Excise Taxes
PreTest
1. Excise taxes
a. Are deductible for income tax purposes
b. Are specific taxes only
c. Are deductible to the VAT
d. Do not apply to services performed in the
Philippines
2. What is the primary difference between specific
excise taxes and ad valorem excise taxes?
a. Specific excise taxes are based on quantity, while ad
valorem excise taxes are based on value
b. Ad valorem excise taxes are based on quantity, while
specific excise taxes are based on value
c. Specific excise taxes apply to imported goods, while
ad valorem excise taxes apply to domestic goods
d. Specific excise taxes are calculated on an annual
basis, while ad valorem excise taxes are calculated
monthly
3. What is the main reason for excise taxes on
petroleum products in the Philippines?
a. To encourage use of public transportation
b. To control environmental impact and raise
government revenue
c. To protect the oil industry
d. To promote domestic energy production
4. In the Philippines, which government agency is
responsible for collecting excise taxes?
A) Bureau of Customs
B) Bureau of Internal Revenue
C) Department of Trade and Industry
D) Securities and Exchange Commission
5. Which of the following is not subject to excise tax in
the Philippines?
A) Tobacco products
B) Alcoholic beverages
C) Petroleum products
D) Groceries and basic food items
6. What is an "excise tax" as defined in SEC. 129 of the
Philippines tax code?
a) A tax on goods manufactured or produced in the
Philippines for domestic sales or consumption, or things
imported.
b) A general tax on all consumer goods and services.
c) A tax on the profits of corporations.
d) A tax on goods and services related to exports.
7. What is the usual basis for calculating the gross
selling price of goods subject to ad valorem tax?
a) The price at which goods are sold at wholesale in the
place of production, excluding VAT.
b) The retail price of goods in stores.
c) The cost of production, including all overhead
expenses.
d) The value of raw materials used in production.
8. What is the consequence of importing cigars and
cigarettes, distilled spirits, and wines into the Philippines?
a) These goods are subject to all applicable taxes, duties,
and charges, including excise taxes, unless exempted.
b) These goods are exempt from all taxes and duties,
irrespective of their point of entry.
c) These goods are taxed only upon resale in the Philippines.
d) These goods are only subject to excise taxes, not other
duties or charges.
9. According to the NIRC, excise taxes on imported
goods must be paid to whom?
a) Customs Officers before the goods are released from
customs custody.
b) Bureau of Internal Revenue (BIR) upon importation.
c) Department of Finance (DOF) after the goods are
released from customs custody.
d) Customs Brokers before the goods reach the customs
house.
10. Which of the following services is subject to excise
tax?
a. Bookkeeping services
b. Cosmetic Surgery
c. Dental Cleaning
d. All of these
What is Excise Tax
• In Addition to VAT or OPT
• Taxes which apply to certain goods manufactured or produced in the
Philippines for domestic sale or consumption and to things imported.
• Shall also apply to certain services performed in the Philippines
Purpose of Excise tax
TO RAISE REVENUE
TO CURTAIL THE
CONSUMPTION OF
CERTAIN COMMODITIES
TO PROTECT DOMESTIC
INDUSTRIES
Types of Excise Taxes
• Specific Tax – excise tax imposed on goods or services based on
weight or volume capacity or any other physical measurement
• Ad Valorem Tax – excise tax imposed on goods or articles based on
the selling price or other specified value of the goods, exclusive of VAT
and tariff and customs duties (if imported).
