Philippine Lawmakers Push to Unify Vape Taxes to Curb Tax Evasion

Philippine lawmakers and tobacco harm reduction advocates have called on Congress to unify the country’s vapor product taxes. During a House Committee on Ways and Means hearing, stakeholders warned that the current complex tax structure encourages tax evasion and fuels a rapidly growing black market.

Currently, the Philippines taxes nicotine salt products at ₱60 per milliliter, while freebase nicotine is taxed at just ₱6.95 per milliliter. Representative Rufus Rodriguez noted that this vast price difference has led to widespread tax avoidance, with importers misdeclaring nicotine salts as freebase.

“No one is declaring their vape products as made of nicotine salt but instead declaring or misdeclaring the same as freebase nicotine,” Rodriguez said, citing 2025 Bureau of Internal Revenue (BIR) data showing freebase accounted for over 90% of collected vape taxes.

Legislative Proposals for Vape Tax Unification

To resolve this, Rodriguez filed House Bill 5364, the Vape Tax Unification Bill, to establish a unified tax structure. His team estimates the bill could generate ₱6 billion annually from 2027 to 2030 and reduce illicit trade to 10% by 2028.

Separately, Representative Rolando Valeriano filed House Bill 10289, which proposes a flat excise tax of ₱15 per milliliter on all vapor products starting in 2027, followed by a 5% annual increase.

The Philippine E-Cigarette Industry Association (PECIA) supports a uniform rate but suggested setting it at ₱10 per milliliter. PECIA President Joey Dulay warned that setting the rate too high would shrink the legal market.

“The highest statutory tax rate is not necessarily the highest revenue-producing rate,” Dulay said. “Our position is therefore simple: protect our children. Enforce the law, eliminate the illicit market, and tax the legitimate market at a rate that keeps it inside the tax system.”

Risk-Based Taxation and Market Realities

Rodriguez argued that keeping vape taxes lower than cigarette taxes aligns with a harm-reduction approach, noting that Public Health England found e-cigarettes to be 95% less harmful than smoking. He pointed out that the country’s 16 million smokers have not declined substantially over the past decade.

“Risk-based taxation is not new. We use this principle when we provide less tax or zero tax to electronic vehicles vis-à-vis gasoline-type vehicles,” Rodriguez said.

Michael Eric Castillo, CEO of Caps and Partners Inc., urged the Department of Finance to measure the size of the untaxed black market before raising rates further. He warned that rising tax rates often lead to tax leakage and declining legal consumption rather than improved public health.

Source: Vape stakeholders urge balanced taxes to boost collection, curb illicit trade

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Matthew Ma

Marketing at Ecigator

With over a decade of experience in the e-cigarette industry, Matthew Ma is a seasoned expert in both the manufacturing and usage aspects of vaping products. His extensive background has provided him with a deep understanding of the intricacies and evolving dynamics of e-cigarettes.