KUALA LUMPUR — Japan Tobacco International (JTI) has backed the Department of Finance’s (DOF) proposal to unify excise taxes on e-cigarette liquids, saying it would close a loophole exploited by illicit vape traders.
JTI Philippines official Shaiful Mahpar said smugglers falsely declare salt nicotine — a smoother, higher-tax vape liquid — as freebase nicotine, a harsher liquid taxed at a lower rate. Customs officers cannot tell the two apart simply by looking at them.“Laboratory testing is needed to determine whether an e-liquid is freebase or salt nicotine,” Mahpar told reporters.A single tax rate would help curb such “technical smuggling,” improve revenue collection, and level the playing field between legitimate businesses and illicit traders, he pointed out.The DOF has proposed a unified excise tax of P72.90 on vape products, subject to a 5-percent annual increase. The rate would apply to every milliliter of salt nicotine, 2 milliliters of freebase liquid and pack of 20 heated tobacco sticks.The proposal also includes a P150 excise tax on vape devices and novel tobacco products.The DOF estimates that the measure could generate P8.26 billion annually. It also projects that freebase consumption would decline by 128 million milliliters by 2030 under the revised tax regime.Citing a 2025 Euromonitor International study, JTI said the Philippine government lost about P118 billion in revenue from illicit cigarettes in 2024 and 2025. Revenue losses from illegal vape products were estimated at P23 billion over the same period.JTI Anti-Illicit Trade Operations regional director Valentin Dinca said the tax reform must be backed by effective enforcement.“Whatever tax increase happens, authorities must match it with enforcement action,” Dinca said.He called for closer cooperation among customs and law enforcement agencies in the region, such as sharing intelligence and verifying cargo moving along illicit tobacco routes.Malaysia and Indonesia have emerged as transit points for illegal shipments entering the Philippines, although they may not be the products’ countries of origin, Dinca said.JTI also identified China, the United Arab Emirates, Vietnam, Indonesia and Cambodia as countries linked to illicit tobacco supply routes.
