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EXECUTIVE ORDERS
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EXECUTIVE ORDER NO. 960 - IMPOSING
AN AD VALOREM TAX ON CIGARETTES IN ADDITION TO THE SPECIFIC TAX LEVIED
THEREON
WHEREAS, the fixed nature of the specific
tax on cigarettes does not provide for a built-in flexibility to price
changes as the tax yield does not automatically increase with an
increase in cigarettes prices thereby necessitating frequent rate
and/or base adjustments such that for the period 1978 to 1983 alone
there have been four amendatory laws affecting the specific tax on
cigarettes.
WHEREAS, the weighed average tax burden (ratio of specific taxes to
wholesale price or value, net of tax) of locally manufactured
cigarettes packed in 30’s and 20’s of about 10.69 percent and 29.29
percent, respectively, are low considering that cigarettes are
non-essential commodities and the marginal rate of sales tax levied on
non-essential commodities under the National Internal Revenue Code of
1977, as amended, is 50 percent, not to mention that the tax levied on
cigarettes by some of our neighboring countries are quite high e.g.,
Republic of China 120 % of taxable value; Thailand 40% or 45% of retail
price; and Indonesia 30% or 50% of manufacturer’s or importer’s selling
price of hand-made or machine-made cigarettes;
WHEREAS, in order to provide a built-in flexibility to price changes,
which could relieve the policy makers from the tedious task of
reviewing the specific tax on cigarettes and changing the rate and/or
base, and to upgrade the tax on cigarettes to a more reasonable level,
it is necessary to impose an ad valorem tax in addition to the specific
tax presently levied thereon.
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines,
pursuant to the powers vested in me under Sec. 290-B of the National
Internal Revenue Code, as amended, do hereby direct and order that:
Section 1.
CHAPTER
IV. — Ad Valorem Tax
“SEC.
186-A.
“The price at which the
different brands of cigarettes are sold at whole sale in the factory or
in the establishment of the importer or through their sales agents to
the public shall determine the amount of tax due thereon; and if the
manufacturer or importer also sells, or allows to be sold, his
cigarettes at wholesale in another establishment of which he is the
owner or in the profits of which he has an interest, the whole sale
price in establishment shall determine the amount of tax applicable to
the cigarettes therein sold: Provided, However, That when such price is
less than the cost of manufacture or importation plus all expenses
incurred until the cigarettes are finally sold by the manufacturer or
importer, such cost plus expenses shall determine the amount of tax to
be collected.
“Every manufacturer or importer
of cigarettes shall file with the Commissioner on the date or dates
designated by the latter, and as often as may be required, a sworn
statement showing, among other information, the different brands of
cigarettes manufactured or imported and their corresponding wholesale
prices, together with the cost of manufacture or importation plus
expenses incurred or to be incurred until the cigarettes are finally
sold. It shall be unlawful to sell said cigarettes at wholesale at a
price in excess of the one specified in the statement required herein
without previous written notice to the Commissioner. In case of
imported cigarettes, the sworn statement required herein shall be
accompanied by verified sales invoices of the manufacturer of the
cigarettes as well as the consular invoice issued by a Philippine
Consul, should one be available at the place of origin or shipment, and
that every pack of cigarettes shall bear the inscription “FOR EXPORT TO
THE PHILIPPINES.”
“Any manufacturer or importer
who, in violation of this Section , knowingly misdeclares or
misrepresents in his sworn statement herein required or in his sales
invoice any pertinent data or information shall, upon discovery, be
penalized by a summary cancellation or withdrawal of his permit to
engage in business as a manufacturer or importer of cigarettes. If the
violator is an alien, he shall liable for deportation.”
Sec. 2.
Sec. 3.
Sec. 4.
Done in the City of Manila,
this 11th day of June in the year of Our Lord, nineteen hundred and
eighty-four.
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