(NAR) VOL. 14 NOS. 1-2 / JANUARY - MARCH 2003
This Order is issued to:
II. Policies and guidelines
a. For validation of the suggested net retail price of brands registered and introduced in the market after the prescribed three-month period; andb. For reclassification of new brands of said excisable products that were introduced in the market after January 1, 1997.
The new brands of excisable products shall include locally manufactured and imported cigarettes, fermented liquors, wines and distilled spirits, except the following:
a. Those brands falling under the highest tax classification/bracket;
b. Those brands that are currently taxed based exclusively on the volume of removals without any consideration on the selling prices thereof (e.g. cigars, compounded liquors, etc.);
c. Those brands that are locally registered and manufactured exclusively for export. However, in case these brands are sold locally and found in the supermarkets/retail outlets where the survey shall be conducted, the same shall, nevertheless, be included in the survey, subject to the issuance of an appropriate assessment and imposition of applicable penalties and sanctions;
a) Through actual price survey in major supermarkets/retail outlets to be conducted by the revenue officers of the Large Taxpayers Service and/or Regional Offices or any equivalent office of the Bureau of Internal Revenue having jurisdiction over excise taxpayers;b) Through submission of a price list duly authenticated by the store owner or operator of the supermarkets/retail outlets carrying such items/products;
c) Through an information submitted by an informer and duly authenticated/validated by the store owner/operator of the supermarket/retail outlet that issued the source-document;
d) Through direct purchase of such items from the supermarket/retail outlet for which a valid receipt/invoice is issued detailing the product description and the retail price thereof; and,
e) Through duly authenticated photographs clearly showing the items and their corresponding selling prices being displayed on the shelves of the supermarket/retail outlet. The camera to be used for this purpose should have built-in day-date features to indicate the exact date and time when such pictures were taken.
In case a survey covering these new brands of cigarettes and alcohol products has been conducted by any other government office, the results of the said survey may be used as reference in the determination of the current net retail prices of such new brands.
a. In case of newly registered brand where the taxpayer has submitted the suggested retail price thereof, the Chief, Large Taxpayers Assistance Division II (LTAD II), in charge of the registration of new brands nationwide, shall submit a list of brands of cigarettes and said alcohol products to the Commissioner, thru the Assistant Commissioner, Large Taxpayers Service (ACIR, LTS), within five (5) days immediately after the lapse of the third month following the introduction of the new brand and/or variants thereof in the market for purposes of determining the current retail prices thereof and validating the accuracy of the suggested retail price submitted by the taxpayers.For Revenue Region Nos. 4, 5, 6, 7, 8 and 9, the ACIR, LTS shall be responsible for identifying the major supermarkets/retail outlets where the excisable products to be surveyed are being sold. However, for all other revenue regions, the ACIR, LTS may request assistance from any concerned Revenue Regional Director having jurisdiction over the establishments where the newly registered brands are being sold.
b. After the lapse of the prescribed two-year period or as the Commissioner may otherwise direct, the appropriate tax reclassification of these brands based on the current net retail prices thereof shall be determined by a survey to be conducted upon a written directive by the Commissioner.
For this purpose, a memorandum order to the Assistant Commissioner, Large Taxpayers Service, Heads, Excise Tax Areas, and Regional Directors of all Revenue Regions, except Revenue Region Nos. 4, 5, 6, 7, 8 and 9, shall be issued by the Commissioner for the submission of the list of major supermarkets/retail outlets where the above excisable products are being sold, as well as the list of selected revenue officers who shall be designated to conduct the said activity(ies).
5.1 Authorized revenue officers from the Large Taxpayers Service for Revenue Region Nos. 4 (Pampanga) up to 9 (San Pablo); and5.2 Authorized revenue officers representing both the Excise Tax Areas (EXTAs) and the concerned Revenue District Offices having jurisdiction over the physical location of the major supermarkets/retail outlets for all Revenue Regions outside Revenue Region Nos. 4 to 9.
III. Procedures
Revenue Officer(s) of Surveying Office
Original - to the surveyed establishment
Duplicate - receiving copy of the surveying Office
The receiving copy of the Mission Order must bear the full name, signature and designation of the authorized representative of the establishment together with the date and time of receipt thereof.
