Our Lady of the Pillar College San Manuel, Inc.

District 3, San Manuel, Isabela

COLLEGE OF ACCOUNTANCY

EXCISE TAX

Coverage:
1. Excise Tax Definition
2. Goods Subject to Excise Taxes
3. Articles Subject to Excise Taxes
4. Purpose of Excise Tax
5. Kinds of Excise Taxes
6. Persons Liable to Excise Tax
7. Time of Payment
8. Excise Tax Rates

Discussion Proper

RELATED LAW:

As amended by Republic Act No. 10963 Or the Tax Reform for Acceleration and Inclusion (TRAIN)

EXCISE TAX

Excise tax or sometimes referred to as “sin taxes”, are imposed on certain articles either to promote
health (e.g., excise tax on tobacco and alcohol) or to discourage purchase of certain articles (e.g.,
automobiles, petroleum products and non-essential goods) or to protect the environment (e.g., excise tax on
minerals).

GOODS SUBJECT TO EXCISE TAXES

Excise taxes apply to:
1. Goods manufactured or produced in the Philippines for domestic sale or consumption or for any other
disposition; and
2. To things imported.
3. Non-essential services performed in the Philippines (added by TRAIN law)

ARTICLES SUBJECT TO EXCISE TAX

1. Alcohol, including wines, distilled spirits, and fermented liquor.
2. Tobacco Product such as cigars and cigarettes
3. Automobiles
4. Petroleum Products such as gas, gasoline, diesel, wax, lubricant oils and greases, kerosene, naphtha,
denatured alcohol, coke, asphalt, and bunker fuel oil.
5. Non-Essential Goods
6. Mineral Products whether metallic or non-metallic minerals and quarry resources
7. Sugar Sweetened Beverages

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JENNY ROSE O. TOLEDO BSA – 3
 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

8. Non-Essential Services such as cosmetic surgery

PURPOSE OF EXCISE TAX
- to raise revenue
- to curtail the consumption of certain commodities
- to protect domestic industries

NATURE OF PHILIPPINE EXCISE TAX

A. Excise tax as a regulatory tax
1. Environmental tax (green tax) – imposed on products which causes harm to the environment when
produced, extracted or use.
2. Sumptuary Tax (vanity tax) – it is imposed to restrain luxury or extravagance.
3. Sin tax (health tax) – it is imposed on the consumption of sin products or those known to pose health
risk.
B. Excise tax as indirect tax
C. Excise tax as a consumption tax
D. Excise tax as an additional business tax
E. Excise tax as specific and ad valorem tax

KINDS AS TO AMOUNT
1. Specific tax – excise tax imposed on goods or articles based on WEIGHT/VOLUME capacity or any
other physical unit of measurement.
MANNER OF COMPUTATION:
 No. of Units/other measurements x Specific Tax Rate

2. Ad Valorem tax – excise tax imposed on goods or articles based on the gross selling price or other
specified VALUE of the goods.
MANNER OF COMPUTATION:
 No. of Units/other measurements x Selling Price of any specific value per unit x Ad Valorem
Tax Rate

PERSONS LIABLE TO EXCISE TAX

In General:
a. On Domestic or Local Articles
 Manufacturer
 Producer
 Owner or person having possession of articles removed from the place of production without
the payment of the tax
b. 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
c. Others:
On Indigenous Petroleum
 Local Sale, Barter or Transfer
- First buyer, purchaser, or transferee
 Exportation
- Owner, lessee, concessionaire, or operator of the mining claim

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JENNY ROSE O. TOLEDO BSA – 3
 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

WHEN TO FILE AND PAY EXCISE TAX

General Rule Exception

Domestic Before removal from the place Extracted mineral – 15 days after the end of the calendar
products of production quarter when such products are removed.
Imported Before release from the
products customs' custody

