Liquor makers seek TRO vs sin tax reform law

Posted at 01/09/13 4:21 PM

MANILA, Philippines - An organization composed of some of the country's top liquor makers is seeking a temporary restraining order on the implementation of the sin tax reform law.

In a statement, the Distilled Spirits Association of the Philippines (DSAP) said it has filed a petition with a Manila regional trial court seeking a TRO to prevent the Department of Finance and Bureau of Internal Revenue from implementing Republic Act No. 10351 or the sin tax reform law.

The DSAP claimed Revenue Regulations No. 17-2012, which contain the implementing rules of the sin tax reform law, constitutes "double taxation."

It also said the new law violates the National Internal Revenue Code and the 1987 Constitution, and would "damage the local distilled spirits industry."

Members of DSAP include representatives from Destileria Limtuaco & Company, Inc., Emperador Distillers, Inc., Ginebra San Miguel, Inc. and Tanduay Distillers, Inc.

"The necessity and urgency of a TRO is underscored considering that an invalid regulation is sought to be enforced against the Petitioners. Under the circumstances, the prohibition on the claim for tax credit/refund of specific taxes paid on ethyl alcohol subsequently used as raw materials would mean very substantial losses to Petitioners," DSAP said.

The DSAP said some companies have already paid around P1.7 billion in excise taxes on its ethyl alcohol inventory. It claimed the companies will lose money with the imposition of another excise tax on the liquor produced from ethyl alcohol, where the excise tax has already been paid.

The DSAP further noted that Section 12 (c) of RR17-2012 constitutes double taxation since "it effectively taxes distilled spirits twice – first as a raw material, and again, as a finished product."

"There is double taxation when two taxes of the same kind or character is imposed on the same subject matter for the same purpose by the same taxing authority within the same jurisdiction during the same taxing period," the group said.

The DSAP also claimed the sin tax law deprives local manufacturers of equal protection and violated the rule on uniformity of taxation under the Constitution.

The implementing rules and regulations of the sin tax law were also promulgated without public participation, the DSAP said.