2.1 By Actual Price Surveyi. Refer to the list brands of such excisable products introduced in the preceding three-month period or to the master list of locally manufactured and imported brands of cigarettes and alcohol products, as the case maybe, to serve as guide in locating the items in the supermarket or retail outlet.
ii. Fill up all applicable information required in the Survey Form. Indicate the corresponding retail price of the brands, as shown on the tag price or price label of the products under survey, on the column provided in the Survey Form. In case the product(s) listed under the said Survey Form is/are not being sold in such supermarket/retail outlet, mark "x" in the corresponding column for retail price. On the other hand, in case there are products that are being sold in such supermarket but are not listed under the said Survey Form, the complete brand description of such product, together with the retail prices thereof, shall be included in the Survey Form. In the event that the brand description on the displayed item differs with that listed in the Survey Form, make the necessary correction or indicate the complete brand description of the product in the Survey Form.
iii. Request the manager or any authorized officer of the supermarket/retail outlet to validate the Survey Form by having him/her affix his/her signature after all of the products have been surveyed,
2.2 By Submission Of A Price List
a. Secure authenticated copy of the price list of all the different brands of cigarettes and alcohol products being sold in such supermarket/retail outlet.
In case the store manager fails to present the desired authenticated copy of the price list on the date of service of the Mission Order, require the submission thereof not later two days after date of service of the said Mission Order. In the event that the store manager/authorized representative refused to cooperate in the submission of the said price list, submit a written report thereon to the ACIR, LTS/Regional Director, as the case maybe, within twenty four (24) hours, for their appropriate action.
b. Compare the complete of the description of the brands of cigarettes and alcohol products appearing in the price list with that reflected in the Survey Form. In case of discrepancy, verify the full description of the brand in question from the item actually displayed in the establishment and indicate the correct and full description of such brand in the Survey Form.
c. Require the store manager or authorized representative to validate the authenticity of the corrected description of such brand.
d. Fill up all applicable information required in the Survey Form. Indicate the corresponding retail price of the brands, as shown on the tag price or price label of the products under survey, on the column provided in the Survey Form. In case the product(s) listed under the said Survey Form is/are not being sold in such supermarket/retail outlet, mark "x" in the corresponding column for retail price. On the other hand, in case there are products that are being sold in such supermarket but are not listed under the said Survey Form, the complete brand description of such product, together with the retail prices thereof, shall be included in the Survey Form. In the event that the brand description on the displayed item differs with that listed in the Survey Form, make the necessary correction or indicate the complete brand description of the product in the Survey Form.
2.3 By Validation of Submitted Information by an Informer
a. Request the store manager or any authorized officer of the supermarket or retail outlet to authenticate the document containing such information either by affixing his signature under the phrase "CERTIFIED TRUE AND CORRECT" stamped or printed on the face of the document or by issuing a certification to that effect.
b. Submit a written report to the ACIR, LTS/Regional Director, as the case maybe, in case the store manager or any authorized officer of the supermarket or retail outlet refuses to authenticate the document within twenty-four hours (24) from the time of service of the Mission Order.
2.4 By Direct Purchase Of Such Items From The Supermarket/Retail Outlet
a. Secure the funds from the appropriate Office.
b. Proceed to the designated supermarket or retail outlet and purchase the products to be surveyed based on the list of brands on hand. Secure a Sales Invoice or an Official Receipt which clearly indicates the complete brand description of the product(s) and the corresponding retail price(s) thereof.
c. Fill up all applicable information required in the Survey Form. Indicate the corresponding retail price of the brands, as shown on the tag price or price label of the products under survey, on the column provided in the Survey Form. In case the product(s) listed under the said Survey Form is/are not being sold in such supermarket/retail outlet, mark "x" in the corresponding column for retail price. On the other hand, in case there are products that are being sold in such supermarket but are not listed under the said Survey Form, the complete brand description of such product, together with the retail prices thereof, shall be included in the Survey Form. In the event that the brand description on the displayed item differs with that listed in the Survey Form, make the necessary correction or indicate the complete brand description of the product in the Survey Form.
d. Submit the Sales Invoices/Official Receipts and surrender the purchased items to the Assistant Commissioner/Regional Directors, as the case maybe.
e. Submit a liquidation report on the purchased item(s) and return the cash balance. In case of cash purchases in excess of the funds provided, request for cash reimbursement for cash advances made.
