Rodriguez calls for House probe of vape firm’s alleged tax evasion, violation of RA 11900

Cagayan de Oro 2nd District Rep. Rufus Rodriguez has called for a Congressional investigation of Flava Corp., which brands itself as the number 1 vape brand in the Philippines, over allegations of tax evasion and regulatory non-compliance.

Rodriguez, the vice chairman of the House Committee on Trade and Industry and a member of the House Committee on Ways and Means, has filed a resolution calling on the appropriate committee of Congress to conduct an inquiry on the recently reported raid of Flava's warehouse in Valenzuela City.

The Bureau of Customs recently raided Flava's warehouse in Valenzuela, discovering 14,000 boxes containing P1.428-billion worth of allegedly illegal vape or e-cigarette products bearing the brand.

This incident highlights Flava's possible evasion of excise tax, a critical revenue stream for the government. An independent testing report furnished to the office of Rodriguez also showed that Flava has been mislabeling its products to reduce tax payments.

Allegedly, Flava has been labeling its products as containing "freebase nicotine" instead of "nicotine salt," which fetches higher excise tax payments versus the former. The independent testing showed that Flava's products contain nicotine salts and benzoic acid.

"The government cannot afford to lose vital revenue streams due to corporate deceit. Flava's actions to flout Republic Act No. 11900, if proven true, are a direct attack on our nation's fiscal health and must be met with stringent legal consequences," Rodriguez said.

Rodriguez also found out that Flava's rapid market ascension could be well attributed to its alleged marketing strategies with social media posts showing that minors are using its products.

Under Section 12 of RA 11900 or the Vaporized Nicotine and Non-Nicotine Products Regulation Act, companies are prohibited to market nicotine products to minors. They are also required to include health warnings on promotional materials or online posts.

Flava also supposedly sponsored events that are open to minors, an act prohibited under Sections 13 and 14 of RA 11900.

"Flava's business practices, particularly their marketing to minors, are not just legally questionable but morally reprehensible. Such actions compromise the integrity of our market and endanger the welfare of our youth," Rodriguez said. "While Flava's youthful exuberance and aggressive business tactics could lead the business to growth, it may also be a pitfall if they do not have a deep respect for our nation's laws."