By Derco Rosal
Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui expressed uncertainty whether the P1-billion collected from vape stamps will be sufficient to close the country's excise tax deficit for 2024.
"It might still not be enough, since it [the system] has just started," Lumagui told reporters on November 5th when asked about the collection's potential impact on the excise tax gap.
Lumagui reported that the BIR has collected approximately P1 billion from sellers who have applied for vape stamps. "Maybe more or less around P1 billion," he said, noting that previously, "nothing was being collected from vape."
He emphasized the need for increased compliance, stating, "There's still a lot to be collected. That P1 billion is still small. I think the majority of products in the market still don't have stamps. Maybe it's only about 10-20 percent."
In May, the BIR issued an order requiring sellers to affix stamps on vape products before distribution to improve tax compliance. Revenue Regulations No. 59-2024 introduced this tax stamp system, similar to cigarettes, to monitor sales and ensure proper tax collection. Unstamped vape products will be seized, and owners will face charges of tax evasion.
Lumagui highlighted the need for continued efforts to raise awareness and change public perception about vapes compared to cigarettes.
In 2024, the Department of Finance (DOF) lowered its "sin-product" collection target due to a 23 percent decline in cigarette excise tax collections, initially estimated at P185.32 billion. The BIR's 2022 excise tax collection of P261.64 billion fell short of the P313.2 billion target by 16 percent, primarily due to decreased cigarette tax revenue.
Despite the excise tax challenges, Lumagui expressed confidence in the BIR's overall performance, citing double-digit growth in collections. "I know we're doing good because our growth rate is in double digits," he said. "That's what's important, more than inflation and GDP. As long as the Bureau's performance is at that growth rate, it's good."
The BIR recently intensified its crackdown on illegal vape retailers. Following a nationwide raid on October 16th, weekly raids increased, leading to the apprehension of 506 illicit vape stores by October 31st.
"The BIR will not stop raiding illicit vape retailers or resellers until the vape industry complies with our tax laws and regulations. Expect regular raids," Lumagui warned.
The BIR estimates a tax liability of P181.7 million from these raids, citing common violations such as non-payment of excise taxes, lack of revenue stamps, and unregistered vape products.