Article 54p. 54

NATIONAL INTERNAL REVENUE CODE TAXATION, TARIFF and CUSTOMS LAWS

for motive power, it shall be taxed under Section 148(d) of

this Code: Provided, finally, That any alcohol, previously

rendered

unfit

for

oral

intake

after

denaturing but

subsequently rendered fit or oral intake after undergoing

fermentation, dilution, purification, mixture or any other

similar process shall be taxed under Section 141 of this

Code and such tax shall be paid by the person in

possession of such reprocessed spirits.

SEC. 135. Petroleum Products Sold to International

Carriers and Exempt Entities or Agencies. -Petroleum

products sold to the following are exempt from excise tax:

(a) International carriers of Philippine or foreign

registry on their use or consumption outside the

Philippines: Provided, That the petroleum products

sold to these international carriers shall be stored in

a bonded storage tank and may be disposed of only

in accordance with the rules and regulations to be

prescribed

by

the

Secretary

of

Finance,

upon

recommendation of the Commissioner;

(b) Exempt entities or agencies covered by tax

treaties,

conventions

and

other

international

agreements for their use of consumption: Provided,

however,

That

the

country

of

said

foreign

international carrier or exempt entities or agencies

exempts from similar taxes petroleum products sold

to Philippine carriers, entities or agencies; and

(c) Entities which are by law exempt from direct and

indirect taxes.

SEC.

136.

Denaturation,

Withdrawal

and

Use

of

Denatured

Alcohol.

-

Any

person

who

produces,

withdraws, sells, transports or knowingly uses, or is in

possession of denatured alcohol, or articles containing

denatured alcohol in violation of laws or regulations now

or hereafter in force pertaining thereto shall be required

to pay the corresponding tax, in addition to the penalties

provided for under Title X of this Code.

SEC.

137.

Removal

of

Spirits

Under

Bond

for

Rectification. - Spirits requiring rectification may be

removed

from

the

place

of

production

to

another

establishment for the purpose of rectification without

prepayment of the excise tax: Provided, That the distiller

removing such spirits and the rectifier receiving them

shall

file

with

the

Commissioner

their

joint

bond

conditioned upon the payment by the rectifier of the

excise tax due on the rectified alcohol: Provided, further,

That in cases where alcohol has already been rectified

either

by

original

and

continuous

distillation

or

by

re-distillation, no loss for rectification and handling shall

be allowed and the rectifier thereof shall pay the excise

tax due on such losses: Provided, finally, That where a

rectifier makes use of spirits upon which the excise tax

has not been paid, he shall be liable for the payment of

the tax otherwise due thereon.

SEC. 138. Removal of Fermented Liquors to Bonded

Warehouse. - Any brewer may remove or transport from

his brewery or other place of manufacture to a bonded

warehouse used by him exclusively for the storage or sale

in bulk of fermented liquors of his own manufacture, any

quantity of such fermented liquors, not less than one

thousand

(1,000)

liters

at

one

removal,

without

prepayment of the tax thereon under a permit which

shall be granted by the Commissioner. Such permit shall

be affixed to every package so removed and shall be

cancelled

or

destroyed

in

such

manner

as

the

Commissioner

may

prescribe.

Thereafter,

the

manufacturer of such fermented liquors shall pay the tax

in the same manner and under the same penalty and

liability as when paid at the brewery.

SEC. 139. Removal of Damaged Liquors Free of Tax. -

When

any

fermented

liquor

has

become

sour

or

otherwise damaged so as to be unfit for use as such,

brewers may sell and after securing a special permit from

the Commissioner, under such conditions as may be

prescribed in the rules and regulations prescribed by the

Secretary of Finance, remove the same without the

payment of tax thereon in cask or other packages,

distinct from those ordinarily used for fermented liquors,

each containing not less than one hundred seventy-five

(175) liters with a note of their contents permanently

affixed thereon.

SEC.

140.

Removal

of

Tobacco

Products

without

Prepayment of Tax. - Products of tobacco entirely unfit

for chewing or smoking may be removed free of tax for

agricultural or industrial use, under such conditions as

may be prescribed in the rules and regulations prescribed

by the Secretary of Finance. Stemmed leaf tobacco,

fine-cut shorts, the refuse of fine-cut chewing tobacco,

scraps,

cuttings,

clippings,

stems,

or

midribs,

and

sweepings of tobacco may be sold in bulk as raw material

by

one

manufacturer

directly

to

another

without

payment of the tax, under such conditions as may be

prescribed in the rules and regulations prescribed by the

Secretary of Finance.

' Stemmed leaf tobacco, ' as herein used, means leaf

tobacco which has had the stem or midrib removed. The

term does not include broken leaf tobacco.

CHAPTER III EXCISE TAX ON ALCOHOL PRODUCTS

SEC. 141. Distilled Spirits. - [90] On distilled spirits, subject

to the provisions of Section 133 of this Code, an excise tax

shall be levied, assessed and collected based on the

following schedules:

(a) Effective on January 1, 2013

1.

An ad valorem tax equivalent to fifteen

percent (15%) of the net retail price (excluding

the excise tax

and the value-added tax) per

proof; and

2.

In addition to the ad valorem tax herein

imposed,

a

specific

tax

of

Twenty

pesos

(P20.00) per proof liter.

(b) Effective on January 1, 2015

1.

An ad valorem equivalent to twenty percent

(20%) of the net retail price (excluding the

excise tax and the value-added tax) per proof;

and

2.

In addition to the ad valorem tax herein

imposed, the specific tax rate of Twenty pesos

(P20.00) per proof liter.

(c) In addition to the ad valorem tax herein imposed,

the specific tax rate of Twenty pesos (P20.00) per

proof liter.

Medicinal preparations, flavoring extracts, and all other

preparations,

except

toilet

preparations,

of

which,

excluding water, distilled spirits for the chief ingredient,

shall be subject to the same tax as such chief ingredient.

This tax shall be proportionally increased for any strength

of the spirits taxed over proof spirits, and the tax shall

attach to this substance as soon as it is in existence as

such, whether it be subsequently separated as pure or

impure spirits, or transformed into any other substance

either in the process of original production or by any

subsequent process.

' Spirits or distilled spirits ' is the substance known as

ethyl alcohol, ethanol or spirits of wine, including all

dilutions,

purifications

and

mixtures

thereof,

from

whatever source, by whatever process produced, and

shall include whisky, brandy, rum, gin and vodka, and

other similar products or mixtures.

' Proof spirits ' is liquor containing one-half ( 1 / 2 ) of its

volume of alcohol of a specific gravity of seven thousand

nine hundred and thirty-nine thousandths (0.7939) at

fifteen degrees centigrade (15˚C). A ' proof liter ' means a

liter of proof spirits.

' Net retail price ' shall mean the price at which the

distilled spirit is sold on retail in at least five (5) major

supermarkets in Metro Manila, excluding the amount

intended to cover the applicable excise tax and the

© Compiled by RGL

54 of 201