BIR eyes 3rd-party monitor for bogus cigarettes, tax stamps

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The Bureau of Internal Revenue (BIR) is looking at tapping a third-party entity to monitor the proliferation of fake stamps and cigarettes in the tobacco industry.

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“We’re still studying it, we’re working on it,” BIR Commissioner Caesar Dulay told reporters earlier this week, saying the right entity is crucial since the monitoring is primarily a function of the government.

“If we cannot get the private to do it, do we have the budget to do it? We’re studying, because it helps in addressing fake stamps and cigarette products,” he said.

Later last year, joint operatives of the Bureau of Customs-Intelligence and Investigation Service (BOC-CIIS) and the Philippine National Police (PNP) simultaneously raided warehouses in which raw materials for making cigarettes were found in Bulacan and Pangasinan.

In Davao, criminal charges were filed against owners of an illicit depot where fake cigarettes worth P50 million were seized.

Seized by the raiding team were hundreds of boxes and sacks of tobacco, cigarette filters, cigarette paper, cigarette label, fake Internal Revenue seal, plastic wrappers, aluminum foils and sealants, as well as delivery trucks and private cars.

The raw materials were used for making cigarettes like Marvels, Mighty, La Reyna Mascada, Marlboro, Philip Morris, Jackpot and Skag Fortune, which are originally produced by Philip Morris-Fortune Tobacco Corp. (PMFTC).

The proliferation of fake cigarettes and fake tax stamps led the BIR to issue letters of authority (LOA) to Tobacco Industries of the Philippines (Bo. Tikay, Malolos, Bulacan), Wongchuling Holdings Inc., La Campana Fabrica de Tabacos Inc. and Mighty International and Mighty Corp.

The BIR intends to expand its investigation into the use of fake stamps by issuing LOAs to other tobacco players.

An LOA is a prelude to a BIR audit of company books, accounts, records and other transactions to be examined and verified.

“By process of deduction you can figure out how we want to look at the bigger, clearer picture on how the fake stamps are happening out there, who’s manufacturing them, and what’s happening. We really wa nt to get to the bottom line,” BIR Deputy Commissioner Jesus Clint Aranas earlier said.

“We’re not singling out any company. But yes, it destroys the market. It destroys the market of legitimate players. It destroys government because it doesn’t help us generate revenue. And the administration needs a lot of budget, we need to find it,” he added.

Philip Morris Fortune Tobacco Corp. said it welcomes any investigation into the proliferation of fake tax stamps on cigarette packs.

“We hope the Bureau of Internal Revenue will closely examine the entire manufacturing and distribution supply chain to ensure 100 percent compliance and take swift enforcement action where needed,” it said.

BIR data showed that excise tax collections on tobacco products in 2016 dropped 8 percent from a year earlier, tracing the decline to the impact of graphic health warning and the proliferation of fake stamps and cigarettes.
Total excise collections from tobacco dropped to P91.6 billion from P99.5 billion.

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2 Comments

  1. Eloisa Concepcion on

    Looks like this government is truly serious in making tax evaders pay up. Game over for Mighty COrp.

  2. BIR needs all the help they can get. And even if they hire a third party auditing firm, they better keep an eye on them as well. Hiring someone to do the job doesn’t mean you are not accountable for anything. It is still their job to make sure that the hired persons are actually doing the job right.