BIR seeks reform vs excise tax violators

MANILA, Philippines — The Bureau of Internal Revenue (BIR) is seeking a legislative reform to expand its authority in suspending or closing businesses found violating excise tax laws.

BIR Commissioner Romeo Lumagui Jr. is proposing to amend the Tax Code to give the agency the power to suspend or close business operations for violations of excise tax rules, in a bid to intensify its crackdown on illicit trade in excisable goods such as cigarettes and electronic cigarettes.

“We recommend that the enforcement powers under Section 115 of the tax code be transferred and integrated into Section 6, which outlines the general powers of the commissioner,” Lumagui told The STAR.

Under Section 115, the BIR commissioner may suspend business operations and temporarily close establishments for value-added tax (VAT) violations such as failure to issue invoices, file returns or understate sales, and for failure to register as required by law.

Lumagui said the move aims to strengthen tax enforcement by making it clear that suspension powers apply to all forms of tax violations, ensuring consistency and eliminating loopholes in the current system.

“This will clarify that the authority to suspend business operations applies across all tax types, not just VAT, and remove any ambiguity in its enforcement,” Lumagui said.

Furthermore, the BIR is pushing to expand the commissioner’s authority to suspend or close business operations for violations of excise tax laws – an enforcement tool that it believes will help curb the illicit trade of excisable goods, including tobacco and vapor products.

This is similar to its current powers under Section 115 for VAT violations.

Lumagui said the proposed enforcement tool would help decrease the illegal distribution of taxed products like cigarettes and electronic cigarettes.

Recently, the BIR released a revenue regulation increasing the new floor price for a pack of cigarettes to P85.57 from P78.58 in September last year, alongside a higher production cost assumption of P10.25 per pack from P7.16.

The agency also raised the floor price for two-milliliter (ml) nicotine pods to P353.18 from P180.67, with the production cost assumption increasing to P200.68 from P52.11.

With 10 ml per packaging, the disposable pod’s floor price is set at P183.31, the prefilled pod at P174.89 and the disposable device at P198.18.