Biz Buzz: Vape tax goes up in smoke?

There has apparently been a lot of frustration at the Bureau of Internal Revenue (BIR) over the DTI’s Office for the Special Mandate on Vaporized Nicotine and Non-Nicotine Products’ (OSMV) recent crackdown against vape importers.

Tasked with implementing the Vape Law, the OSMV has reportedly suspended the licenses of all but one vape importer, alleging violations related to BIR tax stamps.

This heavy-handed approach, BIR insiders claim, can cause a significant dent in the agency’s vape tax collection efforts.

The issue, sources say, lies in the OSMV’s interpretation of “packaging requirements.”

Despite importers having paid the required excise taxes and possessing valid BIR Taxpayer’s Removal Declarations, the OSMV contends that the mere absence of a physical tax stamp on vape products constitutes a violation.

This stance, critics argue, is a potential overreach of the OSMV’s mandate and encroaches on BIR’s jurisdiction over tax-related matters.

With licensed importers barred from selling their products, an estimated P500 million in excise taxes already paid to the BIR in advance is effectively locked up.

What’s more, the regulatory uncertainty is likely to discourage “underground” vape companies from legitimizing their operations, fearing similar arbitrary suspensions.

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The situation presents a double whammy for BIR and the Philippine economy. Not only are projected tax revenues going up in smoke, but the growth of a potentially significant tax-generating industry is being stifled.

As the country grapples with a national debt exceeding Php15 trillion, such internal conflicts and regulatory inconsistencies are deemed counterproductive.

Unless DTI and BIR can quickly resolve the impasse and establish clear, non-overlapping regulatory frameworks, the Vape Law’s potential to generate much-needed revenue will remain unrealized.

The clock is ticking, and with vape products having a limited shelf life, the industry’s frustration is understandable. Will common sense prevail, or will this regulatory tug-of-war continue to burn a hole in the nation’s pocket?