The country’s oldest distillery, Destileria Limtuaco, asked the government to implement “simple” rules on taxing distilled spirits, as the ad valorem tax rate imposed on it under the “sin” tax law is tempering the industry’s growth.
Destileria Limtuaco made this pronouncement amid the ongoing effort of the government to review the taxes imposed on alcoholic products and tobacco under Republic Act (RA) 10351, or the sin-tax reform law.
Company CEO and President Olivia Limpe-Aw said that, even as the ad valorem tax starting at 15 percent has been in place since 2013, the structure can still be “simplified”.
“The specific tax is okay; we’ve been used to that, but the ad valorem on the net retail price, which we’ve only seen in 2013, makes the computation difficult,” Limpe-Aw told reporters in a recent interview.
RA 10351 restructured the taxation on distilled spirits based on raw materials, including a three-tiered specific tax rates, shifting to a one-tiered scheme combination of specific and ad valorem tax.
Starting 2013, an ad valorem tax rate of 15 percent of the net retail price per proof volume of the spirit, combined with the specific tax rate equal to P20 per proof volume, has been imposed.
Under the specific tax, the P20-per-proof-volume levy will be replaced by a 4-percent increase in the specific tax rates annually starting 2018.
This, however, was questioned by the Duterte administration, and was even regarded as being “too low”.
While declining to disclose figures, Limpe-Aw said the industry’s growth has stagnated since the implementation of the tax structure, specifically the ad valorem tax based on net retail price.
The industry has yet to come up with a unified proposal, but Limpe-Aw disclosed she prefers basing the tax rate on manufacturer’s price, instead of the net retail price.