrid vehicles shall be taxed at
50% of the applicable excise tax
rates.

1
TRAIN.
6
Pick-ups are considered trucks, and therefore exempt from excise tax.
7
Jeeps are considered automobiles subject to excise tax.

1
 May 2020

- Heated tobacco products2

- Vapor products3
5) Cigars NON-ESSENTIAL GOODS
6) Cigarettes
4) Jewelry, whether real or imitation;
pearls; precious and semi-precious
PETROLEUM PRODUCTS stones and imitations;
7) Lubricating oils and greases; 5) Goods made of or ornamented, mounted
8) Processed gas; or fitted with precious metals or
9) Waxes and petrolatum; imitations thereof or ivory;
10) Denatured alcohol to be used for motive Except:
power; a) surgical and dental instruments;
11) Naphtha, regular gasoline, and other b) silver-plated wares, frames, or
similar products of distillation; mountings for spectacles or
12) Leaded and unleaded premium gasoline; eyeglasses; and
13) Aviation turbo jet fuel; c) dental gold or gold alloys and other
14) Asphalts precious metals used in filling,
15) Kerosene; mounting, or fitting the teeth.
16) Diesel fuel oil; 6) Opera glasses and lorgnettes;
17) Liquefied petroleum gas; 7) Perfumes and toilet waters;
18) Bunker fuel oil. 8) Yachts and other vessels intended for
pleasure or sports.
MINERAL PRODUCTS
19) Coal and coke
MINERAL PRODUCTS
9) Non-metallic minerals and quarry
SWEETENED BEVERAGES4 - imposes a resources such as marble, granite,
tax per liter of volume capacity on sweetened volcanic cinders, basalt, tuff and rock
beverages.5 phosphate;
10) Metallic minerals:
The following products are excluded from the a) Copper and other metallic minerals;
excise tax on sweetened beverages: b) Gold and chromite
(a) All milk products; 11) Indigenous petroleum including locally-
(b) 100% natural fruit juices; extracted mineral oil, hydrocarbon gas,
(c) 100% natural vegetable juices; bitumen, crude asphalt, mineral gas.
(d) Meal replacement and medically Except:
indicated beverages; and a) Locally-extracted natural gas; and

2
Heated tobacco products refer to tobacco products that may be consumed through heating tobacco, either
electrically or through other means sufficiently to release an aerosol that can be inhaled, without burning
or any combustion of the tobacco. Heated tobacco products include liquid solutions and gels that are part
of the product, and are heated to generate an aerosol.
3
Vapor products shall mean any liquid solution or gel which contains nicotine that transforms into an
aerosol without combustion through the employment of a mechanical heating element, battery, or circuit
that can be used to heat such solution or gel, and includes but is not limited to a cartridge, a tank, and the
device without a cartridge or tank. It is commonly known as e-liquids for e-cigarettes.
4
Added by TRAIN.
5
The excise tax shall be based on the following schedule:
Using purely caloric sweetener, purely non-caloric sweetener, or mixture or ₱6/liter
both
Using purely high-fructose corn syrup, or in combination with any caloric or ₱12/liter
non-caloric sweetener
Using purely coconut sap sugar/purely steviol glycosides Exempt

2
 May 2020

(e) Coffee – ground coffee, instant soluble b) Locally-extracted liquefied natural

coffee, and pre-packaged powdered gas.
coffee products.
NON-ESSENTIAL SERVICES8 - 5% tax on
gross receipts, net of excise tax and VAT,
derived from the performance of invasive
cosmetic surgeries, procedures, and body
enhancements for aesthetic/cosmetic
purposes.

The following shall be exempt from the 5%

excise tax:

(a) Procedures to ameliorate a deformity

arising from or directly related to a
congenital or developmental defect or
abnormality, a personal injury resulting
from an accident or trauma, or
disfiguring disease, tumor, virus, or
infection; and
(b) Cases or treatments covered by the
National Health Insurance Program.

Gross Selling Price of Goods Subject to Ad Valorem Tax

1) The price, excluding the VAT, at which the goods are sold at wholesale or through sales
agents;

2) If the manufacturer also sells the goods at wholesale in another establishment of which he
is the owner, the wholesale price in the latter establishment shall be the gross selling price;

3) If the price is less than the cost of manufacturing plus expenses, the gross selling price shall
equal such cost + expenses + a proportionate margin of profit (≥ 10% of the cost +
expenses).

Persons Subject to Excise Tax

1) Domestic Products

a) Generally, the manufacturer or producer of the domestic products shall file the
return and pay the excise taxes before the removal of the domestic products from the
place of production; or

b) Owner or person having possession of domestic products which were removed from
place of production without payment of the excise tax; or

c) The first buyer, purchaser, or transferee for local sale or transfer in the case of
indigenous petroleum, natural gas, or liquefied natural gas;

2) Imported Products

8
Added by TRAIN.

3
 May 2020

a) The importer shall file the return and pay the tax before removal of the imported goods
from the customhouse or customs custody; or

d) The person who is found in possession of articles which are exempt from excise taxes
other than those legally entitled to exemption.

Credit for Excise Taxes on Goods Actually Exported

Excise taxes paid on goods actually exported shall be credited or refunded upon submission of
proof of actual exportation and upon receipt of the foreign exchange payment.

Provided: Excise tax on mineral products (except coal and coke) shall not be creditable nor
refundable even if the mineral products are actually exported.

Changes under the TRAIN:

1) Cigarettes packed by hand, and packed by machines follow the same schedule of specific
excise taxes.

2) Excise taxes on the following products were increased:

(a) Cigarettes packed by hand, and cigarettes packed by machine;

(b) Manufactured oils and other fuel oils;9
(c) Locally manufactured and imported automobiles;
(d) Domestic or imported coal and coke;
(e) Non-metallic and metallic minerals;
(f) Indigenous petroleum.

