Government to lose P10 billion from vape smuggling

MANILA, Philippines — Lost revenues from the continued smuggling and illegal selling of vape products will likely double to P10 billion this year as misdeclaration worsens.

During the Kapihan sa Manila Bay forum yesterday, local think tank Minimal Government Thinkers said vape smuggling has worsened as products continue to enter the market without the appropriate payment of tariffs and taxes.

Minimal Government Thinkers president Bienvenido Oplas Jr. said excise tax collection for tobacco products has been on a downtrend over the past years largely due to smuggling.

For vape alone, it is estimated that forgone revenues stood at P5 billion last year.

“It’s much worse now because there are two types of smuggling now: outright smuggling where you don’t really pay the taxes and technical smuggling through misdeclaration,” Oplas said.

“The tax leakage from technical smuggling and misdeclaration is at P10 billion or even higher,” he said.

There are two types of vape products namely the nicotine salt and the freebase or classic nicotine.

Based on the latest floor price of the Bureau of Internal Revenue, a 10-milliliter bottle of nicotine salt has an excise tax of P546 as compared to the P63 per 10-ml freebase or classic nicotine.

Given the huge difference in excise tax, Oplas said importers often do not properly declare their products.

He said 100 percent of the declaration is freebase. “There is no facility to distinguish the two. ”

To plug such loopholes, the local think tank said there should be no distinction so as to stop the misdeclaration.

However, this will not be a walk in the park as it will require amendments to the current Vape Law which only lapsed into law in July 2022.

The Philippine E-Cigarette Industry Association (PECIA), on the other hand, maintained that the industry remains in a challenging transition period.

PECIA is the industry group composed of around 300 manufacturers and distributors of e-cigarettes and vapes in the country. Taxes from such products, alongside alcoholic beverages, are funding the government’s universal health care program.

In the same forum, PECIA president Joey Dulay said many brands have yet to secure the Philippine Standard mark from the Department of Trade and Industry.