Gov’t agencies urged to check permits of vape firms
MANILA, Philippines — Different government offices have been urged to check the permits and licenses of vape companies that have been selling their products online or through shopping applications amid fears of tax evasion and violation of guidelines.
At the hearing of the House committee on ways and means on Tuesday, Albay 2nd District Rep. Joey Salceda asked resource persons present to check their online shopping applications and look for Denkat Philippines, one of the two vape product companies subject of House Resolution (HR) No. 1437.
HR No. 1437 was filed by Cagayan de Oro City 2nd District Rep. Rufus Rodriguez after the Bureau of Customs (BOC) found P1.43 billion worth of e-cigarette products in a Valenzuela City warehouse, indicative of attempts to evade taxes that may amount to over P728 million.
“IP, open your Google, go to Lazada, and then press Denkat. No, just so you know, go to Lazada and press D-E-N-K-A-T. Voila, what are the products there, sir?” Salceda asked the BOC’s Intellectual Property Division (IPRD).
“Flava, various advertisements selling,” IPRD Chief Paul Oliver Pacunayen replied, referring to Flava which is another vaping company subject of HR No. 1437.
“Merong plus 18 right? But there are no warnings? Are there warnings na ito’y nakakamatay or something? So the only warning there is nicotine addiction, no? Which is the same as smoking, my goodness. So there is no difference pala between the two?” Salceda asked.
Salceda, who heads the committee on ways and means, noted a series of supposedly Bureau of Internal Revenue (BIR) permit numbers mentioned on the online shop of Denkat and Flava, and asked BIR to confirm this.
He also asked BIR to write to the Food and Drug Administration (FDA) and the Department of Trade and Industry’s Bureau of Product Standards to validate the product specifications of Flava.
“I requested the BIR to write today the Food and Drug Administration and the Bureau of Product Standards of the Department of Trade and Industry to validate the product specifications of the Flava,” Salceda said.
Aside from these, Salceda said Flava is suspected of mislabelling its products as “conventional freebase e-cigarettes,” when there are indicators that suggest such items are of the nicotine salt variety.
Under Republic Act No. 11900 or the Vaporized Nicotine and Non-Nicotine Products Regulation Act, freebase nicotine has a lower tariff compared to nicotine salts because the latter has a higher concentration rate and, therefore, would be more potent.
Salceda, during the earlier part of the hearing, explained that freebase nicotine products are taxed at P60 per 10 milliliter (mL), while nicotine salt has a tariff of P50 per one mL. Companies can save, albeit illegally, by misdeclaring nicotine salts as freebase nicotine.
The Albay representative also said that the tax evaded can go up to P7.3 billion if it is proven that the products are actually nicotine salts and not freebase nicotine.
“Under Section 263 of the NIRC, illicit trade in excisable products is subject to a penalty of not less than ten times the value of the excise tax evaded. The stocks discovered are about 1.4 million cartridges containing 10 mL of electronic cigarette juice,” Salceda said.
Earlier in the hearing, Rodriguez made a motion to summon three individuals — Gen Vincent Serrano Fabro and Lilac Tayaban of Flava, and Dennis Rostata of Denkat Philippines — which was approved by the committee.
Flava is a product from China, which Rodriguez believes is imported by Denkat into the Philippines. Denkat legal counsel Lorman denied this, saying that he had not seen any document or board resolution linking the two companies.
However, Arugay eventually admitted that there appears to be some sort of unofficial collaboration between Flava and Denkat as evidenced in the advertisement materials released by both sides.