Philippine Congress Investigates E-cigarette Brand for Tax Evasion

Nov.29.2023
Philippine Congress Investigates E-cigarette Brand for Tax Evasion
The Philippine House of Representatives has called for an investigation into Flava, an e-cigarette brand, for suspected tax evasion.

According to a report from Inquirer.net, the Philippine House of Representatives has demanded the Bureau of Internal Revenue (BIR) to verify the license and product specifications of an e-cigarette brand that is being investigated for allegedly evading billions of pesos in taxes. The committee has also issued another subpoena to e-cigarette product brand Flava and the local company DenKat Trading, believed to be involved in importing this brand.


Congressman Joey Sarte Salceda, who chairs the House Committee, has formally requested the Bureau of Internal Revenue (BIR) to send letters to the Food and Drug Administration (FDA) and the Department of Trade and Industry's Bureau of Product Standards (BPS) to verify Flava's product specifications. He also added that he has requested the BIR to examine the licenses posted on Flava's online store.


On November 28, the House Committee investigated the seizure of 1.4 million 10ml Flava disposable e-cigarettes at a warehouse in Valenzuela City on October 27. These e-cigarettes were found to lack the necessary documentation. According to Sarseda, it is suspected that Flava falsely labeled their products as traditional freebase e-cigarettes, which are taxed at a rate of 60 pesos per 10ml, rather than nicotine salts, which have a higher concentration and are taxed at a rate of 52 pesos per ml.


He pointed out that according to Article 263 of the National Internal Revenue Code, illicit transactions of variable products will face fines no less than ten times the value of the unpaid consumption tax. "The product in question, marketed as freebase nicotine, should be taxed at a rate of 60 pesos per 10 milliliters, but reports have shown that the product may have been misreported and should actually be taxed as nicotine salts, a more concentrated product with a tax rate of 52 pesos per milliliter," Salceda stated.


He added that Flava's marketing "implies that it is actually salt nicotine." According to the Vaporized Nicotine and Non-Nicotine Products Act (Republic Ordinance No. 11900), compared to freebase nicotine, salt nicotine has lower taxes because the latter is more concentrated and potent.


For a 10-milliliter equivalent, the main salt nicotine products in the market can provide 2,800 puffs. Flava markets claim to offer 6,000 to 10,000 puffs. Just based on this, one can imagine that the product is concentrated. This could potentially be a case of tax evasion amounting to 728 million pesos. If multiplied by 10, the final amount would reach 7.3 billion pesos (approximately 940 million yuan)," Salceda stated.


He also called on the Department of Finance and the BIR to come up with strategies to curb the illicit trade of e-cigarettes. "The purpose of this hearing is not just to prosecute one company, but to find ways to prevent the illegal trade of e-cigarettes, which would harm legitimate companies while allowing unregulated hazardous substances to exist in the market," said Salseda.


We welcome news tips, article submissions, interview requests, or comments on this piece.

Please contact us at info@2firsts.com, or reach out to Alan Zhao, CEO of 2Firsts, on LinkedIn


Notice

1.  This article is intended solely for professional research purposes related to industry, technology, and policy. Any references to brands or products are made purely for objective description and do not constitute any form of endorsement, recommendation, or promotion by 2Firsts.

2.  The use of nicotine-containing products — including, but not limited to, cigarettes, e-cigarettes, nicotine pouchand heated tobacco products — carries significant health risks. Users are responsible for complying with all applicable laws and regulations in their respective jurisdictions.

3.  This article is not intended to serve as the basis for any investment decisions or financial advice. 2Firsts assumes no direct or indirect liability for any inaccuracies or errors in the content.

4.  Access to this article is strictly prohibited for individuals below the legal age in their jurisdiction.

 

Copyright

 

This article is either an original work created by 2Firsts or a reproduction from third-party sources with proper attribution. All copyrights and usage rights belong to 2Firsts or the original content provider. Unauthorized reproduction, distribution, or any other form of unauthorized use by any individual or organization is strictly prohibited. Violators will be held legally accountable.

For copyright-related inquiries, please contact: info@2firsts.com

 

AI Assistance Disclaimer

 

This article may have been enhanced using AI tools to improve translation and editorial efficiency. However, due to technical limitations, inaccuracies may occur. Readers are encouraged to refer to the cited sources for the most accurate information.

We welcome any corrections or feedback. Please contact us at: info@2firsts.com

Guernsey Rejects Petition to Overturn Under-18 Vape Shop Ban
Guernsey Rejects Petition to Overturn Under-18 Vape Shop Ban
A petition seeking to overturn a new ban on under-18s entering vape shops in Guernsey has been rejected. The Health and Social Care Committee said the measure meets its objective of protecting children from exposure to vaping products.
Mar.23 by 2FIRSTS.ai
Indonesian Health Ministry Says New Vape Rules Will Cover Age Limits, Advertising, and Product Standards
Indonesian Health Ministry Says New Vape Rules Will Cover Age Limits, Advertising, and Product Standards
Indonesia’s Ministry of Health is preparing to implement regulations on electronic cigarettes, as provided for in Government Regulation No. 28 of 2024. The ministry said e-cigarettes will be regulated under provisions equivalent to those applied to conventional cigarettes, including age restrictions, advertising controls, product content standards, pictorial health warnings, and bans on use in smoke-free areas.
Apr.16 by 2FIRSTS.ai
NACS Urges USTR to Address Illegal E-Cigarette Exports in China Trade Engagements
NACS Urges USTR to Address Illegal E-Cigarette Exports in China Trade Engagements
NACS submitted a comment letter to USTR in a proceeding examining unfair trade practices worldwide. The letter focuses on illicit nicotine products made in China and shipped to the United States in violation of U.S. law. NACS said the U.S. electronic nicotine delivery systems market has become dominated by illicit products, mainly disposable e-cigarettes manufactured in China and sold without the marketing authorization required by the U.S. Food and Drug Administration.
Apr.16 by 2FIRSTS.ai
New Movement Emerges on EU Tobacco Excise Directive as Cyprus Tables Compromise Draft
New Movement Emerges on EU Tobacco Excise Directive as Cyprus Tables Compromise Draft
The long-stalled debate over the European Union’s Tobacco Excise Directive may be moving forward, with Cyprus, as holder of the EU Council presidency, putting forward a compromise draft. The reported proposal includes lowering the minimum excise duty requirement and granting a transitional period, with the aim of reaching political agreement by June 2026. The revision also covers e-cigarettes, heated tobacco, nicotine pouches and stronger controls on raw tobacco.
Apr.21 by 2FIRSTS.ai
UKVIA Says VApril 2026 Will Highlight Consumer Impact of Tobacco and Vapes Bill
UKVIA Says VApril 2026 Will Highlight Consumer Impact of Tobacco and Vapes Bill
The UK Vaping Industry Association said it will launch the ninth annual VApril campaign next month. The association described VApril as the world’s largest vape awareness initiative and said it has for almost a decade supported adult smokers looking to quit through vaping by providing evidence-based information, expert insights and practical guidance
Mar.24 by 2FIRSTS.ai
The new regulations on nicotine in Argentina are creating caution, expectations, and doubts about the market, according to a local reference in harm reduction for smoking.
The new regulations on nicotine in Argentina are creating caution, expectations, and doubts about the market, according to a local reference in harm reduction for smoking.
The new Argentine framework for tobacco and nicotine marks a shift from prohibition towards registration, traceability, and health surveillance. Juan Facundo Teme told 2Firsts that adult consumers and some of the commercial sector are cautiously optimistic, although concerns remain about flavors, registration costs, and market access.
May.11