EXCISE TAXES
Types of Excise Tax
Definition of Excise Tax
• Excise taxes are taxes imposed on certain specified
goods manufactured or produced in the Philippines for
domestic sale or consumption or for any other disposition
and to things imported as well as services performed in
the Philippines. [Sec. 129, par. 1, NIRC]
• Excise taxes are considered business taxes, along with
VAT and percentage tax.
• An entity subject to excise taxes may still be subject to
VAT or to percentage tax, as the case may be.
• Not to be confused with “excise tax – tax on the
privilege to enter into a certain taxable transaction”
• It is a business tax
• Imposed on specified goods manufactured or
produced in the Philippines for domestic sale,
consumption or any other disposition
• Imposed on things imported
• Imposed on certain services (i.e., “non-essential
services”) performed in the Philippines
Nature and Concept
• The production, manufacture or importation of the
goods belonging to any of the categories enumerated
in Title VI of the NIRC (i.e., alcohol products, tobacco
products, petroleum products, automobiles and non-
essential goods, mineral products) are not the sole
determinants for the proper levy of the excise tax.
• It is further required that the goods be manufactured,
produced or imported for domestic sale, consumption
or any other disposition.
• The accrual of the tax liability is, therefore, contingent
on the production, manufacture or importation of the
taxable goods and the intention of the manufacturer,
producer or importer to have the goods locally sold or
consumed or disposed in any other manner.
• This is the reason why the accrual and liability for the
payment of the excise tax are imposed directly on the
manufacturer or producer of the taxable goods, and
arise before the removal of the goods from the place of
their production (Separate opinion of J. Bersamin in CIR
v. Pilipinas Shell Petroleum Corp., G.R. No. 188497, 2014
• Excise taxes, whether under the specific or the ad
valorem tax system, is basically an indirect tax imposed
on certain types or classes of goods, whether locally
manufactured or imported.
• While the tax is directly levied upon the
manufacturer/importer upon removal of the taxable
goods from its place of production or from the customs
custody, the tax, in reality, is actually passed on to the
end consumer as part of the transfer value or selling
price of the goods, sold, bartered or exchanged. [Silkair
(Singapore) Pte. Ltd. v. CIR, G.R. No. 166482 (2012)]
• Specific Tax - tax due is computed based on:
• weight
• volume capacity
• any other physical unit of measurement.
• Formula: No. of Units/other measurements x
Specific Tax Rate
• Ad Valorem Tax - tax due is computed based on:
• selling price
• other specified value of the good or service
performed
• Formula: No. of Units/other measurements x
Selling Price of any specific value per unit x Ad
Valorem Tax Rate
Purpose of Excise Taxes
1. To curtail consumption of certain commodities, the
excessive or indiscriminate use of which is considered
harmful to the individual or community (e.g., alcoholic
beverages and tobacco products);
2. To protect a domestic industry, the products of which
face competition from similar imported articles;
3. To distribute the tax burden in proportion to the benefit
derived from a particular government service (e.g.,
excise taxes on gasoline, lubricating oils and denatured
alcohol for motive power); and
4. To raise revenue
Transactions Subject to Excise Tax
• Alcoholic products:
• Sec. 141 – Distilled spirits such as liquors
• Sec. 142 – Wines
• Sec. 143 – Fermented liquors (e.g. “beers”)
• Tobacco Products
• Sec. 144(A) – Tobacco products,
• Sec. 144(B) - Heated tobacco products,
Vapor products
• Sec. 145 – Cigars and Cigarettes
• Sec. 146 – Inspection Fee
• Petroleum Products
• Sec. 148 – Manufactured oils and other fuels
• Miscellaneous Articles
• Sec. 149 – Automobiles
• Sec. 150 – Non-essential goods
a. Jewelry, pearls, precious and semi-
precious stones, goods ornamented
 with precious or semi-precious metals
or ivory, opera glasses and lorgnettes
b. Perfumes and toilet waters and
c. Yachts and other vessels intended
for pleasure or sports)
• Sec. 151 – Non essential services (introduced
by the TRAIN Law)
• Sec. 150-B – Sweetened beverages
(introduced by the TRAIN Law)
• Sec. 151 – Minerals (e.g., gold, silver), mineral
products and other quarry resources
Excise Tax on Automobiles
Notes:
• Automobiles - shall mean any 4 or more wheeled
motor vehicle regardless of seating capacity, which is
propelled by gasoline, diesel, electricity or any other
motive power
• Not considered automobiles are the following:
• Buses
• Trucks and pick-ups
• Cargo vans
• Jeepney/jeepney substitutes
• Single cab chassis
• Special-purpose vehicles – designed for
specific applications such as cement-mixer,
firetruck, boomtruck, ambulance and/or
medical unit and off-road vehicles for heavy
industries and not for recreational activities
• Hybrid vehicles or vehicles powered by electric energy
in combination with gasoline, diesel or other motive
power shall be subject to 50% of the applicable excise
tax rates
• EXEMPT – purely electric vehicles and pick-up trucks,
automobiles used exclusively within the freeport zone
Excise Tax on Non-essential Services (RR No. 2-2019)
• Scope: Invasive cosmetic procedures, surgeries, and
body enhancements directed solely towards improving,
altering, or enhancing the patient's appearance and do
not meaningfully promote the proper function of the
body or prevent or treat illness or disease.
• Examples: liposuction, lip injections, breast
augmentation, facelift, hair restoration, rhinoplasty, etc.
• Tax Rate and Base: 5% of gross receipts
• Gross receipts – total money representing the
contract price or service fee, including
deposits applied as payments for services
rendered and advance payments actually or
constructively received, excluding the VAT and
5% excise tax.
• Exemptions:
• Procedures necessary 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
• Cases or treatments covered by the National
Health Insurance Program
• Non-invasive cosmetic procedure – does not
require incision into the body or removal of
tissue, where no break in the skin is created and
there is no contact with mucosa, or skin break
or internal body cavity beyond a natural or
artificial body orifice.
Excise Tax on Sweetened Beverages (RR No. 20-2018)
• Tax rates on sweetened beverages:
• Sweetened beverages covered by the Excise Tax:
• Sweetened juice drinks
• Sweetened tea
• All carbonated beverages
• Flavored water
• Energy and sports drinks
• Other powdered drinks not classified as milk,
juice, tea or coffee
• Cereal and grain beverages
• Other non-alcoholic beverages that contain
sugar
• Exemptions:
• All milk products (plain milk, infant formula
milk, powdered milk, ready-to-drink, flavoured
milk, fermented milk, etc.)
• Soymilk and flavored soymilk
• 100% natural fruit juices
• 100% natural vegetable juices
• Meal replacement and medically indicated
beverages
• Ground coffee, instant soluble coffee, pre-
packaged powdered coffee products

Persons Liable to Excise Taxes

• On domestic or local articles:
• Manufacturer
• Producer
• Owner or person having possession of articles
removed from the place of production without
payment of tax
• On imported articles
• Importer
• Owner
• Person who is found in possession of articles
which are exempt from excise taxes other than
those legally entitled to exemption
• On non-essential services
• Those performing non-essential services as
defined in the Tax Code and regulations
• On indigenous petroleum
• Local sale, barter, or transfer – first buyer,
purchaser or transferee
• Exportation – owner, lessee, concessionaire,
or operator of the mining claim

Filing and Payment of Excise Taxes