Research Utilization

 Donna Eliza Z. Leonardo

Excise tax on sweetened beverages (SBs) is one of the new taxes imposed under Republic Act (RA) 10963 or Tax Reform for Acceleration and Inclusion (TRAIN) Law which took effect last Jan. 1. The Department of Finance (DOF) along with Department of Health (DOH) support this as part of a comprehensive health measure to curb the consumption of SBs and address the worsening number of diabetes and obesity cases in the country, while raising revenue for complementary health programs that address these problems.

SBs, as defined under the TRAIN Law, are non-alcoholic beverages of any constitution (liquid, powder, or concentrated) that are pre-packaged and sealed in accordance with the Food and Drug Association (FDA) standards that contain caloric and/or non-caloric sweeteners added by the manufacturers. Simply, these are beverages that contain high level of certain sugars that are viewed to provide unnecessary or empty calories with little or no nutrition.

Unfortunately, the following drinks that we’ve come to love are now taxed under Section 47 of the TRAIN Law: sweetened juice drinks and tea; all carbonated beverages (e.g. soft drinks, etc.); flavored water; energy and sports drinks; cereal and grain beverages; other powdered drinks not classified as milk, juice, tea and coffee; and other non-alcoholic beverages that contain added sugar.

On a positive note, products that use purely coconut sap sugar and purely steviol glycosides (stevia leaves extract) are exempt from the excise tax on SB. The law also excludes from the scope of excise tax all milk products, 100 percent natural fruit and vegetable juices that do not have added sugar or caloric sweetener, meal replacement and medically indicated beverages, and ground, instant soluble and pre-packaged powdered coffees (including 3-in-1).

Now, let’s take a look at its effect on prices. SBs are to be levied at P6 or P12 per liter of volume capacity depending on the type of added sweetener. SBs using purely caloric sweeteners, purely non-caloric sweeteners or mix of both are subject to P6 excise tax per liter of volume of capacity. On the other hand, P12 per liter of volume capacity shall be imposed on SBs using purely high fructose corn syrup (HFCS) or in combination with caloric or non-caloric sweetener.

Who, when and how to pay for the excise tax?

Excise taxes are imposed on manufacturers, importers or persons in possession of the sweetened beverages before its withdrawal from the place of manufacture.

Revenue Memorandum Circular (RMC) 4-2018 provides transition procedures pending the availability of the enhanced excise tax forms in the electronic filing and payment system (eFPS). The said RMC introduced BIR Form 2200-S (Excise Tax Return for Sweetened Beverages). Electronic filers are advised to download the said form from the BIR website, fill it out, file and pay manually via over-the-counter of Authorized Agent Banks (AABs) under the jurisdiction of the concerned Revenue District Office (RDO) where the head office of the local sweetened beverage manufacturer is duly registered.

Further, a tax memorandum dated Jan. 5, advised that attachment “Liquidation of Excise Tax Deposit and Application with summary of transactions of Excise Tax Removal Declaration” shall be sent to This email address is being protected from spambots. You need JavaScript enabled to view it. through an e-mail.

Other pertinent provisions

Section 47 (E), (F) and (G) of the TRAIN Law also mandates other government offices to ensure that the objective of the law will be properly implemented. Starting June 1, the FDA shall require all manufacturers and importers to properly indicate on the label the type of sweetener used; and for sweetened beverages in powder form, the equivalent of each serving per liter of volume capacity. Likewise, the FDA is also tasked to conduct post marketing surveillance of the sweetened beverages on display in supermarkets, groceries or retail stores, and/or to inspect manufacturing sites to determine compliance with the requirements of this section.

It shall be the duty of the commissioner of internal revenue to prescribe a materially unique, secure and non-removable identification, such as codes, stamps, or other markings, to be firmly and conspicuously affixed on and form part of the label of all excisable sweetened beverages. Every year, DOH, DOF, and Department of Science and Technology (DOST) shall review the impact of the provisions on its health objectives with the view of making recommendations on the tax rate on these beverages in the future.

What to expect?

Affected taxpayers, which are mostly the large beverage manufacturing companies, may have concerns regarding the administrative aspect of this section.

Beverage-manufacturing companies are directly affected by these SBs tax being imposed. Their manufacturing processes may be complex like in the case when there are subcontracting agreements for bottling with other entities. Please note that the point for the payment of excise tax would be before the date of release from the manufacturing facility. In this kind of scenario, the manufacturer will have to transfer the beverage to the facility of the bottler who is subcontracted to put the beverage in a closed container (i.e. bottles or cans). As it is, the question whether when it should be taxed, before transport to bottling facility or before the release of the finished product from the bottling factory, may arise.

Further, if SBs are to be exported, will it be taxable to this excise taxes? As a general rule, excise tax is applicable on goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition, and on goods imported. Hence, SBs that are for exportation may be exempt from such excise tax. However, the BIR may still impose documentary and other requirements for the monitoring of these goods to be exported.

