Tax revenue from sugary drinks hits P24.9 billion in H1, exceeds goal

MANILA, Philippines — The Bureau of Internal Revenue (BIR) generated P24.9 billion in additional revenue from excise tax collections on sugar sweetened beverages (SSB) in the first half of the year, the Department of Finance (DOF) said over the weekend.

In a text message, Finance assistant secretary and spokesperson Antonio Lambino said SSB tax collections from January to June this year reached P24.9 billion, exceeding the target of P23.4 billion by 6.5 percent.

He said this is an improvement from the BIR’s performance in 2018, when it collected P42.6 billion in SSB taxes, but fell short of its P54.5 billion goal.

This also brought the government’s total SSB tax collections to P67.5 billion since the Tax Reform for Acceleration and Inclusion (TRAIN) Law was implemented in January 2018.

The improvement in the SSB collection could be attributed to better enforcement efforts of the BIR, Lambino said.

“The BIR addressed the 2018 underperformance by conducting audits on taxpayers who should have paid the higher excise for beverages sweetened with high fructose corn syrup (HFCS) versus the lower rate for sugar,” Lambino said.

Under the TRAIN Law, beverages using HFCS are levied an excise tax of P12 per liter, twice higher than the P6 per liter tax imposed on beverages using regular caloric and non-caloric sweeteners.

Earlier, Finance Undersecretary Karl Kendrick Chua said the deficiency in the 2018 SSB tax collections may have been caused by a discrepancy in the tax being paid by beverage firms, with the industry claiming that no HFCS had been used since Jan. 2018.

The DOF said the BIR has conducted an audit to verify this claim.

“The BIR also issued a revenue regulation which provided clear guidelines on who should pay what, and how the excise should be collected. These contributed to the improved performance in 2019,” Lambino said.

He was referring to BIR Revenue Regulations 20-2018, dated July 25, 2018, which prescribed the implementing rules and guidelines on the imposition of excise tax on sweetened beverages.

The issuance laid out the procedure for the payment of excise taxes on locally manufactured and imported sweetened beverages.

It required taxpayers engaged in the manufacturing and importation of sweetened beverages to update their certificate of registration with the BIR, and to secure a permit to operate as manufacturer, toll-manufacturer or importer of sweetened beverages.

According to data from the DOF, the BIR collected P55.6 billion in additional revenues from the implementation of the TRAIN Law in the first half of 2019.

The DOF said this is 65 percent higher than the P33.7 billion recorded in the same period in 2018.

This is also equivalent to about 49 percent of the government’s full-year TRAIN target of P113.07 billion for 2019.