The Bureau of Internal Revenue (BIR) is set to implement a two-tier excise tax on vape products to address the issue of product misdeclaration.
BIR aims to stop manufacturers from declaring nicotine salt products as freebase to evade higher taxes.
Some vape companies claim their products are freebase nicotine, but BIR found them to be nicotine salts, which are taxed at a higher rate.
While the BIR prefers to remove the distinction between freebase and nicotine salt entirely, this would require new legislation.
As a faster solution, BIR may impose the same tax rate on both nicotine salt and freebase nicotine through an administrative issuance.
BIR Commissioner Romeo Lumagui Jr. emphasized the importance of combating smuggling, illicit trade, misdeclaration, and tax evasion linked to vape products.
The BIR is also studying the possibility of further increasing the excise tax rates on e-cigarettes unless manufacturers can prove otherwise.