With these questions at hand, it is imperative for the BIR to expedite the issuance of the related revenue regulations. It is undeniable that the imposition of excise tax on sweetened beverages had opened different venues for argument, health and economic wise. Only time can judge whether it is a sweet success on the part of the government.

Donna Eliza Z. Leonardo is an associate from the tax group of KPMG R.G. Manabat & Co. (KPMG RGM&Co.), the Philippine member firm of KPMG International. KPMG RGM&Co. has been recognized as a Tier 1 tax practice, Tier 1 transfer pricing practice, Tier 1 leading tax transactional firm and the 2016 National Transfer Pricing Firm of the Year in the Philippines by the International Tax Review.

This article is for general information purposes only and should not be considered as professional advice to a specific issue or entity.

NEGROS Occidental has partnered with the Department of Science and Technology (DOST) and the Association of Negros Producers, Inc. (ANP) to promote and intensify the use of computer-based systems for the traceability of the province's agricultural products. The collaboration under the program dubbed WeTrace Philippines was formalized during the signing of a memorandum of agreement in a ceremony held at the Capitol Social Hall Thursday. Provincial Agriculturist Japhet Masculino and Provincial Environment Management Officer Wilfred Ramon Peñalosa signed on behalf of the province. Other signatories were DOST Western Visayas Assistant Regional Director Emilyn Flores and ANP president Christina Gaston. The program, which covers the entire commodity chain in key pilot areas of the province, will be piloted in the cities of Kabankalan, San Carlos and Silay. WeTrace Philippines, a multi-stakeholder partnership backed by Justice Foundation and the Federal Ministry of Economic Cooperation and Development (BMZ), is envisioned to become the proponent of transparency and traceability in local agriculture by 2020 that will translate to upscaling the value chain while promoting good agricultural practices and adhering to food safety standards.

WeTrace Philippines supports the use of Kipus web-app tool developed and implemented by Knowledge Intelligence Applications GmbH (KIAG), which digitally records farming activities. The analysis of data collected will allow farmers to come up with recommendations to improve their production to boost the marketability of agricultural products. The WeTrace project is also being implemented in Vietnam by the Support Center of Agricultural Enterprise and Farm. The Vietnamese partners have sent a delegation to the Philippines led by Thanh Dang Huy for benchmarking exercise and knowledge exchange session. The signing ceremony was witnessed by Dr. Stephan Kunz of Justice Foundation and Julia Haasler of BMZ, with Corinna Peters of KIAG and ANP Executive Director Elka Torrejon. (PNA)

The Philippine Economic Zone Authority (PEZA) will soon launch a new type of ecozone concept envisioned as mini Silicon Valleys to be hosted by state universities and colleges.

To be called Knowledge, Innovation,  Science & Technology (KIST) parks, these ecozones will become future sites of knowledge-based industries such as information technology and business processing.

Charito Plaza, PEZA director-general, said KIST will transform existing campus IT parks into KIST parks to create more value adding for the country’s higher education institutions.

The concept  is one of the new types of ecozones that PEZA will be launching soon .

This initiative is in partnership with the Department of Science and Technology and the  academe.

PEZA has initially tapped the Philippine Association of State Universities and Colleges (PASUC) and the University of the Philippines (UP) to provide pilot areas mostly idle lands within their campuses that can be developed as model KIST parks.

Recognizing the success of the Ayala Technohub in UP Diliman as a premier IT park under PEZA, Plaza is gearing up to build on this public-private partnership by creating more IT parks in the universities and colleges all over the country to serve as viable locations for leading IT-BPO companies.

Given the schools’ steady supply of talents, quality of educational infrastructure and strong scientific-technological culture, PEZA hopes to transform these campus IT parks ultimately into KIST parks.

In a recent consultation meeting with PASUC and UP, Plaza has challenged the schools’ top executives to venture into ecozone development to be able to attract scientists and venture capitalists into innovation and technology as well as to promote the establishment of more knowledge process outsourcing hubs and research and development centers through the KIST parks.

PEZA sees this strategy as feasible taking into account the country’s highly educated and English-speaking workforce and the large pool of competent college/university professors and students that can provide intellectual capital to locator industries in KIST parks.

PEZA sees the same vibrant academe-industry collaboration in the Biopolis of Singapore, Science & Technology parks of Korea and Education City of Qatar—as among the international models of S&T parks that PEZA has studied to complement DOST’s KIST framework.

Akin to an S&T park, PEZA version of a KIST park pertains to a “center of excellence or a kind of space where productive activity is done by collaborating government, academics, community and business”. (ScienceDirect). 

PEZA is thus expanding the eligible activities or projects that may be hosted by KIST park developers. 