Scope
• Certain Goods
• Cosmetic Surgery
Nature of Excise Taxes
• Regulatory Tax
• Indirect Tax
• Consumption Tax
• Additional Business Tax
• Specific and Ad Valorem Tax
Excise Tax vs Business Taxes
EXCISE TAXES
BUSINESS TAXES
Levied at Point of Production
Levied at Point of Sale
Specific/ad valorem
Purely ad valorem
Covers narrow range of products
Covers broad range of products
Heavier tax rates
Reasonable tax rates
Revenue + Regulatory
Revenue tax
List of Excisable
Products and Services
• Alcohol Products
• Tobacco Products
• Petroleum Products
• Mineral Products
• Automobiles
• Sugar-Sweetened Beverages
• Non-essential goods
• Non-essential Services
Persons Liable and When to Pay
DOMESTICALLY
PRODUCED
IMPORTED
Who is the
taxpayer
Producer
Importer
When to pay
Before removal from
production
Before removal from
customs
Export of Excisable Goods
TAX REFUND
TAX CREDIT
ANSWERS TO PRETEST
1. Excise taxes
a. Are deductible for income tax purposes
b. Are specific taxes only
c. Are deductible to the VAT
d. Do not apply to services performed in the
Philippines
2. What is the primary difference between specific
excise taxes and ad valorem excise taxes?
a. Specific excise taxes are based on quantity, while ad
valorem excise taxes are based on value
b. Ad valorem excise taxes are based on quantity, while
specific excise taxes are based on value
c. Specific excise taxes apply to imported goods, while
ad valorem excise taxes apply to domestic goods
d. Specific excise taxes are calculated on an annual
basis, while ad valorem excise taxes are calculated
monthly
3. What is the main reason for excise taxes on
petroleum products in the Philippines?
a. To encourage use of public transportation
b. To control environmental impact and raise
government revenue
c. To protect the oil industry
d. To promote domestic energy production
4. In the Philippines, which government agency is
responsible for collecting excise taxes?
A) Bureau of Customs
B) Bureau of Internal Revenue
C) Department of Trade and Industry
D) Securities and Exchange Commission
5. Which of the following is not subject to excise tax in
the Philippines?
A) Tobacco products
B) Alcoholic beverages
C) Petroleum products
D) Groceries and basic food items
6. What is an "excise tax" as defined in SEC. 129 of the
Philippines tax code?
a) A tax on goods manufactured or produced in the
Philippines for domestic sales or consumption, or things
imported.
b) A general tax on all consumer goods and services.
c) A tax on the profits of corporations.
d) A tax on goods and services related to exports.
7. What is the usual basis for calculating the gross
selling price of goods subject to ad valorem tax?
a) The price at which goods are sold at wholesale in the
place of production, excluding VAT.
b) The retail price of goods in stores.
c) The cost of production, including all overhead
expenses.
d) The value of raw materials used in production.
8. What is the consequence of importing cigars and
cigarettes, distilled spirits, and wines into the Philippines?
a) These goods are subject to all applicable taxes, duties,
and charges, including excise taxes, unless exempted.
b) These goods are exempt from all taxes and duties,
irrespective of their point of entry.
c) These goods are taxed only upon resale in the Philippines.
d) These goods are only subject to excise taxes, not other
duties or charges.
9. According to the NIRC, excise taxes on imported
goods must be paid to whom?
a) Customs Officers before the goods are released from
customs custody.
b) Bureau of Internal Revenue (BIR) upon importation.
c) Department of Finance (DOF) after the goods are
released from customs custody.
d) Customs Brokers before the goods reach the customs
house.
10. Which of the following services is subject to excise
tax?
a. Bookkeeping services
b. Cosmetic Surgery
c. Dental Cleaning
d. All of these
Excise Tax on Alcohol
PRETEST
1. Which type of alcoholic beverage is generally subject
to the highest excise tax rate in the Philippines?
a) Beer
b) Wine
c) Spirits
d) Cider
2. How does the excise tax on alcohol in the Philippines
typically affect the price of alcoholic beverages for
consumers?
a) It increases the price.
b) It decreases the price.
c) It has no impact on the price.
d) It provides a discount on the price.
3. Which of the following factors is generally used to
calculate excise tax on alcohol in the Philippines?
a) Alcohol content and volume.
b) Type of packaging.
c) Brand and market share.
d) Place of manufacture.
