BIR, BOC, DTI back proposal to unify vape tax rates

MANILA, Philippines — Key government agencies are backing proposals to simplify the country’s excise tax system for vapor products, citing enforcement challenges, technical gaps and potential revenue losses under the current framework.

The Bureau of Internal Revenue (BIR), Bureau of Customs (BOC) and Department of Trade and Industry (DTI) said a unified vape tax rate is needed, noting weaknesses in technical evaluation and administration under the current two-tiered system, which separates salt nicotine from freebase nicotine products. Officials said this distinction has led to widespread misdeclaration.

Other agencies present at Monday’s House Ways and Means Committee hearing—including the Department of Health (DOH), Food and Drug Administration (FDA) and Philippine Heart Center—also supported adopting a single vape tax rate.

Committee Chairman Miro Quimbo said reforming the tax structure remains a legislative priority. Lawmakers discussed several bills—House Bills 1316, 2618, 5207, 5212, 5364, and 6993—all aiming to restructure excise taxes on vapor products.

Deputy Speaker Kristine Singson-Meehan, author of HB 5207, highlighted the current disparity: nicotine salt vapes are taxed at P60.20 per milliliter, while freebase nicotine is taxed at P6.95 per milliliter.

“This gap creates strong incentives for misdeclaration,” she said, adding the measure seeks to close the excise tax loophole while advancing public health goals.

Senior Deputy Speaker Ferdinand Hernandez, author of HB 5212, called the two-tier system “no longer viable.”

He said it has allowed products to circulate without proper oversight, costing P14.84 billion in lost revenues.

“Two liquids that look and function the same should not be taxed differently,” Hernandez added.

During the inquiry, BIR and BOC officials acknowledged they cannot chemically verify whether products contain nicotine salt or freebase nicotine. The BOC relies solely on documentation from the DTI.

Finance Undersecretary Carlo Adriano said that salt nicotine “disappeared” from official records in 2024 and 2025, suggesting companies may be shifting to the lower-taxed freebase category.

Health regulators also weighed in, saying there is no established evidence that nicotine salt is significantly more harmful than freebase nicotine to justify the existing tax gap.

Lawmakers also flagged a “loop of dependence” among agencies: the BOC defers technical classification to the DTI, which issues certifications; the BIR applies tax stamps based on company self-declarations.

With stamps applied abroad and oversight largely reliant on private reporting, the committee concluded that a unified tax rate may be the only practical way to ensure fair taxation, close loopholes and support public health.