The Bureau of Internal Revenue (BIR) has lowered the government-mandated floor prices for tobacco and vape products.
Based on the updated BIR floor prices, the minimum retail costs for cigarettes, heated tobacco products, and vaporized nicotine have decreased, while non-nicotine products will see a slight increase.
The floor price represents the minimum retail price set by the BIR, calculated based on the sum of excise tax, value-added tax (VAT), and production costs.
For cigarettes, the new floor price has dropped to P78.58 per pack, from P114.60.
The substantial decrease is largely attributed to lower production costs, which have fallen from P42.32 to P7.16 over the past year.
Consequently, the final VAT has also been reduced to P8.42 from P12.28. In contrast, the excise tax on cigarettes has increased to P63 from P60.
As a result, the total tax burden for a pack of cigarettes has declined to P71.42 from P72.28 in 2023.
Similarly, the floor price for heated tobacco products has been reduced to P60.11 per pack, from P120.40. This adjustment is also primarily driven by decreased production costs, which have dropped to P19.54 from P75.
The VAT has been lowered to P6.44 from P12.90, though the excise tax has seen a slight increase to P34.13 from P32.50.
Overall, the total tax burden for heated tobacco products has decreased to P40.57 from P45.40.
For a two-milliliter nicotine vape product, the floor price has been revised to P180.67, a slight decrease from P179.20 due to reduction in production costs, which have fallen to P52.11 from P74.57.
Consequently, the VAT has been lowered to P19.36 from P21.43, while the excise tax has increased from P104 to P109.20.
As a result, the total tax burden for a two-milliliter nicotine vape now amounts to P128.56, up from P125.43.
For conventional 10-milliliter freebase or classic nicotine products, the floor price has been set at P181.72, slightly higher than the previous P179.20. Production costs are now P99 from P100.
The excise tax has risen to P63 from P60, while the VAT has increased marginally to P19.47 from P19.20.
Overall, the total tax burden for these products has increased to P82.47, up from P79.20.
Meanwhile, BIR Commissioner Romeo D. Lumagui Jr. warned that sellers of vapor products, cigarettes, and heated tobacco products who violate the updated floor price regulations will face criminal penalties.
"We are warning all E-marketplaces, Online Sellers, Retail Sellers, Suppliers and Distributors that are selling vape, cigarettes, and heated tobacco products below the floor price. This is a criminal violation penalized by imprisonment of the seller,” Lumagui said.
“We are monitoring both online platforms and brick-and-mortar stores. Do not sell below the floor price. Take down all posts and offerings that are below the floor price," he added. (Jun Ramirez)