4. What is the current (as of April 22, 2024) ad valorem
tax rate on alcohol in the Philippines?
a) 10%
b) 15%
c) 20%
d) 22%
5. Do homemade alcoholic drinks need to pay excise
tax?
a) Yes, if they are intended for sale
b) Yes, always
c) No, only commercially produced drinks
d) No, if the alcohol content is low
6. Champagne falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
7. Beer falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
8. Gin falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
9. Coca-Cola falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
10. Tequila falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
Important Terms
• Alcohol Products — refer to distilled spirits, wines and fermented liquor
• Fortified Wines — refer to natural wines to which distilled spirits are
added to increase their alcoholic strength. Fortified wines containing
more than 25% alcohol are taxed as distilled spirits.
• Fermented Liquor — refers to beer, lager beer, ale, porter, and other
fermented liquor such as draft beer, and other similar products.
• Gauge Liter (G.L.) — the actual volume of the liquor measured in liter.
Important Terms
• Proof Liter (P.L. ) — means a liter of proof spirits.
• Proof Spirits — is liquor containing 1/2 of its volume of alcohol
• Removal from the place of production — shall mean removal from the
company premises as indicated in the approved plot and plan where the
distillery or brewery is located.
• Sparkling Wine — is an effervescent table wine usually white but
occasionally red in color, containing an average of 12% alcohol by volume
which is carbonated by secondary fermentation. This includes
champagne.
Important Terms
• Spirits or Distilled Spirits — refer to the substance known as ethyl
alcohol, ethanol or spirits or wine, including all dilution's, 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.
• Still Wine — is wine that is not carbonated by secondary fermentation
and has an alcohol content of 14% or less.
• Wines — include all alcoholic beverages produced by fermentation
without distillation, from the juice of any kind of fruit. Fermentation is a
process by which enzymatic changes are brought about. It covers a
period of time enough to produce the desired results.
Alcoholic Beverages
Excise Tax on Alcoholic Beverages
Excise Tax on Alcohol
ANSWERS TO PRETEST
1. Which type of alcoholic beverage is generally subject
to the highest excise tax rate in the Philippines?
a) Beer
b) Wine
c) Spirits
d) Cider
2. How does the excise tax on alcohol in the Philippines
typically affect the price of alcoholic beverages for
consumers?
a) It increases the price.
b) It decreases the price.
c) It has no impact on the price.
d) It provides a discount on the price.
3. Which of the following factors is generally used to
calculate excise tax on alcohol in the Philippines?
a) Alcohol content and volume.
b) Type of packaging.
c) Brand and market share.
d) Place of manufacture.
4. What is the current (as of April 22, 2024) ad valorem
tax rate on alcohol in the Philippines?
a) 10%
b) 15%
c) 20%
d) 22%
5. Do homemade alcoholic drinks need to pay excise
tax?
a) Yes, if they are intended for sale
b) Yes, always
c) No, only commercially produced drinks
d) No, if the alcohol content is low
6. Champagne falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
7. Beer falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
8. Gin falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
9. Coca-Cola falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
10. Tequila falls under the category of
a. Wine
b. Distilled Spirits
c. Fermented Liquors
d. None of these
Problem 1
In 2024, Kyonabels Brewery produces Kinse Anyos
Whisky of 30% ABV of 750ml bottle sold at net retail
price of P200 per bottle. During the period, it produced
a total of 18,000 bottles. Compute the excise tax.
• Proof Liters 30% x 2 = 60%
• Total Proof Liters = 60% x .75 x 18,000 = 8,100
• ST = 8,100 x P66 = 534,600
• AVT = P200 x 18,000 x 22% = 792,000
Problem 2
Pasadobels produces various wines packed in cases of 12 bottles. It produced
the following during a month in 2024:
Champagne 750ml per bottle; 1,600 SRP; 20 cases produced
Carbonated wine 40 proof 750ml per bottle; 200 SRP; 150 cases produced
Fortified wine – 70 proof 1L per bottle; 120 NRP; 80 cases produced
Compute for the excise tax
• Champagne (20x.75x12) x P63 = 11,340
• Carbonated Wine (150x.75x12) x P63 = 85,050
• Fortified Wine
• ST = .70x80x12xP66 = 44,352
• AVT = 120x80x12x.22 = 25,344
• Total ET = 69,696
Excise Tax on
Tobacco Products
Pretest
1. In addition to raising revenue, what is a secondary
goal of excise taxes on tobacco products in the
Philippines?
