JTI Philippines backs unified e-cigarette tax to curb smuggling
The proposed P72.9 excise rate from 2027 aims to close loopholes exploited by illicit traders and increase government collections.
JTI Supports Unified Tax Proposal
JTI Philippines has voiced support for the Department of Finance's (DOF) "Promoting Growth, Revenue, and Equity towards Socio-Economic Sustainability" (ProGRESS) tax package. The tobacco firm stated this proposal, which introduces a single excise rate on e-cigarettes, could combat "technical smuggling".
Shaiful Mahpar, corporate affairs and communications director for JTI Philippines, explained that unifying the tax rate would prevent illicit trade and ensure the government receives its rightful share of revenue. JTI's regional headquarters for South Asia is located in Kuala Lumpur.
Proposed Tax Structure and Indexation
Under the DOF's proposal, a unified excise tax rate of P72.9 for e-cigarettes is planned to take effect in 2027. This rate would then see a 5% indexation starting from 2028. The specific levy would apply per millilitre of salt nicotine, per two millilitres of freebase e-liquid, and per pack of 20 heated tobacco products.
Several legislators have also introduced similar proposals in the House of Representatives, though with varying tax rates.
Plugging Smuggling Loopholes
The current system allows illicit traders to misdeclare products due to varying tax rates on different e-liquid types. Shaiful Mahpar noted that salt-nicotine e-liquids are taxed eight to ten times higher than freebase products. This creates an opportunity for smugglers to declare higher-taxed salt nicotine as lower-taxed freebase.
Ports currently lack the ability to easily distinguish between these e-liquid types, requiring laboratory tests. A unified rate would eliminate this tax distinction, removing the incentive for misdeclaration.
Impact on Revenue and Enforcement
Tobacco smuggling cost the Philippines P61.8 billion in 2025, an increase from P56.3 billion in 2024, according to data provided by Euromonitor International to the European Union-ASEAN Business Council. Valentin Dinca, JTI's regional director for North and South Asia, stressed that any tax increase must be paired with stronger enforcement measures.
The proposed unified tax aims to recover these significant revenue losses, ensuring the government collects its due from the e-cigarette market.
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