Revenue Regulations No. 16-2024

Prescribing the Updated Floor Price for Cigarette, Heated Tobacco, and Vapor Products Pursuant to Sections 114(B) and (C) and 145 (C) of the NIRC of 1997, As Ammended

Section 1. Scope – Sections 144 (B) and (C), and 145 (C) of the National Internal Revenue Code (NIRC) of 1997, as amended by the Republic Act (RA) Nos. 11346 and 11467, in the Products Regulation Act,” mandate the Bureau of Internal Revenue (BIR) to prescribe the floor price of Cigarettes, Heated Tobacco Products, and Vapor Products.

Pursuant to the provisions of the Sections 244 and 245 of the NIRC of 1997, as amended, these Regulations are hereby promulgated in order to update the floor price of Cigarette, Heated Tobacco, and Vapor Products prescribed in Revenue Memorandum Circular (RMC) No. 49-2023, which revised the floor prices set forth in Section 6 of revenue Regulations (RR) No. 14-2022 and RMC No. 79-2022.

Section 2. Definition of Terms – For purposes of these regulations, the words and phrases listed hereunder are defined as follows:

E-marketplace – refers to an online intermediary that allows participating merchants to exchange information about products or services into an electronic commerce transaction.

Floor Price – refers to the minimum price of cigarette, heated tobacco and vapor products per unit, which shall be equivalent to the total reasonable production cost/expenses of the cheapest brand per tobacco product in the sum of the excise tax and VAT.

Heated Tobacco Products (HTPs) – refer to tobacco products that may be consumed through heating tobacco, either electrically or through other means sufficiently to release an aerosol that can be inhaled, without burning or any combustion of the tobacco. Heated tobacco products include liquid solutions and gels that are part of the product and are heated to generate an aerosol.

Seller – a person engaged in the business of selling consumer products directly to consumers. It includes online sellers or merchants or any person or entity selling products or services to customers through an e-marketplace. It shall also include a supplier or distributor; (2) the seller interchanges personnel or maintains common or overlapping officers or directors with the supplier or distributor; or (3) the supplier or distributor provides or excises supervision, direction or control over the selling practices of the seller.

Vapor Products – shall mean Electronic Nicotine and Non- Nicotine Delivery systems (ENDS/ENNDS), which are combinations of (i) a liquid solution or gel, that transforms into an aerosol without combustion through the employment of a mechanical or electronic heating element, battery or circuit that can be used to heat such solution or gel, and includes, but is not limited to (ii) a cartridge, (iii) a tank, and (iv) the device without a cartridge or tank. It is commonly known as a nicotine salt/salt nicotine, and conventional ‘freebase’ or ‘classic’ nicotine, and other similar products. All vapor products shall be covered regardless of its nicotine content.

Section 3. Floor Price – Provided hereunder are the updated floor prices for the subject tobacco products:

A. Cigarettes

B. Heated Tobacco Products

C. Vapor Products
1. Nicotine Salt or Salt Nicotine

2. Conventional ‘ Freebase’ or ‘Classic’ Nicotine

The above floor prices shall only be used as reference for taxation purposes in the absence of other documents/proof as to the actual price of the product that is higher than the identified floor price.

Section 4. Penalties – Selling of tobacco products at a price lower than the combined excise and value-added taxes imposed under the law shall be prohibited.

Under Section 145 (C) of the NIRC of 1997, as amended, the seller of such products shall be punished with a fine of not less than ten (10) times the amount of excise plus value-added taxes due but not less than Two hundred thousand pesos (P200,00.00) nor more than Five hundred thousand pesos (P500,000.00), and imprisonment of not less than four (4) years but not more than six (6) years.

Under Section 263-A of the same code, as amended, any person who sells heated tobacco products and vapor products at a price lower than the combined excise and value-added taxes shall be punished with a fine of not less than ten (10) times the amount of excise tax plus value-added tax due but not less than Two hundred thousand pesos (P200,000.00) nor more than Five hundred thousand pesos (P500,000.00), and imprisonment of not less than four (4) years but not more than six (6) years.

Section 5. Repealing/Amendatory Clause – All existing rules, regulations, issuances or parts thereof contrary to or inconsistent with the provisions of these Regulations are hereby repealed, amended or modified accordingly.

Section 6. Separability Clause – If any of the provisions of these Regulations is subsequently declared unconstitutional or invalid, the validity of the remaining provisions hereof shall remain in full force and effect.

Section 7 Effectivity – These Regulations shall take effect fifteen days following the publication thereof in the Official Gazette or the BIR’s official website, whichever comes first.