a) To discourage smoking and improve public health
b) To support local tobacco companies
c) To reduce the production of tobacco
d) To encourage the export of tobacco products
2. Which of the following is NOT included in the excise
tax on tobacco products in the Philippines?
a) Type of tobacco (Leaf, cut tobacco, etc.)
b) Weight of the product
c) Retail price
d) Brand name
3. What is the current (as of April 22, 2024) ad valorem
tax rate on cigars in the Philippines?
a) 10%
b) 15%
c) 20%
d) 25%
4. What happens if a retailer does not pay the correct
excise tax on tobacco products?
a) Minor fine
b) License suspension
c) Legal penalties
d) All of the above
5. Aside from excise tax, what other regulations can
affect the sale of tobacco products in the Philippines?
a) Age restrictions
b) Labeling requirements
c) Advertising restrictions
d) All of the above
6. Which of the following is not subject to excise tax?
a. Cigars
b. Cigarettes
c. Vape
d. None of these
7. A roll of tobacco or any substitute thereof, wrapped
in leaf tobacco that are consumed via combustion of
the tobacco.
a. Cigar
b. Cigarette
c. Vape
d. None of these
8. Electronic nicotine and non-nicotine delivery systems
which are combination of (a) liquid solution or gel, that
transform into aerosol without combustion through the
employment of mechanical or electronic heating
element, battery or circuit that can be used to heat
a. Cigar
b. Cigarette
c. Vape
d. None of these
9. 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.
a. Cigar
b. Cigarette
c. Vape
d. None of these
10. A roll of finely-cut leaf tobacco, or any substitute
therefor, wrapped in paper or in any other material that
are consumed via combustion of the tobacco.
a. Cigar
b. Cigarette
c. Vape
d. None of these
Important Terms
• Cigars - all rolls of tobacco or any substitute thereof, wrapped in leaf
tobacco that are consumed via combustion of the tobacco.
• Cigarettes - all rolls of finely-cut leaf tobacco, or any substitute
therefor, wrapped in paper or in any other material that are
consumed via combustion of the tobacco.
• Heated Tobacco Products (HTP) - 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.
Important Terms
‘Vapor products’ – electronic nicotine and non-nicotine delivery
systems which are combination of (a) liquid solution or gel, that
transform into aerosol without combustion through the employment of
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; (b)
a cartridge; (c) a tank; and (d) the device without a cartridge or tank. All
vapor products shall be covered regardless of its nicotine content
Excise Tax on Tobacco Products
Excise Tax on Tobacco Products
Excise Tax on Tobacco Products
Excise Tax on Tobacco Products
Excise Tax on
Tobacco
Products
Tobacco Inspection Fee
ANSWERS TO PRETEST
1. In addition to raising revenue, what is a secondary
goal of excise taxes on tobacco products in the
Philippines?
a) To discourage smoking and improve public health
b) To support local tobacco companies
c) To reduce the production of tobacco
d) To encourage the export of tobacco products
2. Which of the following is NOT included in the excise
tax on tobacco products in the Philippines?
a) Type of tobacco (Leaf, cut tobacco, etc.)
b) Weight of the product
c) Retail price
d) Brand name
3. What is the current (as of April 22, 2024) ad valorem
tax rate on cigars in the Philippines?
a) 10%
b) 15%
c) 20%
d) 25%
4. What happens if a retailer does not pay the correct
excise tax on tobacco products?
a) Minor fine
b) License suspension
c) Legal penalties
d) All of the above
5. Aside from excise tax, what other regulations can
affect the sale of tobacco products in the Philippines?
