Tobacco firm seeks TRO vs BIR on excise tax rule

British American Tobacco Philippines company is seeking a temporary restraining order (TRO) against the implementation of a new Bureau of Internal Revenue Regulation (BIR-RR) raising the excise tax on cigarettes and tobacco products.

James dela Vega, corporate counsel and corporate affairs manager of BAT Phils., said they are filling the appropriate legal action against the Department of Finance (DOF) and the BIR for its allegedly "discriminatory" revenue regulation.

"We will question the issuance of the RR," Dela Vega said.

The new BIR-RR supposedly implements the revised tax classification of certain new cigarette brands, including variants, introduced in the market after January 1997.

The revised tax classification was provided for under the Comprehensive Tax Reform Program of 1997 which shifted the excise tax on tobacco and alcohol products to specific from value-base.

Under the specific tax system, cigarettes with a net retail price of less than P5 per pack are subject to a tax of P1.12 per pack.

Those priced between P5 and P6.50 per pack are subject to a tax of P5.60 per pack.

Those with a retail price of between P6.50 and P10 per pack are subject to a tax of P8.96 and those priced above P10 per pack is subject to a tax of P13.44 per pack.

Due to a loophole, the BIR realized that it was foregoing tax collections of up to P6 billion.

The BIR recently conducted a survey to determine new cigarette brands and variants introduced after 1997 and their retail price.

Based on that survey, the BIR issued RR-No. 22-2003 which will result in additional revenues of P1.8 billion.

However, Dela Vega complained, the new RR would result in a 47-percent increase in the excise tax on the Lucky Strike cigarette brand from the current P8.96 per pack to P13.44 per pack.