BIR doubles down on vape industry

MANILA, Philippines — The Bureau of Internal Revenue (BIR) is ramping up efforts to monitor the vape industry after scoring a major win in a P1.2-billion tax evasion case.

BIR Commissioner Romeo Lumagui reminded businesses involved in the vape sector to comply with the necessary registration and tax requirements as the revenue agency commits to closely monitor the industry.

This came after the BIR recently won its criminal case against big-fish vape seller Tap Fog and its conspirators for tax liabilities worth P1.2 billion inclusive of fines and penalties.

“The vape industry is a regulated industry. The BIR has already established a system for the proper registration and payment for this purpose,” Lumagui said.

In November 2022, the BIR raided Tap Fog, resulting in the filing of criminal cases before the Court of Tax Appeals and the Metropolitan Trial Court.

Both courts have ordered the issuance of arrest warrants for Tap Fog officials.

“This is a testament to our promise that after the execution of raids, cases will be filed,” Lumagui said.

Under the Tax Code, Tap Fog is charged with various violations including unlawful possession and removal of articles subject to excise tax without payment, as well as the selling of heated tobacco and vapor products at a price lower than the combined excise and value-added taxes.

Likewise, the vape seller is also found guilty of offering package with false, spurious and counterfeit stamps and labels, willful attempt to evade taxes, and willful failure to pay taxes.

The vape industry has been under hot water after Congress opened an investigation on popular brand Flava, which is found to be marketing its vape devices to minors and depriving the government of tax revenues.

The BIR raised the floor price for cigarettes but lowered for vape products in May 2023 as the government took into account the latest market conditions.

This as vapor products are fairly new products and manufacturers are constantly testing product mix and are pulling out and adding new variants.

The BIR maintained that selling of tobacco products at a price lower than the combined excise taxes and value added tax imposed under the law is prohibited.

It also reiterated penalties for violators selling at lower prices including fines of P200,000 to P500,000 and imprisonment of up to six years.