EXCISE TAX RATES

A. ALCOHOL PRODUCTS

ALCOHOL NEW TAX RATES based on REMARKS

PRODUCTS Republic Act. 11467
2022 2023 2024
Ad Valorem Tax Based
DISTILLED SPIRITS
on Net Retail Price 22% 22% 22% 22%
(NRP) per proof liter
Specific Tax Per proof
52.00 59.00 66.00
liter
SPARKLING NRP per bottle of 750 Effective
WINES/CHAMPAGNE ml volume capacity 1/1/2025, the
(P500.00 or less) specific tax
More than P500.00 rate shall be
STILL WINES AND Still wines 14% or less 56.18 59.55 63.12
increased by
CARBONATED Still wines more than 6% every
WINES 14% but not more than year
25% thereafter
FERMENTED If brewed and sold at
39.00 41.00 43.00
LIQUORS pub and restaurants

NOTE: Beginning January 23, 2020, the classification of wines was removed pursuant to RA NO. 11467.
All types of wines are subject to specific excise tax rates per liter.

ILLUSTRATION 1:

On January 2024, Alak Brewery produces its famous LakLak Whisky of 60 proof 750ml-bottle sold at net
retail price of P100/bottle. During the period, it produced a total of 15,000 bottles.

The excise tax shall be computes as:

Alcohol content in a 60 proof (60/2) 30%

Total alcohol content in liters (15,000 bottles * 3,375
0.75L* 30% )
Total proof liters (3,375 alcohol * 2) 6,750
Specific tax (6,750 proof liter * 66.00) 445,500
Ad Valorem tax (15,000 bottles * 100/bottle) 22% 330,000
TOTAL EXCISE TAX 775,500

NOTE:
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JENNY ROSE O. TOLEDO BSA – 3
 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

1. 60 proof = 30% alcohol content

2. 1,000 ml = 1 liter

ILLUSTRATION 2:
Beer Serbesa ferments beer from imported malt or ale and sells them in 500 ml bottles at 32 pesos
per bottle final retail price. The beers are sold in cases containing 24 bottles each. 300 cases of beers are
produced in March 2024. Compute the excise tax of Beer Serbesa.

Total cases produced 300

Multiply by: bottles per case 24
Total bottles 7,200
Multiply by: ml per bottle 500
Total ml produced 3,600,000
Divide by: ml per liter 1,000
Total liters produced 3,600
Multiply by: excise tax per liter 43
Total excise tax 154,800

B. TABACCO PRODUCTS

TABACCO NEW TAX RATES based on REMARKS

PRODUCTS Republic Act. 11467
2022 2023 2024
TOBACCO a. Tobacco twisted by
2.50 2.60 2.70
hand
PRODUCTS (per Kilo)
b. Tobacco prepared or
partially prepared Tax Rate
c. Fine-cut shorts & shall be
refuse, scraps, increased by
2.50 2.60 2.70
clippings, stems & 4% every
sweepings year
d. Novel Tobacco
Product
e. Chewing tabacco 2.13 2.21 2.30
HEATED TOBACCO per Pack)
PRODUCTS 30.00 32.50 34.13 Effective
1/1/2024, the
VAPOR PRODUCTS a. Nicotine Salt and specific tax
Salt Nicotine 47.00 52.00 54.60 rate shall be
per milliliter increased by
b. Conventional 5% every
"Freebase" or 'Classic' year
55.00 60.00 63.00
Nicotine thereafter
per 10 milliliter
CIGARS Ad Valorem Tax Based
20% 20% 20% 20%
on Net Retail Price
Specific Tax Per Cigar 7.10 7.38 7.75 Effective
CIGARETTES a) Cigarettes packed by 1/1/2024, the
hand 55.00 60.00 63.00 specific tax
rate shall be
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JENNY ROSE O. TOLEDO BSA – 3
 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

b) Cigarettes packed by increased by

machine 5% every
year
thereafter

INSPECTION FEE - There shall be collected inspection fees on leaf tobacco, scrap, cigars, Cigarettes and
other manufactured tobacco and tobacco products as follows:

PRODUCT TYPE INSPECTION FEE

a. Leaf Tobacco (per kg) 0.02
b. Scrap and other manufactured tobacco (per kg) 0.03
c. Chewing Tobacco (per kg) 0.03
d. Novel Tobacco Product (per kg) 0.03
e. Heated Tobacco (per 1000 sticks or fraction
0.10
thereof)
f. Vapors (per milliliter of liquid) 0.01
g. Cigars (per 1000 piece or fraction thereof) 0.50
h. Cigarettes (per 1000 sticks or fraction thereof) 0.10

ILLUSTRATION 3:
In May 2024, Juan Company produced a total of 8,000 kilos of dried tobacco leaves from its
plantation and processed the same into cigarettes.
The processing resulted to the following:

PRODUCT PACKS PIECES/PACK NET RETAIL PRICE

CIGAR 1,000 10 P200/PACK
CIGARETTE 6,000 20 P100/PACK

1,000 kilos of the dried leaves failed strict quality control and are discarded to be sold as loose-leaf
tobacco to consumer for P100/kilo.
All of the products will be withdrawn for sale in domestic supermarkets except for 1,500 cigarette
packs which are ordered exported by a foreign customer.

Juan Company shall pay the following excise tax:

CIGAR
Ad Valorem Tax (1,000 packs * 200/packs * 20%) 40,000
Specific Tax (1,000 packs * 10 pcs * 7.75) 77,500
TOTAL 117,500
CIGARETTE (6,000 packs * 35/packs) 210,000
LOOSE TOBACCO (1,000 * 2.70 2,700
TOTAL EXCISE TAX 330,200

NOTE:
1. The sale of loose tobacco to end users is subject to excise tax.
2. Loose tobacco leaf is exempt when the same is used in the manufacturing of tobacco products which
will ultimately be subject to the excise tax.
3. Juan Company shall pay excise tax for the withdrawal of the 1,500 cigarettes pack for export. It shall
claim tax refund or tax credit upon showing proof of actual exportation

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 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

C. PETROLEUM PRODUCTS

PETROLEUM PRODUCTS 2022 2023 2024

a. Lubricating oils & greases, base stock, high vacuum distilates,
aromatic extracts, additives & other similar prep. (per Kg)
b. Processed gas (per Liter)
c. Waxes and petrolatum, mineral oil (per Kg)
d. Denatured alcohol to be used for rnotive power (per Liter) 10.00
e. Asphalts (per Kg)
f. Naphtha, regular gasoline, pyrolisis gasoline and other similar
products of distillation (per Liter)
g. Unleaded premium gasoline (per Liter)
h. Kerosene (per Liter) 5.00
i. Aviation turbo jet fuel, aviation gas (per Liter) 4.00
j. Kerosene, when used as aviation fuel (per Liter)
k. Diesel fuel oil, and on similar fuel oils having more or less
the same generating power (per Liter)
l. Liquefied petroleum gas used for motive power (per Kg)
6.00
m. Bunker fuel oil (IFO) & similar generating Power
(feedstock) (per Liter)
n. Petroleum coke (per MT)
o. Liquefied petroleum gas (per Kg) 3.00
p. Naphtha and pyrolysis gasoline (per Liter)
0.00
q. Liquefied petroleum gas as raw material of petrochemical
0.00
(per Kg)
r. Petroleum coke as feedstock (per Metric Ton) 0.00

ILLUSTRATIVE 4:
CCC pumps crude oil from its oilfield and feed them to its oil refinery which transform the crude oil
into various petroleum products.

The following were produced by the plant from a batch of crude oil in 2024:
Gasoline 45,000 liters
Aviation gas; 5,000 liters is kept in bonded storage 9,000 liters
tanks for sale to international carriers
Diesel fuel 25,000 liters
Bunker fuel 3,000 liters
Asphalt 5,000 liters
Naphtha; 200 liters used in refining of petroleum 1,200 liters
products 500 used in producing plastic products; the
lance is sold

Compute the total excise tax.

