REVENUE REGULATIONS NO. 15-2008

SUBJECT : Prescribing the Manner of Computing the Incremental Revenue to be Used as Basis of the Fifteen Percent (15%) Share of the Beneficiary Provinces Producing Burley and Native Tobacco in the Excise Tax Collection from Tobacco Products under Republic Act No. 8240

TO : All Internal Revenue Officers and Others Concerned

BACKGROUND:

Section 8 of Republic Act (R.A.) No. 8240 which took effect on January 1, 1997, provides that 15% of the incremental revenue collected from the excise tax on tobacco products shall be allocated and divided among the provinces producing burley and native tobacco in accordance with the volume of tobacco leaf produced, to be exclusively utilized for programs in pursuit of the objectives enumerated in the said Act. In the absence of the corresponding rules and regulations governing the determination of what constitutes “incremental revenue”, the above legislative requirement covered under the said Act could not be implemented. In accordance with the position taken by the legislative body, thru the Congressional Oversight Committee on Comprehensive Tax Reform Program, based on the minutes of deliberations by the Congress of the Philippines on the said Act, these revenue regulations are, therefore, prepared and issued to finally implement the said “incremental revenue” provisions.

SECTION 1. SCOPE. – Pursuant to the provisions of Section 244, in relation to Section 245 of the National Internal Revenue Code (NIRC) of 1997, as amended, these Regulations are hereby promulgated in order to prescribe the manner of computing the incremental revenue from excise tax on tobacco products to be used as basis of the 15% allocable share of the beneficiary provinces producing burley and native tobacco in the excise tax collection from tobacco products pursuant to the provisions of Section 8 of R.A. No. 8240, “An Act Amending Sections 138, 139, 140 and 142 of the National Internal Revenue Code, as Amended, and for Other Purposes”.

SECTION 2. MANNER OF COMPUTING THE INCREMENTAL REVENUE. –

The amount of incremental revenue collected from the excise tax on tobacco products, for purposes of determining the 15% allocable share of beneficiary provinces producing burley and native tobacco, shall be equivalent to the excess of the actual collection of excise taxes from tobacco products for the year under consideration over the calendar year 1996 as the base year, net of the incremental revenue collected from the increase in excise tax rates under R.A. No. 9334.

SECTION 3. REPEALING CLAUSE. – The provisions of any revenue regulations, rulings, or any other issuances inconsistent with these Regulations are hereby repealed, amended, or modified accordingly.

SECTION 4. EFFECTIVITY CLAUSE. – These Regulations shall take effect after fifteen (15) days following publication in any newspaper of general circulation.

(Original Signed)
MARGARITO B. TEVES
Secretary of Finance

Recommending Approval:

(Original Signed)
SIXTO S. ESQUIVIAS IV
Commissioner of Internal Revenue

REVENUE REGULATIONS NO. 12-2008

SUBJECT : Basis of the Fifteen Percent (15%) Share of the Beneficiary Provinces in the Excise Tax Collection from Locally Manufactured Virginia-Type Cigarettes under Republic Act No. 7171

TO : All Internal Revenue Officers and Others Concerned

BACKGROUND:

From the time of the effectivity on January 9, 1992 of Republic Act No. 7171, “An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces”, the farmers of the Virginia tobacco-producing provinces benefited from excise taxes collected by the Bureau of Internal Revenue (BIR) on the locally manufactured cigarettes using Virginia-leaf tobacco thru the allocated fifteen percent (15%) share provided by the said Act to them. This benefit represents the financial assistance of the Government for the developmental projects in the applicable or covered areas, as enumerated in the objectives of the Act, in order to advance the self-reliance of the tobacco farmers, which projects are to be implemented by the local governments of the provinces concerned.

However, the said benefits were significantly reduced since 2002 by reason of the different position adopted by the previous BIR administrations with respect to the legal interpretation on the proper basis of the 15% allocable share prescribed by the said Act, to the disappointment of the beneficiary provinces adversely affected by the said BIR position, as continuously raised by the concerned local government units and legislators representing the beneficiary provinces.

In order to settle the issue on the matter in accordance with the spirit of the Act, these Revenue Regulations is, therefore, prepared and issued.

