By Filane Mikee Cervantes
MANILA – The chairperson of the House Ways and Means Committee on Tuesday asked the Bureau of Internal Revenue (BIR) to verify the licenses and product specifications of an e-cigarette maker for possible tax evasion and tax fraud.
Committee chair and Albay Rep. Joey Salceda made the appeal during the hearing on some 1.4 million 10-ml. disposable vapes bearing the mark FLAVA, an e-cigarette label, were found in a warehouse in Valenzuela City.
According to the Bureau of Customs, PHP1.43 billion is the total aggregate value of the goods with an estimated value of PHP700 million at PHP500 each, and the PHP728 million worth of excise tax based on the PHP52 excise tax per 1 ml. of e-cigarette or vape.
“I requested the BIR to write today to the Food and Drug Administration and the Bureau of Product Standards of the Department of Trade and Industry to validate the product specifications of the FLAVA,” Salceda said.
He said FLAVA is suspected of mislabeling its products as conventional freebase e-cigarettes, when there are reports that suggest it is of the salt nicotine variety.
Under Republic Act No. 11467, salt nicotine vape is taxed at PHP52 per ml, while freebase is taxed at PHP60 per 10 ml.
“The product is declared as freebase, which should be taxed at PHP60 per mL, but there are reports which suggest that the products themselves may be misdeclared and that they should, in fact, be taxed as nicotine salt, the more highly concentrated product, which is taxed at PHP52 per mL,” he said.
He said if found liable for evasion, the excise tax due is subject to a penalty of 10 times the amount under Section 263 of the Tax Code.
“This could thus be a case of PHP728 million in evaded taxes. If you multiply that by 10, this ends up being a PHP7.3 billion case,” Salceda added.
Salceda also pointed out that FLAVA’s own marketing “reveals that it is, in fact, salt nicotine.”
“For a 10mL equivalent, the most dominant nicotine salt product in the market can provide 2,800 puffs. FLAVA markets itself to provide 6,000 to 10,000 puffs. So, by this alone, you could imagine that the product is concentrated,” Salceda said.
Salceda, meanwhile, requested that the Department of Finance and the BIR come up with strategies to curb illicit trade in electronic cigarettes.
“The point of this hearing is not to prosecute just one company but to look at ways by which we can prevent illicit trade in electronic cigarettes, which will kill legitimate companies while allowing unregulated dangerous substances in the market,” he said. (PNA)