The Department of Trade and Industry (DTI) said 93 percent of vape brands it identified in the market are unregistered, as lawmakers and government agencies raised concerns over illicit trade and backed the unification of excise tax rates for vapor products.

During the Aug. 25 House Committee on Ways and Means Hearing tackling excise taxes on tobacco and vapor products, DTI Assistant Secretary Marcus Valdez II said the agency's monitoring identified 313 vape brands in the market, of which 292 were not registered with the DTI.

"From our survey, there are 313 vape brands in the market; about 292 are not registered. So, it’s at 93%," Valdez said.

Valdez noted, that during the last hearing, he mentioned that there are 18 registered brands, but two of the registrations, namely Shift and Chillax, will be subject to cancellation. He said that the two brands were also named by Bureau of Customs' (BOC) in their report during the hearing.

Asked why a large number of brands remained unregistered, Valdez said the DTI had provided a compliance period to register, but some continued selling without registering. They filed formal charges against those unregistered brands and were penalized.

Valdez also distinguished between legitimate retailers and illicit or noncompliant establishments when the discussion turned to the sale of vapor products to minors.

"I don't think legitimate traders would be selling to minors. During our monitoring we would see retailers in the malls where they have explicit signs saying that minors are not allowed to enter. I know for a fact that in the big malls they are refusing to cater to minors. But for the establishments outside malls, here you find them (illicit sellers) in the strip malls or in the streets," Valdez said.

"It's been our experience that when we monitor during daytime these establishments are closed, they open at night when most of the government workers are already at home," he added.

Ways and Means Chair Rep. Miro Quimbo said the difference in tax rates was a factor in the lack of registrations under the nicotine salt category.

"They will not register because the tax is too high. It’s not because of the preferred chemical composition," Quimbo said.

The DTI also backed the proposed unification of excise tax rates for nicotine salt and conventional freebase vapor products.

The Department of Finance (DOF), Bureau of Internal Revenue (BIR) and BOC likewise supported moving from the current two-tier system to a unified tax rate, although the appropriate rate remained under discussion.

Rep. Roberto Nazal said that the committee members had already established that the source of tax leakage is the current tax structure.

"Based on earlier manifestations by our committee members, we’ve established that the current two-tier system enabled or allowed a tax leakage. Some are in agreement that a single tier will plug that loophole," Nazal said.

Rep. Rufus Rodriguez also questioned maintaining separate tax rates when BIR records showed no taxes being paid under the nicotine salt category. Rodriguez proposed a unified rate of P15 per milliliter for vapor products, citing the need to determine a tax level that would generate revenues without encouraging consumers to shift to illicit products.

Rep. Bong Suntay, meanwhile, urged fiscal agencies to consider how more mature economies tax products by maintaining a tax differential between cigarettes and vapor products.

“Mr. Chair, I’m trying to rationalize why in a lot of European countries, the tax rates are different between traditional cigarettes and vape products. There should be a reason. They have more advanced studies. They are more mature when it comes to taxation [of these products]. But here, why do we want to equalize the two categories? They should have a reason. I believe that when the wheel is not broken, we should not reinvent it.”

Economist Bienvenido Oplas also presented international examples of differentiated tax treatment between cigarettes and e-cigarettes, citing excise tax differentials of 45 percent in Indonesia and 96 percent in the UK, while New Zealand was listed at 100 percent.

The discussion came as revenue and enforcement agencies reported continued operations against illicit tobacco and vapor products.

The BIR reported 6,196 enforcement activities involving tobacco and vape products so far in 2026, with an estimated P1.7 billion in excise taxes due, compared with 2,318 enforcement activities involving P122 million in estimated excise taxes due in 2025.

The BOC separately reported 253 tobacco seizures valued at P10 billion in 2026, compared with 317 seizures valued at P1.87 billion in 2025. For vapor products, Customs reported 18 seizures valued at P1.6 billion in 2026, against 37 seizures valued at P649 million in 2025.

Head Revenue Executive Assistant of the BIR Atty. Dondanon Galera said the agency had observed an increasing number of illicit products in its enforcement operations.

“Base dun sa experience namin, padami nang padami ang huli namin ng illicit products,” Galera said.

Rep. Nazal said lawmakers also needed to consider the possible effect of the eventual tax rate on illicit trade and government revenues.

“As mentioned by the Chairman, we do not want to overtax to the point that we will promote further smuggling and discourage investors from investing in our country,” Nazal said.

“That beyond a certain rate, we may not be raising more revenue at all but simply pushing consumers in volume to the illicit market,” he added.