Gasoline (45,000 liters * 10/ liter) 450,000

Aviation gas (9,000 – 5,000) 4/liter 16,000
Diesel (25,000 liters * 6/liter) 150,000
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JENNY ROSE O. TOLEDO BSA – 3
 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

Bunker fuel (3,000 liters * 6/liter) 18,000

Asphalt (5,000 kilos * 10/kilo) 50,000
Naphtha (1,200 – 200 – 500) 500
Total excise tax 684,500

D. MINERAL PRODUCTS

MINERAL PRODUCTS 2022 2023 2024

1. Domestic and Imported Coal and Coke Php150.00 per metric ton
2. Non-Metallic Minerals and Quarry Resources
4% based on the actual market value of the gross
 Locally extracted or produced
output
4% value used by the Bureau of Customs (BOC) net
 Imported
of excise tax and VAT
 Locally extracted natural gas and liquefied
Exempt
natural gas
3. Metallic Minerals
 Locally extracted or produced copper, gold, 4% based on the actual market value of the gross
chromite and other metallic minerals) output
 Imported copper, gold, chromite and other 4% value used by the Bureau of Customs (BOC) net
metallic minerals) of excise tax and VAT
Indigenous Petroleum 6% of the fair international market price

ILLUSTRATIVE 5:
During the month, FFF Mining Company mined a total of 500 tons of gold-copper concentrates. The
concentrates were assayed to contain 0.008% fold and 18% copper. FFF Mining Company usually exports
its concentrates.

The market value of the following in the London Metal Exchange (LME) were:
Gold Price S1,495/ troy ounce
Copper S5,700 / ton
Each troy ounce is 31.10348 grams. Each tone is 1,000,000 grams. The US Dollars is trading P52/P1

Compute the excise tax.

GOLD:
Total concentrates in tons 500
Multiply by: gold content 0.008%
Gold in tons 0.04
Multiply by: 1,000,000 grams/ton 1,000,000
Gold in grams 40,000
Multiply by: gold price/ grams (S1,492/31.10348) S48
Total S1,920,000
Multiply by: peso-dollar exchange rate 52
Gold price in peso 99,840,000
COPPER:
Total concentrates in tons 500
Multiply by: copper content 18%
Copper in tons 90
Multiply by: S/ ton S5,700
Copper price in dollar S513,000
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JENNY ROSE O. TOLEDO BSA – 3
 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

Multiply by: peso-dollar exchange rate 52

Copper in peso 26,676,000
Total 126,516,000
Multiply by: excise tax rate 4%
Total excise tax 5,060,640

E. AUTOMOBILES

AUTOMOBILES 2022 2023 2024

Up to P600,000 4%
Over P600,000 to P1,000,000 10%
Over P1,000,000 to P4,000,000 20%
Over P4,000,000 50%
Hybrid Fifty percent (50%) of applicable excise tax rate
Purely Electric and Pick-ups EXEMPT

ILLUSTRATIVE 6:
GGG Cars manufactures various automobile models. It completed the following units:
MODEL CLASS WHOLESALE PRODUCED SOLD
PRICE
A SUV- gasoline 800,000 8 6
B Pick-up truck - 1,200,000 7 5
diesel
C Electric car 3,000,000 5 4
D Bus – diesel 5,000,000 4 2
E Sports car – hybrid 7,000,000 4 3
Compute the total excise tax.

Model Price Qty Total Tax rate Excise tax

wholesale
A 800,000 8 6,400,000 10% 640,000
B 1,200,000 7 8,400,000 EXEMPT -
C 3,000,000 5 15,000,000 EXEMPT -
D 5,000,000 4 20,000,000 EXEMPT -
E 7,000,000 4 28,000,000 50% /2 8,000,000
TOTAL 8,640,000

ILLUSTRATIVE 7:
BBB Company manufactures cars and motorbikes power solar energy or by a combined gasoline and
hydrogen generated from hydrolysis. During the month. BBB Company completed a unit each of its car and
motor bike model.
WHOLESALE
Hybrid water car 2,000,000
Hybrid water bikes 800,000
Solar car 4,000,000
Compute the total excise tax.

