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

Why Does JPMorgan Favor BAT Over Philip Morris Despite Forecasting Slower Growth of 3.9% Versus 6.2%?
Why Does JPMorgan Favor BAT Over Philip Morris Despite Forecasting Slower Growth of 3.9% Versus 6.2%?
JPMorgan resumed equity research coverage of British American Tobacco (BAT), Philip Morris International (PMI) and Imperial Brands in November 2026, assigning BAT an Overweight rating and the other two companies Neutral ratings. The bank forecasts like-for-like sales growth of 3.9% for BAT and 6.2% for PMI in 2027, but estimates the two companies will trade at approximately 11 times and 21 times 2027 earnings, respectively. JPMorgan cited BAT's improving position in US nicotine pouches and vaping products as a driver of its investment outlook. BAT reported a 220% constant-currency increase in US modern oral nicotine revenue in the first half of 2026, while PMI's ZYN US shipments returned to growth in the third quarter. Imperial expects NGPs to represent 4% to 5% of sales and has expanded its oral portfolio through acquisitions.
Capital Markets
Nov.12
Product | PMI Launches TEREA Black Mint Pearl in Japan, Adding First Capsule Variant to Black Range With Nationwide Rollout From October 19
Product | PMI Launches TEREA Black Mint Pearl in Japan, Adding First Capsule Variant to Black Range With Nationwide Rollout From October 19
Philip Morris Japan (PMJ) launched TEREA Black Mint Pearl on October 15, 2026, introducing the first capsule-equipped heated tobacco stick in the TEREA Black range for IQOS ILUMA devices. The product combines a strong menthol profile with a crushable mint capsule and is priced at ¥640 per 20-stick pack, including tax. Sales began at four IQOS stores and selected retail partners on October 15, with distribution expanding to convenience stores and other tobacco retailers nationwide from October 19. The launch brings Japan's TEREA portfolio to 28 variants, including 21 menthol-related products, or 75% of the range.
product
Oct.16 by 2Firsts Perspectives
JTI Invests ₱2.1 Billion to Upgrade Batangas Manufacturing Hub, Adds First Southeast Asia DIET Facility
JTI Invests ₱2.1 Billion to Upgrade Batangas Manufacturing Hub, Adds First Southeast Asia DIET Facility
JTI Asia Manufacturing Corp. has invested ₱2.1 billion, or about $37 million, in its manufacturing site in Malvar, Batangas, Philippines, to expand tobacco-processing capabilities. About ₱1.9 billion is allocated to JTI's first Dry Ice Expanded Tobacco, or DIET, facility in Southeast Asia, while more than ₱177 million has been spent on expanding its Controlled Atmosphere treatment facility. The Batangas plant supplies the Philippine market and exports to 22 overseas markets, making it one of JTI's key manufacturing hubs in Asia.
Sep.24
Product | KT&G Launches lil HYBRID 3.0 Misty Rosé Edition II in South Korea With Two Pink Finishes at 88,000 Won
Product | KT&G Launches lil HYBRID 3.0 Misty Rosé Edition II in South Korea With Two Pink Finishes at 88,000 Won
South Korean tobacco company KT&G launched the limited-edition lil HYBRID 3.0 Misty Rosé Edition II on September 30, 2026, following the original Misty Rosé Edition introduced in November 2025. The new release comes in two pink finishes, Bloom Rosé and Viva Rosé, each priced at 88,000 won. Both versions initially went on sale through the lil Store online shop and lil MINIMALIUM flagship stores. From October 7, Bloom Rosé became available at approximately 1,500 lil Station retail outlets nationwide. The release retains the existing lil HYBRID 3.0 hybrid heated tobacco platform, with changes focused on exterior design and distribution.
product
Oct.10
Russia's State Duma Passes Tobacco and Nicotine Ingredient Disclosure Bill, Targeting 2027 End to Trade-Secret Protection for Certain Harmful Ingredient Data
Russia's State Duma Passes Tobacco and Nicotine Ingredient Disclosure Bill, Targeting 2027 End to Trade-Secret Protection for Certain Harmful Ingredient Data
Russia's State Duma passed a government-sponsored amendment on November 11, 2026, by 414 votes to none, seeking to prevent businesses from classifying information on the presence and number of types of certain harmful ingredients in tobacco and nicotine-containing products as trade secrets. The measure covers ingredients capable of increasing nicotine dependence or exhibiting toxic, carcinogenic, mutagenic or reproductive toxicity, including substances that acquire such properties during heating or smoldering. Bill No. 1286415-8 would amend Article 5 of Federal Law No. 98-FZ on Commercial Secrets and is scheduled to take effect on January 1, 2027. The bill has cleared all three readings in the State Duma but has not completed the remaining legislative procedures.
Regulations
Nov.12 by 2Firsts Perspectives
On-Site Report | After FDA Announces Review of PMTA Framework, CTP Director Details Reform Priorities
On-Site Report | After FDA Announces Review of PMTA Framework, CTP Director Details Reform Priorities
FDA CTP Director Bret Koplow used his FDLI keynote in Washington to outline how the agency is rethinking the PMTA framework. He discussed category-specific review, nicotine pouch and sPMTA pilots, AI-assisted review, a 70% reduction in pending applications, and a major staffing constraint: CTP currently has only nine scientific review teams. He also reaffirmed tobacco harm reduction while stressing youth protection, flavored products, risk communication, and the challenge of unauthorized e-cigarettes.
Regulations
Oct.06