a) Age restrictions
b) Labeling requirements
c) Advertising restrictions
d) All of the above
6. Which of the following is not subject to excise tax?
a. Cigars
b. Cigarettes
c. Vape
d. None of these
7. A roll of tobacco or any substitute thereof, wrapped
in leaf tobacco that are consumed via combustion of
the tobacco.
a. Cigar
b. Cigarette
c. Vape
d. None of these
8. Electronic nicotine and non-nicotine delivery systems
which are combination of (a) liquid solution or gel, that
transform into aerosol without combustion through the
employment of mechanical or electronic heating
element, battery or circuit that can be used to heat
a. Cigar
b. Cigarette
c. Vape
d. None of these
9. 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.
a. Cigar
b. Cigarette
c. Vape
d. None of these
10. A roll of finely-cut leaf tobacco, or any substitute
therefor, wrapped in paper or in any other material that
are consumed via combustion of the tobacco.
a. Cigar
b. Cigarette
c. Vape
d. None of these
Illustration
Kayabels produced from its plantation, a total of 9,000 kilos of dried tobacco leaves and
processed them into cigarettes which resulted to the following:
Cigars: 1,000 packs; 10pcs per pack; P220 per pack NRP
Cigarettes: 6,000 packs; 20 pcs per pack; P110 per pack NRP
2000 kgs of leaves failed quality control and discarded to be sold as loose-leaf tobacco to
customers at P80 per/kg. 1,500 cigarette packs were ordered for export by a foreign
customer.
Compute for the excise tax.
Solution:
Cigars
ST (1,000 x 10 x 7.75) = P77,500
AVT (1,000 x 220 x 20%) = 44,000
Cigarettes (6,000 x P63) = 378,000
Loose Leaf Tobacco (2,000 x P2.70) = 5,400
Total Excise Tax P360,000
Problem 2
A vape shop in Davao City sells a disposable vape pen with the following details:
Net Retail Price (NRP): Php 2,000.00 (excluding excise tax and VAT)
E-liquid capacity: 2ml
Nicotine strength: 5mg/ml (Assuming it's classified as nicotine salt)
Solution:
52 x 1.05 x 2ml = 110
Excise Tax on
Petroleum
Products
Pretest
1. Which Republic Act in the Philippines notably
increased excise tax rates on petroleum products as
part of a comprehensive tax reform?
a) Republic Act No. 10963
b) Republic Act No. 10351
c) Republic Act No. 10173
d) Republic Act No. 11313
2. Excise taxes on petroleum products in the Philippines
generally apply to which of the following?
a) Both domestically produced and imported petroleum
products
b) Only domestically produced petroleum products
c) Only imported petroleum products
d) Petroleum products for export
3. Excise taxes on petroleum products can influence the
behavior of businesses and consumers. What is one
potential environmental benefit of higher excise taxes
on petroleum products?
a) It can encourage reduced fuel consumption and
promote the use of cleaner energy sources.
b) It leads to more fossil fuel production.
c) It encourages the import of high-sulfur petroleum
products.
d) It reduces the cost of oil production.
4. Who are the proponents of KEEPING or INCREASING
excise taxes on petroleum products in the Philippines?
a) Department of Finance (DOF)
b) Private car owners
c) Oil companies
d) None of the above
5. A portion of the excise tax collected on petroleum
products is allocated to what government program?
a) Universal Access to Quality Tertiary Education Act
b) Infrastructure projects
c) National Health Insurance Program
d) Salary Standardization Law
Definition of Terms
• Gasoline – a volatile mixture of liquid hydrocarbons, generally
containing small amount of additives suitable for use as fuel in spark
ignition internal combustion engines.
• Leaded premium gasoline – a gasoline containing a maximum of
0.150 gram per liter lead additive and a minimum octane number of
93 Research Octane Number
• Liquefied natural gas – a natural gas which has been liquefied by
compression and/or cooling to an extremely low temperature
• Natural gas – a mixture of naturally occurring hydrocarbon gases of
the paraffin series, at varying proportions with methane
predominating. It may exist in isolation or associated with crude oil.