Hybrid water car 2,000,000

Multiply by: excise tax rate 20%
Total excise tax 400,000

NOTE:
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JENNY ROSE O. TOLEDO BSA – 3
 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

The solar car is electrical powered vehicle and hence exempt. The water bike does not fit into the
definition of automobile being a two-wheeled vehicle. \

F. NON-ESSENTIAL GOODS
A 20% ad valorem tax is imposed upon the following non-essential goods:
1. Jewelry
2. Perfume and Toilet waters
3. Yachts and other vessels intended for pleasures or sports.

The following are not jewelry and hence exempt:

 Surgical and dental instruments
 Silver plated wares
 Frames and mounting spectacles or eyeglasses
 Dental golds or gold alloys and other precious metals are used in filling, mounting or fitting of the teeth.

ILLUSTRATIVE 8:
AAA Inc. manufactures perfumes, precious jewelry, fashion bags and clothes. It produced the
following during the month:
Wholesale price Suggested retail price
Perfumes 6,000,000 12,000,000
Jewelry 8,000,000 15,000,000
Fashion bags 1,500,000 4,000,000
Designer clothes 4,000,000 11,000,000
Compute the total excise tax.

Perfumes 6,000,000 20% 1,200,000

Jewelry 8,000,000 20% 1,600,000
Total excise tax 2,800,000

NOTE: The fashion bags and designer clothes though pricy are not currently subjected excise tax.

G. NON ESSENTIAL SERVICES

A tax of 5% on gross receipt derived from the performance of services, net of excise tax and VAT,
on invasive cosmetic procedure, surgeries, and body enhancement 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 of taxable invasive cosmetic procedures:

Chin augmentation Eyelid surgery
Mammoplasty Facelift/ Neck lift Vaginal plastic surgery
Breast lift Thread lift Auto grafting and otoplasty

Buccal fat remover Buttocks Augmentation Rhinoplasty/ alar trimming

Embedded protein threads Hair restoration/ transplantation Abdominoplasty or Tummy truck

Examples of exempt noninvasive cosmetic procedures:

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 Our Lady of the Pillar College San Manuel, Inc.
District 3, San Manuel, Isabela
COLLEGE OF ACCOUNTANCY

Acupuncture rejuvenation Non surgical face lifting and skin tightening Dermal fillers
therapy using radio frequency

Air dissector Cleaning and facials Peelings

Collagen induction therapy CO2 fractional laser and resurfacing Injectibles and weight
management treatment
Botulinum toxin injection/ Laser and light treatment Body treatment and contouring
treatment procedures

H. SWEETENED BEVERAGES

PRODUCT DESCRIPTION TAX RATE PER

LITER
Using purely caloric sweeteners, and purely non-caloric sweeteners or a mix of them. P6.00

Using purely high fructose corn syrup or in combination with any caloric or non- P12.00
caloric sweeteners

Using purely coconut sap sugar and purely steviol glycoside EXEMPT

ILLUSTRATIVE 9:
DODO Manufacturing Corporation will remove from the place of production 100 cases of Super
Cola using HFCS and non-caloric sweetener. Each case contains 6 bottles of 1.5 liters each.
Compute the excise tax to be paid before removal.

No. of cases 100

Multiply by: no. of bottles per case 6
Total no. of bottles 600
Multiply by: content per bottle 1.5 L
Total volume in liters 900 L
Multiply by: specific tax rate 12
Total excise tax to be paid before removal 10,800

EXEMPT PRODUCTS FROM EXCISE TAX

The following shall not be subjected to the excise tax on sweetened beverages:|
 All milk products, including plain milk, infant formula milk, follow-on milk, growing up milk,
powdered milk, ready to drink milk, flavored milk and fermented milk.
 Soymilk and flavored soymilk
 100% natural fruit juices
 100% natural vegetable fruit juices
 Meal replacement and medically indicated beverages.
 Ground coffee, instant soluble coffee, and prepacked coffee products.

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