SECTION 1. SCOPE. – Pursuant to the provisions of Section 244, in relation to Section 245 of the National Internal Revenue Code (NIRC) of 1997, as amended, these Regulations are hereby promulgated in order to prescribe the manner of computing the basis of the fifteen percent (15%) allocable share of the beneficiary provinces in the excise tax collection from locally manufactured Virginia-type cigarettes pursuant to the provisions of Section 3 of Republic Act (R.A.) No. 7171, “An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces”.

SECTION 2. BASIS OF THE 15% SHARE OF THE BENEFICIARY

PROVINCES. - The computation of the 15% share of the beneficiary provinces shall be based on the actual excise taxes collected annually from locally manufactured Virginia type cigarettes. For purposes of these Regulations, “Virginia-type cigarettes” shall refer to cigarettes containing Virginia-type leaf tobacco, whether imported or locally produced, as one of the raw materials thereof.

SECTION 3. REPEALING CLAUSE. – The provisions of any revenue regulations, rulings, or any other issuances inconsistent with these Regulations are hereby repealed, amended, or modified accordingly.

SECTION 4. EFFECTIVITY CLAUSE. – These Regulations shall take effect after fifteen (15) days following publication in any newspaper of general circulation.

(Original Signed)
MARGARITO B. TEVES
Secretary of Finance

Recommending Approval:

(Original Signed)
LILIAN B. HEFTI
Commissioner of Internal Revenue

REVENUE REGULATIONS NO. 9-2008

SUBJECT : Basis of the Fifteen Percent (15%) Share of the Beneficiary Provinces in the Excise Tax Collection from Locally Manufactured Virginia-Type Cigarettes under Republic Act No. 7171

TO : All Internal Revenue Officers and Others Concerned

BACKGROUND:

From the time of the effectivity on January 9, 1992 of Republic Act No. 7171, “An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces”, the farmers of the Virginia tobacco-producing provinces benefited from excise taxes collected by the Bureau of Internal Revenue (BIR) on the locally manufactured cigarettes using Virginia-leaf tobacco thru the allocated fifteen percent (15%) share provided by the said Act to them. This benefit represents the financial assistance of the Government for the developmental projects in the applicable or covered areas, as enumerated in the objectives of the Act, in order to advance the self-reliance of the tobacco farmers, which projects are to be implemented by the local governments of the provinces concerned.

However, the said benefits were significantly reduced since 2002 by reason of the different position adopted by the previous BIR administrations with respect to the legal interpretation on the proper basis of the 15% allocable share prescribed by the said Act, to the disappointment of the beneficiary provinces adversely affected by the said BIR position, as continuously raised by the concerned local government units and legislators representing the beneficiary provinces.

In order to settle the issue on the matter in accordance with the spirit of the Act, these Revenue Regulations is, therefore, prepared and issued.

SECTION 1. SCOPE. – Pursuant to the provisions of Section 244, in relation to Section 245 of the National Internal Revenue Code (NIRC) of 1997, as amended, these Regulations are hereby promulgated in order to prescribe the manner of computing the basis of the fifteen percent (15%) allocable share of the beneficiary provinces in the excise tax collection from locally manufactured Virginia-type cigarettes pursuant to the provisions of Section 3 of Republic Act (R.A.) No. 7171, “An Act to Promote the Development of the Farmers in the Virginia Tobacco-Producing Provinces ”.

SECTION 2. BASIS OF THE 15% SHARE OF THE BENEFICIARY PROVINCES. - The computation of the 15% share of the beneficiary provinces shall be based on the actual excise taxes collected annually from locally manufactured Virginia type cigarettes. For purposes of these Regulations, “Virginia-type cigarettes” shall refer to cigarettes containing Virginia-type leaf tobacco, whether imported or locally produced, as one of the raw materials thereof.

SECTION 3. TRANSITORY PROVISION. – The manner of computation and the basis of the said 15% share prescribed herein shall apply on the Certifications to be issued by the Bureau of Internal Revenue on excise taxes collected from locally manufactured Virginia-type cigarettes beginning the calendar year 2008.

SECTION 4. REPEALING CLAUSE. – The provisions of any revenue regulations, rulings, or any other issuances inconsistent with these Regulations are hereby repealed, amended, or modified accordingly.

SECTION 5. EFFECTIVITY CLAUSE. – These Regulations shall take effect after fifteen (15) days following publication in any newspaper of general circulation.

(Original Signed)
MARGARITO B. TEVES
Secretary of Finance

Recommending Approval:

(Original Signed)
LILIAN B. HEFTI
Commissioner of Internal Revenue