Manila - The House Ways and Means Committee will conduct an investigation into the e-cigarette label Flava for potential tax evasion and fraud. This follows a warehouse raid that revealed illegally imported e-cigarettes. Committee chair and Albay 2nd District Rep. Joey Salceda stated that the raid on October 27 uncovered e-cigarettes worth PHP1.43 billion, with an estimated PHP728 million in evaded taxes.
According to Philippines News Agency, approximately 1.4 million disposable vape pods were seized during the raid.
Salceda expressed urgency in investigating the extent of the fraud and potential tax evasion, hinting at a possibly larger scale of operation and unpaid taxes. He highlighted that, if found guilty, the excise tax due could attract a penalty of ten times the amount, as per Section 263 of the Tax Code. This could mean a penalty of PHP7.28 billion for the warehouse raid alone, with past offenses potentially increasing the amount significantly. Salceda also noted misdeclaration concerns, as Flava's products, which contain high concentrations of nicotine salts, were possibly declared as freebase vape, attracting significantly lower taxes. Under Republic Act No. 11467, the tax rate for salt nicotine vape is PHP52 per ml, while freebase is taxed at PHP60 per 10 ml. Another potential violation by Flava includes inappropriate product labeling targeting minors, contradicting the ban against fancy flavoring. Salceda emphasized that 80 percent of revenues from vape sin taxes are allocated towards universal health care and government hospitals, making tax evasion in this sector particularly detrimental.