Apart from the conventional IT-enabled activities, companies into technology, innovation and R&D may register with PEZA as locators in the KIST parks and where their pioneering products/services and innovative solutions may cater to both export and domestic markets. 

The academe may also partner with the industry particularly in putting up a research institute and incubation facility where its scientific studies or technology patent can be offered to venture capitalists for commercial development and production. The KIST parks may be immediately rolled out in public and private institutions with high academic standards and strong research facilities in the fields of biotech, food and nutrition, agro-engineering, electronics, robotics, renewable energy, transport solutions, data analytics, etc.

Alice Sicat

DOE AND DOST MOVE TO SECURE THE ENERGY FACILITIES. The DOE and DOST signed on 16 March 2018 a Memorandum of Agreement (MOA) to enhance the capacity of the energy sector in assessing the risk hazards of an impending earthquake that may have adverse impacts on energy facilities and services as well as people. The MOA entails training on the use of the Filipino-made Rapid Earthquake Damage Assessment System (REDAS) software, which is a tool for preparing and responding to calamities and disasters. Sealing the deal with Energy Secretary Alfonso G. Cusi is DOST Undersecretary Renato U. Solidum Jr. with DOE Senior Undersecretary Jesus Cristino P. Posadas and PHIVOLCS Associate Scientist Dr. Maria Leonila P. Bautista as witnesses. (DOE)

TAGUIG CITY, Mar. 17 -- “Wag na tayong magpatumpik-tumpik pa,” Department of Energy (DOE) Secretary Alfonso Cusi said during the signing of an agreement with the Department of Science and Technology (DOST) on Friday (16 March 2018) to use a Filipino-made software to enhance the capacity of all stakeholders in earthquake readiness.

This is a timely response to the magnitude 6.5-earthquake that hit Visayas last year, affecting electricity supply delivery in Leyte, Samar and Bohol. This incident revealed the vulnerability of the country’s energy systems to earthquakes. 

Cusi pointed out, “It is the mandate of the DOE to ensure that energy services will be available to everyone immediately after an emergency situation.” This pronouncement supports President Rodrigo Duterte’s directive to ensure disaster resilience. 

“We need all available tools and technologies to enhance our resiliency planning and implementation,” Cusi emphasized, citing the threat of a magnitude 7.2-earthquake and other calamities, which pose risks to operations in the energy sector. 

The Memorandum of Agreement (MOA) entitled “Capacity Enhancement of the Energy Sector on Hazard, Risk Assessment and Exposure Database Development Through the Use of the Rapid Earthquake Damage Assessment System (REDAS) Software” was inked on Friday (16 March 2018) at the DOE-Media Center in Taguig City by DOE Sec. Cusi and DOST Undersecretary Renato Solidum Jr., and witnessed by DOE Undersecretary Jesus Cristino Posadas and DOST- Philippine Institute of Volcanology and Seismology (PHIVOLCS) Associate Scientist Dr. Maria Leonila Bautista. 

For the energy sector’s capacity enhancement, the MOA outlines the development of database on hazard, risk assessment and exposure to earthquake through the use of the DOST-PHIVOLCS’ REDAS software. It can be used as a tool for emergency preparedness, contingency planning and mainstreaming disaster risk reduction. 

Under the MOA, the DOE and PHIVOLCS would undertake and pursue intensive REDAS training, endeavor knowledge and resources sharing to complement each other on the implementation of the program, among other assistance and cooperation needed for the attainment of the goals and objectives to prepare the energy sector on possible earthquake hazards. 

REDAS will be helpful in providing quick and near-real-time simulated earthquake hazard information to disaster managers which will help them in assessing the distribution and extent of the impacts of a strong earthquake to their people and assets. The data generated could also provide information and insights for better resource management and asset resiliency. 

REDAS can be used to compute ground-shaking, earthquake-induced landslides, liquefaction and even tsunamis. Other capabilities of the tool include earthquake sorting capability, generating seismicity maps, onscreen map digitization and building of database on earthquake hazard risks as well as wind hazards. 

The partnership of the DOE and DOST-PHIVOLCS is also in line with the recently signed Department Circular No. ‎2018-01- 0001 or the “Adoption of Energy Resiliency in the Planning and Programming of the Energy Sector to Mitigate Potential Impacts of Disasters”, also known as the Energy Resiliency Policy. 

The Energy Resiliency Policy was issued as a foundation to make the Philippines an energy-resilient country. The policy also aims to unify the energy sector in mainstreaming disaster risk reduction in its plans, programs and activities. 

The policy likewise seeks to institutionalize the strengthening of energy systems and facilities, and to enable the quick restoration and provision of an alternative power source that will alleviate consumer conditions during emergencies and disasters. 

“Because of this partnership with PHIVOLCS, more collaborative efforts within the energy sector will result and in the end, it will make the country more competitive,” Cusi said. (DOE)