3) The following are exempt from excise tax:

(a) Naptha and pyrolysis gasoline used as raw material in the production of petrochemical
products or in the refining of petroleum products, or as replacement fuel for natural-
gas-fired-combined cycle power plant;
(b) Production of petroleum products, whether or not they are classified as products of
distillation, and for use solely for production of gasoline;
(c) Liquefied petroleum gas when used as a raw material in the production of
petrochemical products;
(d) Petroleum coke, when used as feedstock to any power generating facility;
(e) Purely electric vehicles, and pick-ups;10

4) The Secretary of Finance shall require the use of an official fuel marking or similar
technology on petroleum products refined, manufactured, or imported in the Philippines,
and that are subject to the payment of taxes and duties.

9
Diesel fuel, liquefied petroleum gas, kerosene, and bunker fuel oil which were all not taxed before the
effectivity of the TRAIN are now taxed under the TRAIN.
10
Hybrid vehicles shall be subject to 50% of the applicable excise tax rates on automobiles.

4
 May 2020

DOCUMENTARY STAMP TAX (DST)

- A national tax whose purpose is to raise revenue;

- Deductible for income tax purposes
- Defined as a tax upon documents, instruments, loan agreements, papers evidencing
acceptances, assignments, sales and transfers of obligations, rights or properties, and in
respect of the transaction so had or accomplished. It is levied and collected whenever
the document is made, signed, issued, accepted, or transferred when the obligation or
right arises from Philippine sources, or the property is situated in the Philippines.

However, the DST is actually an excise tax because it is imposed on the transaction
rather than on the document.11 The transactions entered into by the taxpayer
need not be embodied in a document or debt instrument for them to be subjected
to DST.

Documents and Papers Subject to Documents and Papers Not Subject to DST
DST12
a) Original issue of shares of stock
b) Bonds, debentures, certificates of
stock/indebtedness issued in foreign
countries
c) Sales, agreements to sell, memoranda of
sales; deliveries or transfer of shares or
certificates of stock
d) Certificates of profits or interest in
property or accumulations
e) Bank checks, drafts, certificates of
deposit not bearing interest, and other
instruments
f) Debt instruments;
g) Bills of exchange or drafts;
h) Acceptance of bills of exchange;
i) Foreign bills of exchange and letters of
credit;
j) Life insurance policies;
k) Insurance upon property;
l) Fidelity bonds and other insurance policies
m) Policies of annuities, and pre-need plans
n) Indemnity bonds
o) Warehouse receipts
p) Jai-alai, horse race tickets, lotto, or other
authorized numbers games
q) Bills of lading or receipts
r) Proxies
s) Powers of attorney
t) Leases and other hiring agreements
u) Mortgages, pledges, and deeds of trust
v) Deeds of sale and conveyances of real
property13
w) Charter parties and similar instruments
a) Policies of insurance or annuities made by a
fraternal or beneficiary society operated on the
lodge system or local cooperation plan;
b) Certificates of oaths administered to any
government official in his official capacity
c) Papers filed in court by or for the national,
provincial, or municipal governments
d) Affidavits to prove poverty;
e) Statements and other compulsory information
required of persons exclusively for statistical
purposes and for the use of the government
f) Certificates of the assessed value of lands ≤ ₱200
g) Borrowing and lending of securities executed
under the Securities Borrowing and Lending
Program (“SBL”) of a registered exchange
h) Loan agreements ≤ ₱250,000 executed by an
individual for the purchase of a house and lot,
motor vehicle, appliance, or furniture for
personal use
i) Sale, barter, or exchange of shares listed and
traded through the local stock exchange
j) Assignment or transfer of mortgage, lease, or
insurance policy if there is no change in the
maturity date
k) Fixed income and other securities traded in the
secondary market or through an exchange;
l) Derivatives
m) Interbranch or interdepartmental advances
within the same legal entity
n) Forebearances arising from sales or service
contracts
o) Bank deposit accounts without a fixed term
p) Contracts, deeds, documents and transactions
related to the conduct of business of the BSP

11
San Miguel Paper Packaging Corporation vs. CIR, CTA Case No. 9288, July 2, 2019.
12
TRAIN increased the DST rates for the transactions in BOLD.
13
Transfers exempt from donor’s tax are exempted from DST.

5
 May 2020

x) Assignments and renewals of certain q) Transfer of property pursuant to tax-free

instruments exchanges
y) Certificates r) Interbranch call loans with maturity ≤ 7 days to
cover deficiency in reserves including those
between or among banks and quasi-banks

Persons Subject:
The person making, signing, issuing, accepting, or transferring the document. When one
party enjoys exemption, the other party who is not exempt shall be the one directly liable
for the tax.

Time of Filing and Payment:

Generally, the tax return shall be filed within 5 days after the close of the month when the
document was made, signed, accepted or transferred.

Place of Filing and Payment:

1) Authorized agent bank (AAB) within the territorial jurisdiction of the RDO which has
jurisdiction over the residence or principal place of business of the taxpayer; or
2) If there be no AAB, with the Revenue District Officer, collection agent, or duly
authorized treasurer of the city or municipality in which the taxpayer has his legal
residence or principal place of business.

Modes of Payment:
1) The tax due on the return is paid at the time the return is filed; or
2) The tax may be paid through purchase and actual affixture of the DSTs on the
document; or
3) By imprinting the DSTs, through a DST metering machine, on the taxable document.

Effect of Failure to Stamp a Taxable Document:

1) Shall not be recorded;

2) Shall not be admitted or used in evidence in any court;
3) The notary public shall not add his jurat or acknowledgement to the document

Until the DSTs are paid