Following the seizure of tons of smuggled and untaxed Vape Products from five big-time illicit vape traders, BIR Commissioner Romeo D. Lumagui, Jr. calls on all distributors and sellers of Vaporized Nicotine and Non-Nicotine Products, Novel Tobacco Products, and their devices (herein referred to as Vape Products) to comply fully with the business registration requirements and other tax obligations specified in BIR Revenue Regulations (RR) No. 14-2022 and DTI Department Administrative Order No. 22-16.
Said RR and DAO, which were issued to implement pertinent provisions of Republic Act No. 11900 (Vaporized Nicotine and Non-Nicotine Products Regulation Act), provided that the sale or distribution of Vape Products through internet websites or via e-commerce and/or other similar selling platforms shall only be made by online sellers or distributors registered with the BIR and Department of Trade and Industry (DTI) or Securities and Exchange Commission and Cooperative Development Authority.
Hence, all e-marketplaces, e-commerce platforms, selling facilities embedded in social media websites/applications, and/or other similar selling platform providers should only allow the sale of Vape Products on their website or platform by online distributors, merchants, or retailers duly registered with the BIR and/or DTI/SEC/CDA (per Section 4(A) of RR No. 14-2022 and Rule V, Section 3 of DTI DAO No. 22-16).
For duly-registered distributors, merchants, or retailers of Vape Products, Commissioner Lumagui reminds them to post the required government certificates and approvals of the products conspicuously on the landing page of their website and/or selling platform. And that in case of any violations of the said BIR/DTI requirements by the online distributors/sellers, the online selling platform providers should immediately suspend the sale of the Vape Products in their e-commerce platform.
In addition to the aforementioned registration requirements, there are also other compliance and administrative requirements laid down in RR No. 14-2022 (i.e. registration of brand and variants, affixture of internal revenue stamps for Vape Products, maintenance of Official Register Books and other records, etc.) that must be strictly followed by the manufacturers or importers of the Vape Products.
Any violation of the said Regulations shall be subject to the corresponding penalties under the pertinent provisions of the National Internal Revenue Code of 1997, as amended, and applicable regulations issued by the BIR. For any violation of Section 4 (Compliance and Administrative Requirements) of RR No. 14-2022, if the offender is a manufacturer, importer, distributor, or retailer of Vape Products, the following shall be imposed:
a. On the first offense, a fine of Two Million Pesos (₱ 2,000,000.00) and imprisonment of two (2) years;
b. On the second offense, a fine of Four Million Pesos (₱ 4,000,000.00) and imprisonment of four (4) years;
c. On the third offense, a fine of Five Million Pesos (₱ 5,000,000.00) and imprisonment of six (6) years;
d. That the business permits and licenses, in the case of a business entity or establishment, shall be revoked and canceled.
e. The BIR shall order the immediate recall, ban, or seizure from public sale or distribution of Vaporized Nicotine and Non-Nicotine Products and Novel Tobacco Products not registered with the BIR, including those sold online. This is without prejudice to the filing of the appropriate cases and collection of correct taxes and duties, including applicable fines and penalties under RA No. 8424, as amended, and RA No. 10863, otherwise known as the “Customs Modernization and Tariff Act (CMTA)”.
Per Rule XIV, Section 5 of DTI’s DAO No. 22-16, online sellers and distributors of Vape Products and online platforms that are non-compliant with the provisions of Rule V, Section 3 (Business Registration Prior to Marketing and Sale) of the same Order shall be ordered by the DTI to immediately suspend trading of such products and shall be liable for the fines and penalties imposed under RA No. 11900. The suspension shall continue until the manufacturer, seller, distributor or online platform has complied with the said business registration requirements.
If the offender is a foreign national, he/she shall be deported after service of sentence and/or payment of applicable fines without the need for further deportation proceedings and shall be permanently barred from re-entering the Philippines (per Rule XIV, Section 6 of DTI’s DAO No. 22-16).
Upon effectivity of the Implementing Rules and Regulations (IRR) of RA No. 11900 (DTI’s DAO No. 22-16), the manufacturers, importers, distributors, and retailers of Novel Tobacco Products shall be given an eighteen (18)-month transitory period to comply with the requirements of RR No. 14-2022.