2.5 By Taking Photograph(s) Of The Products
a. Furnish the store manager or any authorized officer of the supermarket or retail outlet with a copy of the list of brands that are to be photographed. However, in case there are items that are being sold in such supermarket or retail outlet which are not included in the list, the said manager or authorized officer shall be duly informed that the said items are also to be photographed. b. Take the pictures of the displayed products. However, make sure that the retail prices thereof are also clearly indicated on the rack and the same are included in the photograph. c. Request the said manager or authorized officer to validate the authenticity of the photographs, after the films are processed/developed, by affixing his/her signature at the back of the pictures/photographs. In case the store manager or duly authorized officer of the supermarket or retail outlet refuses to authenticate the photograph(s), submit a written report to the ACIR, LTS/Regional Director, as the case maybe, within twenty-four (24) hours from the time of his/her refusal. d. Fill up all applicable information required in the Survey Form. Indicate the corresponding retail price of the brands, as shown on the tag price or price label of the products under survey, on the column provided in the Survey Form. In case the product(s) listed under the said Survey Form is/are not being sold in such supermarket/retail outlet, mark "x" in the corresponding column for retail price. On the other hand, in case there are products that are being sold in such supermarket but are not listed under the said Survey Form, the complete brand description of such product, together with the retail prices thereof, shall be included in the Survey Form. In the event that the brand description on the displayed item differs with that listed in the Survey Form, make the necessary correction or indicate the complete brand description of the product in the Survey Form.
3. Submit a memorandum report, together with the prescribed attachments and/evidences, to the ACIR, LTS/Regional Director detailing the results of the survey conducted within two (2) days after the completion of the physical survey.
Office of the Regional Director
Large Taxpayers Assistance Division II
a. On validating the new brands introduced in the market after the three (3) month periodi. Submit a list of such new brands to the ACIR, LTS within five (5) days after the lapse of the third month following the introduction thereof in the market containing the complete description of each brand, suggested net retail price thereof and the corresponding tax rate.
ii. Submit to the ACIR, LTS, a list containing at least twenty (20) major supermarkets/retail outlets within Metro Manila (for brands marketed nationally) and/or five (5) major supermarkets/retail outlets in the region (for brands marketed outside Metro Manila) where the survey will be conducted to be used as basis in the issuance of Mission Orders. Ensure that the minimum number of establishments to be surveyed as prescribed under existing revenue laws and regulations, is complied with. In addition, the names and designations of revenue officers selected to conduct the survey shall be clearly indicated opposite the names of the establishments to be surveyed.
b. On the tax reclassification of new brands
i. Submit a master list of registered brands covered by the survey pursuant to the provisions of Item II.2 of this Order containing the complete description of each brand, existing net retail price and the corresponding tax rate thereof.
ii. Submit to the ACIR, LTS, a list of major supermarkets/retail outlets within the territorial jurisdiction of the concerned revenue regions where the survey will be conducted to be used as basis in the issuance of Mission Orders. Ensure that the minimum number of establishments to be surveyed, as prescribed under existing revenue laws and regulations, is complied with. In addition, the names and designations of revenue officers selected to conduct the survey shall be clearly indicated opposite the names of the establishments to be surveyed.
a. On the basis of the Survey Forms, fill up the columns provided for the supermarkets/outlets, brands and retail prices; andb. Compute the average retail prices per brand of the surveyed products in the entire revenue region.
a. Compute the value-added tax by multiplying the current retail price of each brand (the average result of the above computation) by 1/11;b. Add the resulting value-added tax to the excise tax rate initially declared and paid by the manufacturer on the basis of the suggested/current net retail price of each brand;
c. Deduct the sum of value-added tax and excise tax rate from the surveyed retail price to get the current net retail price of each brand;
d. Determine the appropriate excise tax rate on the computed current net price for each surveyed brand;
e. Compare the existing excise tax rate applied and paid by the taxpayer/importer per suggested/current net retail price against the newly determined excise tax rate of each brand. The higher excise tax rate shall be recommended as the new tax classification for each brand.
Finance Division (RR)/Finance and Administrative Service (NO)
Large Taxpayers Service
a. Approve recommendation on the current net retail price of new brands that were registered and introduced in the market after the prescribed three-month period.b. Indorse the recommendation on the current net retail price and revised tax reclassification of new brands to the Office of the DCIR-Operations/CIR for review and approval.
Office of the Deputy Commissioner for Operation/Commissioner of Internal Revenue
IV. Repealing Clause
All issuances and/or portions thereof inconsistent herewith are hereby repealed and amended accordingly.
V. Penalty Clause
Strict compliance herewith is enjoined. Any violation of the provisions of this Order shall be subject to disciplinary action and shall be dealt with accordingly.
VI. Effectivity
This Order takes effect immediately.
Adopted: 11 March 2003
(SGD.) GUILLERMO L. PARAYNO, JR.
Commissioner of Internal Revenue