Philippines Urged to Close Vape Tax Loophole Fueling Illicit Trade

Philippines illicit vape seizure

Consumer advocacy groups and state agencies in the Philippines are pressing Congress to reform the national vape excise tax system to combat a surge in illicit trade. Advocates warn that a severe tax disparity between nicotine salt and freebase products encourages widespread misdeclaration, causing heavy revenue losses.

Under the current framework, a 10-milliliter nicotine salt product is taxed at P602, while the same volume of freebase nicotine incurs a tax of P69.46. This gap makes nicotine salts nearly nine times more expensive to import legally, incentivizing smugglers to mislabel their cargo.

Product Type (10ml Volume)Current Excise Tax Rate
Nicotine SaltP602.00
Freebase NicotineP69.46

Representative Miro Quimbo, chair of the House Committee on Ways and Means, reported a disconnect between rising vape usage and falling tax collections. Orlando Oxales, convenor of CitizenWatch Philippines, explained that the system is vulnerable to manipulation. “Products that appear and are used similarly but are taxed differently based on characteristics difficult for regulators to verify on-site become prime targets for misdeclaration,” Oxales stated.

To resolve this, several legislative proposals suggest establishing a single excise tax rate for all vapor products, regardless of their chemical formulation. Marc Gamboa, convenor of Progreso Para sa Bayan, noted that the country’s specific tax distinction is unusual internationally and creates unnecessary loopholes. “Simpler regulations would allow enforcement agencies to concentrate their resources more effectively on combating actual tax evasion,” Gamboa said.

Key regulatory bodies, including the Bureau of Internal Revenue, the Bureau of Customs, and the Department of Trade and Industry, support the transition to a unified rate. These agencies cite enforcement difficulties and revenue leakage under the two-tier system, arguing that a streamlined tax regime will protect legitimate retailers and stabilize the domestic market.

Matthew Ma
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