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

Cambodia Moves to Draft New Tobacco Control Strategy Targeting Illicit Products and E-Cigarette Spread
Cambodia Moves to Draft New Tobacco Control Strategy Targeting Illicit Products and E-Cigarette Spread
Cambodian Health Minister Cheang Ra has called for the development of a tobacco control strategy for 2027–2031, with the goal of reducing tobacco use by 30% by 2030. The directive was issued during a Tobacco Product Control Committee meeting in Phnom Penh. Priority areas include reducing tobacco use, protecting the public from secondhand smoke, tackling illegal and counterfeit tobacco products, and preventing the spread of e-cigarettes.
Apr.29 by 2FIRSTS.ai
Swedish Politicians Ask European Commission to Clarify Legality of France’s Nicotine Pouch Ban
Swedish Politicians Ask European Commission to Clarify Legality of France’s Nicotine Pouch Ban
France’s ban on oral nicotine pouches has triggered an immediate response in Sweden. Swedish Minister for Foreign Trade Benjamin Dousa said Sweden had mobilized strongly against the ban and argued that it constitutes a clear obstacle to the free movement of goods within the EU single market. Swedish officials say the measure affects a strategically important domestic industry and conflicts with Sweden’s harm-reduction approach to public health.
Apr.14 by 2FIRSTS.ai
Delaware Tax Proposal Targets Vapes, Nicotine Pouches and Other Tobacco Products
Delaware Tax Proposal Targets Vapes, Nicotine Pouches and Other Tobacco Products
Delaware’s latest tobacco tax increase bill cleared its first House committee hurdle on April 22. Backed by House Speaker Melissa Minor-Brown, the bill would raise the cigarette tax from $2.10 to $3.60 per pack and increase taxes on moist snuff, vapor products and other tobacco products.
Apr.24 by 2FIRSTS.ai
Peru Parliament Considers Imposing up to 100% Tax on E-Cigarettes
Peru Parliament Considers Imposing up to 100% Tax on E-Cigarettes
Peru Parliament discusses bill to impose up to 100% tax on e-cigarettes, citing public health concerns. Youth usage at 15.9%.
Mar.20 by 2FIRSTS.ai
Israel’s Finance Ministry Advances New Tax Plan for Vapes, Tobacco Pouches and Nicotine Pouches
Israel’s Finance Ministry Advances New Tax Plan for Vapes, Tobacco Pouches and Nicotine Pouches
Israel’s Finance Ministry is advancing a new bill to tax e-cigarettes, tobacco pouches and nicotine pouches. According to the report, once approved by the Knesset Finance Committee, the initiative would only require the signature of Finance Minister Bezalel Smotrich to take effect. The plan would lower the tax on vape liquid while introducing new taxes on vape devices and on tobacco and nicotine pouches.
Apr.22 by 2FIRSTS.ai
Thailand’s DDC Reaffirms Nicotine Pouches Are Regulated Under the Tobacco Products Control Act
Thailand’s DDC Reaffirms Nicotine Pouches Are Regulated Under the Tobacco Products Control Act
Thailand’s Department of Disease Control has warned the public not to believe claims that nicotine pouches are harmless, saying the products contain high levels of nicotine that can enter the bloodstream through the mouth lining and affect the nervous system and brain.
Apr.30 by 2FIRSTS.ai