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BIR Intensifies Oversight of Vape Industry Following Successful Tax Evasion Case

In response to winning a big battle against P1.2 billion in tax fraud, the Bureau of Internal Revenue (BIR) is intensifying its efforts to keep an eye on the vape business.

The BIR’s Commissioner Romeo Lumagui has sent out warnings to companies in the vape industry, emphasizing the need for them to adhere to the relevant tax and registration regulations as the revenue agency pledges to closely monitor the sector.

This program comes after the Bureau of Internal Revenue (BIR) successfully prosecuted big vape vendor Tap Fog and its associates in a criminal case, which resulted in P1.2 billion in tax liabilities (including fines and penalties).

Lumagui underlined the vape industry’s regulatory structure, noting that the BIR has already set up a framework for appropriate registration and payment.

Following a BIR raid on Tap Fog in November 2022, criminal cases were filed with the Metropolitan Trial Court and the Court of Tax Appeals. Tap Fog authorities now have arrest warrants issued by both courts.

Lumagui said, “This demonstrates our resolve to take legal action in the wake of raids.”

Under the Tax Code, Tap Fog is being accused of a number of offenses, such as selling heated tobacco and vapor goods for less than the total excise and value-added tax, giving packages with fake stamps, and unlawfully possessing and removing items subject to excise duty without making payment. In addition, the vape vendor is determined to have intentionally failed to pay taxes and attempted to escape taxes.

Congress opened an investigation into the well-known brand Flava when it was discovered that the company was selling its vape devices to minors, costing the government money in taxes. This probe has put the vape business under close scrutiny.

The BIR modified floor prices for vape goods and cigarettes in May 2023, taking current market realities into consideration. This change is necessary since vapor products are still relatively new and producers are always experimenting with product combinations, removing certain versions, and adding new ones.

The BIR reaffirmed that it is legally forbidden to sell tobacco goods for less than the total amount of excise taxes and value-added tax levied by law. It also reiterated the sanctions for violators selling at reduced prices, which include fines of up to P500,000 and up to six years in jail.

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