House panel to probe vape label for 'massive' tax evasion, fraud

Metro Manila (CNN Philippines, November 11) — The House Ways and Means Committee will investigate vape label Flava for possible tax evasion and fraud after a warehouse raid uncovered illegally imported e-cigarettes worth ₱1.43 billion, with an estimated ₱728 million in evaded taxes.

«We will investigate the matter as soon as possible, to see the extent of the fraud and tax evasion. If this is just one warehouse, imagine how much the value of evaded excise taxes must have been over its entire operations,» committee chair and Albay 2nd District Rep. Joey Salceda said Friday.

The raid on the warehouse in Valenzuela City last month yielded some 1.4 million pieces of 10ml disposable vape pods.

Salceda said Flava has been «misdeclaring» its products as a freebase vape despite containing salt nicotine, which is subject to a higher tax rate.

RELATED: House panel slams vape industry for unpaid taxes

Under Republic Act No. 11467, salt nicotine vape is taxed ₱52 per ml, while freebase is taxed at ₱60 per 10 ml.

«We have received reports of independent testing which appears to confirm that one of Flava's products, Chillax, contains high concentrations of nicotine salts. If that is the case, then they have been paying just about one-tenth of what they should be paying in excise taxes for those products,» Salceda added.

He also pointed out other possible violations, including «brazenly labeling its products to appeal to minors» and non-compliance to tax stamp requirements.

Salceda, a principal author of the Vape Tax Law, noted that 80% of revenues from vape sin taxes are spent towards universal health care and government hospitals.

«So, the health impacts of smoking vapes aside, tax evasion in this product is stealing from our hospitals and our sick,» he said.

If found liable for evasion, the excise tax due is subject to a penalty of 10 times the amount under Section 263 of the Tax Code.

«So, really, on the warehouse raid alone, you could be looking at a penalty of ₱7.28 billion. Once we factor in all past offenses, the amount could be staggering,» Salceda said.

Meanwhile, Senator Raffy Tulfo called on the Bureau of Customs (BOC) to file charges against those