Definition of Terms
• Feedstock – a type of bunker fuel and product similar to properties
including Heavy Vacuum Gas Oil (HVGO), hydrocracking Unit Bottoms
(HCUB) and Mobil Isomerization Dewaxing Unit Bottoms (MIDW)
which are used as raw material to produce petroleum products in a
lubricating oil.
Definition of Terms
• Petrochemical products – chemicals produced from the processing
generally by cracking various feedstocks derived from petroleum, with
different feedstocks yielding different range of products. These
products may include ethylene, propylene, butadiene, benzene,
toluene, and mixed xylene.
• Petroleum – a naturally occurring mixture of compounds of hydrogen
and carbon with a small proportion of impurities and shall include
mineral, petroleum gas, hydrogen gas, bitumen, asphalt, mineral wax,
and all other naturally associated substances with the exception of coal,
peat, bituminous shale and/or other stratified mineral fuel deposits.
Definition of Terms
• Petroleum products – products formed in the course of refining crude
petroleum through distillation, cracking, solvent refining and chemical
treatment coming out as refinery stocks from the refinery such as but
not limited to, LPG, Naphtha, gasolines, solvent, kerosene, aviation
fuels, diesel oils, fuel oils, waxes and petrolatums, asphalts, bitumens,
coke and refinery sludges, or such refinery petroleum fractions which
have not undergone any process or treatment as to produce separate
chemically defined compounds in a pure or commercially pure state
and to which various substances may have been added to make them
suitable for particular uses.
Definition of Terms
• Processed gas – it is the lightest by-product/component of refined
crude oil and is generated from the various process units like crude
distillers, hydro desulphurizers and platformers. It is composed of
pressurized gases like hydrogen, methane, ethane, propane and butane
and is used for refinery fuel.
• Pyrolysis gasoline – a product of thermal cracking, high in aromatic
content which may be used as a constituent of gasoline.
• Unleaded premium gasoline – a gasoline containing a mixture of
hydrocarbons, petrochemicals and/or additives, with a minimum
octane number of 93 RON and a maximum lead content of 0.013 gram
per liter as prescribed by the national standards
Excise Tax on Petroleum Products
Excise Tax on Petroleum Products
Excise Tax on Petroleum Products
Time and Manner of Payment
a. On locally manufactured petroleum products – shall be paid by the
manufacturer, producer, owner or person having possession of the
same within fifteen days from the date of removal from the place of
production
b. On imported petroleum products – shall be paid by the owner or
importer before their release from customs custody or by the
person who are found in possession of petroleum products.
Creditable Excise Tax
Excise taxes paid on purchased feedstock used in the manufacture of
exciseable articles shall be allowed as tax credit in proportion of the
volume of such raw material used in production, in relation to the total
volume of finished goods subject to tax.
Exemption of Sale of Petroleum Products
INTERNATIONAL CARRIERS
ENTITIES EXEMPT UNDER
TAX TRITIES
ENTITIES EXEMPT FROM
DIRECT AND INDIRECT TAX
1. Which Republic Act in the Philippines notably
increased excise tax rates on petroleum products as
part of a comprehensive tax reform?
a) Republic Act No. 10963
b) Republic Act No. 10351
c) Republic Act No. 10173
d) Republic Act No. 11313
2. Excise taxes on petroleum products in the Philippines
generally apply to which of the following?
a) Both domestically produced and imported petroleum
products
b) Only domestically produced petroleum products
c) Only imported petroleum products
d) Petroleum products for export
3. Excise taxes on petroleum products can influence the
behavior of businesses and consumers. What is one
potential environmental benefit of higher excise taxes
on petroleum products?
a) It can encourage reduced fuel consumption and
promote the use of cleaner energy sources.
b) It leads to more fossil fuel production.
c) It encourages the import of high-sulfur petroleum
products.
d) It reduces the cost of oil production.
