THE Department of Finance (DoF) is supporting a proposal by Bureau of Internal Revenues (BIR) to regular enhancements on the security features of cigarette tax stamps as a measure against the proliferation of bogus tax stamps being used by unscrupulous entities in the industry.
“Of course we need to change it,” Finance Secretary Carlos Dominguez 3rd said when asked if the enhancements were really necessary.
Investigation efforts have revealed that counterfeiters have been able to breach and falsify eight of the 10 security features. Thus, Dominguez said the BIR must now discuss the plan with cigarette makers and gain their full cooperation.
“Well, that’s why I said we have to have a chat with the cigarette companies, and say, ‘Look guys, you’re the ones who are going to pay for this’,” he said.
“Of course [it is a priority], because the leakage is huge. Even if it’s just 1 percent, it is still equivalent to P1 billion,” Dominguez noted.
The BIR intends to tap a third-party entity to monitor the proliferation of fake stamps and cigarettes after the joint operatives of the Bureau of Customs and the Philippine National Police (PNP) simultaneously raided warehouses full of raw materials for cigarette-making in Bulacan and Pangasinan.
Criminal charges were also filed against owners of an illicit depot in Davao, where P50 million worth of fake cigarettes were seized.
The raw materials were used for making fake cigarettes like Marvels, Mighty, La Reyna Mascada, Marlboro, Philip Morris, Jackpot and Skag Fortune, all originally produced by Philip Morris-Fortune Tobacco Corp. (PMFTC).
The proliferation of fake cigarettes and tax stamps has prompted the BIR to issue letters of authority (LOA) to the Tobacco Industries of the Philippines, Wongchuling Holdings Inc., La Campana Fabrica de Tabacos Inc., Mighty International and Mighty Corp.
The BIR said it would issue letters to other tobacco players as a way of expanding its investigation. The BIR uses LOAs to inform taxpayers that they will be subjected to an audit, their records, books of accounts and other transactions examined and verified.
To meet its P1.82 trillion collection goal this year, the taxman expects to generate up to P15 billion of revenue from cigarette tax stamps.
“We are estimating it at P10-P15 billion and, with proper enforcement, maybe we can increase the collection, especially when we have to meet the demands of the P1.8 trillion target,” BIR Deputy Commissioner Jesus Clint Aranas earlier said.
BIR data showed the excise tax collection on tobacco products declined by 8 percent to P91.6 billion in 2016 from P99.5 billion a year earlier, largely a result of the graphic health warning on cigarette packs and the proliferation of fake stamps and cigarettes.