BIR issues rules on allotment of tobacco excise tax revenues

The Bureau of Internal Revenue has issued a ruling on how it would compute the tax share of four Virginia tobacco provinces from excise tax collections of the BIR.

Virginia tobacco, the most dominant tobacco type in the country, is commercially grown in the four Ilocos provinces of Abra, Ilocos Norte, Ilocos Sur and La Union. 

In a recently issued regulation, Finance Secretary Margarito Teves and BIR Commissioner Lilian Hefti said the 15 percent share of tobacco-producing provinces from cigarette excise tax revenues shall be based on the actual excise taxes collected annually from locally-manufactured Virginia cigarettes.

Republic Act 7171 or “An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces” mandates that tobacco-producing provinces shall get a 15 percent share from tobacco excise taxes collected by the BIR.

However, since 2002, local governments and provincial heads of the concerned provinces claim they have not been getting the full benefits provided to them by law.

Per regulation 12-2008, the BIR said “the computation of the 15 percent share of the beneficiary provinces shall be the actual excise taxes collected annually from locally manufactured Virginia-cigarettes.”

According to the BIR, the regulation covers cigarettes which use Virginia-type leaf tobacco, whether imported or locally produced, as one of the raw materials.

The BIR’s ruling will allow the four tobacco-producing provinces to maximize the financial assistance of the government for the developmental projects in the covered areas.

The tax agency said the projects are to be implemented by the local governments of the provinces concerned to help advance the self-reliance of tobacco farmers.

The BIR hopes to collect P845 billion in revenues this year or P133 billion more than the P712 billion it collected in the same period last year.