4. Who are the proponents of KEEPING or INCREASING
excise taxes on petroleum products in the Philippines?
a) Department of Finance (DOF)
b) Private car owners
c) Oil companies
d) None of the above
5. A portion of the excise tax collected on petroleum
products is allocated to what government program?
a) Universal Access to Quality Tertiary Education Act
b) Infrastructure projects
c) National Health Insurance Program
d) Salary Standardization Law
6. What is the relationship between petroleum and
gasoline?
a) They are the same thing.
b) Petroleum is a fuel additive used in gasoline.
c) Gasoline is a refined product made from petroleum.
d) Petroleum is a type of plastic derived from gasoline.
7. What is gasoline?
a) A liquid produced from processing natural gas
b) A volatile mixture of liquid hydrocarbons
c) A naturally occurring mixture of hydrocarbon gases
d) Chemicals produced from processing petroleum
Illustration
• Krudobels pumps crude oil from its oilfield and feeds
them to its oil refinery which transforms the crude
oil into various petroleum products. The following
were produced by the plant from a batch of crude oil
in 2020.
Gasoline
45,000 liters X 10 = P450,000
Aviation gas, 5,000 liters
kept bonded in tanks for
sale to International carrier
Diesel fuel
Bunker fuel
9,000 liters
25,000 liters
3,000 liters
Asphalt
5,000 kilos
Naphtha, 200 liters used in refining 1,200 liters
And 500 liters used in other products
(9K – 5K) x 4 = 16,000
X 6 = 150,000
X 6 = 18,000
X 10 = 50,000
(1,200 – 200 – 500) x 10 = 5,000
Total Excise Tax P589,000
Illustration
BelBels removed 1,000 kilograms of asphalts as of June 30, 2024. Based on
her production records, the manufacturer purchased and used 900 liters of
tax-paid bunker fuel to produce 1,000 kgs of asphalts. How much is the
excise tax due?
Solution:
Tax due on Asphalts (1,000kg x 10) P10,000
Less: Creditable Taxes on tax-paid
Bunker fuel used as raw mat
(900 x 6)
5,400
Excise Tax Due
P 4,600
Excise Tax on Minerals and Mineral
Products
Definition of Terms
• Minerals – all naturally occurring inorganic substances (found in
nature) whether in solid, liquid, gaseous or any intermediate state.
• Mineral products – things produced and prepared in a marketable
state by simple treatment processes such as washing or drying but
without undergoing any chemical change or process or manufacturing
by the lessee, concessionaire or owner of mineral lands
• Mineral lands – lands in which minerals exist.
• Mineral concentrates – product obtained by concentrating
disseminated or lean ores by mechanical means without altering their
original chemical composition.
Definition of Terms
• Indigenous petroleum – locally extracted mineral oil, hydrocarbon
gas, bitumen, crude asphalt, mineral gas, and all other similar or
naturally associated substances with the exception of coal, peat,
bituminous shale.
• Quarry resources – common stone or other common mineral
substances such as but not restricted to marl, marble, granite,
volcanic cinders, basalt, tuff and rock phosphate, andesite,
conglomerate, coral, sand diatomaceous earth, diorite, decorative
stones, gabbro, limestone, red burning clays for pottery and bricks,
rhyolite, sandstone, serpentine, shale and volcanic glass: Provided
that they contain no metal or metals or other valuable minerals in
economically workable quantities.
Minerals and Mineral Products
*per metric ton for coal and coke
Minerals and Mineral Products
Persons Liable
All lessees, concessionaires, owners or operators of mines, processors
of minerals, licensees or permittees of quarry/mines, producers or
manufacturers of mineral products whether natural or juridical
persons, shall be liable to the payment of the excise tax due on
minerals, mineral products and quarry resources removed from the
minesite and/or place of production.
Exemption
Sale of gold by registered traders and small-scale miners, as defined
under RA 7076 to the BSP and the sale of gold to accredited traders for
eventual sale to the BSP.
