DOF orders BIR to audit beverage makers on excise tax payments

The Department of Finance (DOF) has ordered the Bureau of Internal Revenue (BIR) to scrutinize if beverage manufacturers are declaring the correct taxes, as the government recorded a P10-billion shortfall in collection in January to October 2018.

The department suspects that companies are not paying the right amount of tax on sweetened beverages.

The excise tax collection on sugar-sweetened beverages amounted to only P30 billion as of October 2018, short of the P40-billion target, the DOF said.

For his part, BIR Deputy Commissioner Arnel Guballa said the bureau has started checking the tax payments of beverage manufacturers to address the discrepancies.

Excise tax is an “indirect tax on the sale of a particular good or service” such as tobacco, alcohol, and fuel, according to Investopedia. It is levied on the producer or merchant, who then passes it on to the consumer by including it in product prices.

Under the Tax Reform for Acceleration and Inclusion (TRIAN) signed into law by President Rodrigo Duterte in December 2017, higher excise taxes were imposed on sugar-sweetened beverages.

TRAIN mandates a P6-per-liter excise tax on beverages using caloric and non-caloric sweeteners, and a P12-per-liter excise tax on beverages using high-fructose corn syrup (HFCS).

“My hunch is that those that are supposed to pay the P12.00 tax are only paying P6.00,” Finance Undersecretary Karl Kendrick Chua was quoted as saying in the DOF statement.

Citing data from the Department of Health, the DOF noted only Coca-Cola has so far been able to secure approval on converting its sweetener from HFCS to sugar or other caloric or non-caloric sweeteners.

“The (Food and Drugs Administration) approved only the conversion for Coke, and that was just last August. So I think many are paying P6 when they should be paying P12,” Chua said.

“That is our concern. I suggest that the BIR conduct an audit,” he added. —Jon Viktor Cabuenas/VDS, GMA News