*small-scale mining refers to any single unit mining operation that
produces not more than 50,000 metric tons of ore annually
Illustration
Terrybels, a small-scale mining operator
produced 4,000 grams of gold nuggets and
discs with 90% purity. He sold the gold
production to the BSP. He also sold silver to
the BSP. The final settlement is as follows:
Gold
P7,500,000 Exempt
Silver
500,000 X .04 = 20,000
Compute for the excise tax
Illustration
Tab Bels, a BSP registered gold trader, bought several kilos of gold and
sold them as follows:
P9,000,000 to the BSP
Exempt
P3,000,000 to gold collectors X 4% = 120,000
P2,000,000 to jewelers
X 4% = 80,000
Compute for the excise tax
Total = 200,000
Excise Tax on
Automobiles
Terms
Automobile - as any four (4) or more wheeled vehicle other than trucks
specially designed for the transport of persons with a seating capacity
of less than 10 adult passengers, including the driver.
Hybrid – a car with a gasoline engine and an electric motor, each of
which can propel it.
AUTOMOBILES AND OTHER MOTOR VEHICLES
Exemption
Hybrid Vehicles
Purely Electric Vehicles
Pick-ups (considered as trucks)
Illustration
Garabels Car Manufacturer, completed the following units:
Model
Class
Net Manufacturer’s Price
Produced
Sold
Carbels
Sedan
500,000
10
8
Pickupbels
Pick-up
2,000,000
9
7
Kuryentebels
Electric Car
4,000,000
8
6
Busbels
Bus
6,000,000
7
5
Sportsbels
Hybrid Sportscar
9,000,000
6
4
Compute for the excise tax.
Solution:
Sedan (500,000 x 10 x 4%) = P200,000
Hybrid (9,000,000 x 6 x 25%) = 13,500,000
Total Excise Tax P13,700,000
Non-essential
Goods
Jewelry
Perfume
Yachts and other vessels intended for
pleasure or sports
Tax Rate
Twenty percent (20%) based on the wholesale price or the value of importation
used by the Bureau of Customs in determining Tariff and Customs Duties.
Illustration
Desi Bels manufactures perfumes, jewelry,
fashion bags and clothes. It produced the
following during the month along with their
corresponding wholesale price:
Perfumes
P 7,000,000 X 20% = 1,400,000
Fashion Bags
4,000,000
Jewelry
8,000,000 X 20% = 1,600,000
Designer Clothing 3,000,000
Total = 3,000,000
Compute the excise tax
Invasive Cosmetic
Procedures
(non-essential service)
5% of Gross
Receipts, net of
excise tax and VAT
Examples of Invasive Cosmetic Procedures
Breastlift
Facelift
Buttocks
augmentation
Necklift
Hair
transplant
Chin
augmentation
Eyelid surgery
Illustration
Vicky Bels conducted several operational procedures and
treatment on Chakabels, a social media influencer. The
following amounts were agreed before any VAT and Excise
taxes:
Teeth brace for underbite correction P 50,000
Liposuction
200,000
Cataract Surgery
100,000
Breast lift
340,000
How much is the total excise tax?
Solution:
Lipo (200,000 x .05)
Breast Lift (340,000 x .05)
Total
10,000
17,000
27,000
Illustration
Bar Bels conducted a buttocks augmentation
procedure in a clinic outside a hospital. The
doctor charged a fee of P74,088 inclusive of
both VAT and Excise Tax. How much should be
the excise tax on the service revenue?
Solution
Professional Fee
Divide by
Prof Fee net of VAT
Divide by
Net Prof Fee
X Excise Tax Rate
Excise Tax
P 74,088
1.12
P 66,150
1.05
P63,000
.05
P 3,150
Definition of Terms
Sweetened Beverages
Illustration
Colabels Manufacturing Company is manufactured 100 cases of Mountain Juts
Cola using HFCS and non-caloric sweeteners. Each case contains 6 bottles of 1.5
liters each. How much is the excise tax?
Solution:
Total Liters (100 x 6 x 1.5L)
X Tax Rate
Excise Tax
900L
P12
10,800