FCTC willing to assist BIR in monitoring tobacco players

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Non-government organization FCTC Alliance of the Philippines, a principal advocate of excise tax reform, is willing to assist the Bureau of Internal Revenue (BIR) in monitoring tax compliance of local cigarette firms.

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Maricar Limpin, FCTC Alliance president, said her group is willing to be the BIR’s third-party auditor of cigarette factories to ensure revenue collection and prevent tax evasion.

She, however, said the government should ensure that cigarette companies have no hand in the third-party audit group.

“If we [FCTC] would be the monitoring group, I think that would be better,” she stressed.

Third party monitoring is seen to ensure strict implementation and protect the gains of Republic Act 10351, or the excise tax reform law of 2013.

BIR figures show that excise tax collection on tobacco and alcoholic beverages reached PHP23.02 billion in the first four months of 2014 or 5.8 percent above the agency’s PHP21.74-billion goal.

The amount was also 11.83 percent higher than the PHP20.58 billion reported in the same period last year. Taxes from cigarettes alone amounted to PHP11.34 billion, up 14.22 percent from PHP9.93 billion.

Admitting that there are untaxed cigarettes available in the local market, FCTC stressed that strict monitoring of cigarette removals from local factories is important.

A recent study by an international research group showed that the Philippines lost an estimated PHP15.6 billion in revenues due to non-payment of correct taxes by local cigarette manufacturers.

To show that her agency is strictly enforcing the excise tax law, BIR commissioner Kim Jacinto-Henares ordered a 24/7 monitoring of local cigarette firms, particularly Bulacan-based Mighty Corp. following allegations of smuggling, underpricing and volume underdeclaration.

As this developed, Limpin expressed full support to BIR’s planned implementation of the Internal Revenue Stamps Integrated Systems.

The BIR is set to require tax measure on tobacco products starting next month, which aims to curb proliferation of untaxed cigarettes in the domestic market. “If you have a stamp tax system, you will have a way by which you can mark illicit products,” Limpin said.

Tobacco giant PMFTC Inc. earlier said it supports tax stamps on cigarettes but the company also urged government to impose additional measures to safeguard the industry against illicit trade.

Illicit trade is believed to be one of the reasons why prices of some cigarettes brands in the domestic market have remained abnormally low despite two consecutive-years of excise tax rates increases.

Jacinto-Henares said earlier the BIR is conducting an audit on the tax payments made by Bulacan-based Mighty Corp. after several discrepancies were discovered on the cigarette manufacturer’s imports and exports transactions. PNA

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7 Comments

  1. Benedict Cordero on

    “To show that her agency is strictly enforcing the excise tax law, BIR commissioner Kim Jacinto-Henares ordered a 24/7 monitoring of local cigarette firms, particularly Bulacan-based Mighty Corp. following allegations of smuggling, underpricing and volume under declaration.”

    But so far there are no results from this 24/7 monitoring, and illicit cigarette trade continues to grow. An outside party assisting in the monitoring might be a good way to go to help minimize illicit trade.

  2. Meredith Pacheco on

    The BIR seems to be failing so miserably in their monitoring of these tobacco companies… The Mighty issue has been going on for quite some time now and still nothing is happening. The FCTC probably felt they needed to step in and offer assistance, otherwise the BIR will continue to allow companies like Mighty trample all over them

    • Blake Rodriguez on

      But Henares seems to be in denial when it comes to this growing illicit cigarette trade. Instead of taking action and pursuing the erring company, she spends more time defending them. Billions of pesos lost, and still the BIR Commissioner doesn’t take appropriate action.

  3. Will Henares accept this offer to help, knowing that it can be seen as an admission that the BIR can not be trusted with monitoring these cigarette companies?

  4. BIR is monitoring Mighty? Why is the Bureau’s investigation taking so long? This issue has been raised since last year and up to now they are still investigating.

    • Aries Cabaya on

      BIR investigation is getting nowhere. Henares is always making an alibi protecting MIGHTY CORP. despite the reports and evidences pointing out lost of an estimated PHP15.6 billion in revenues due to non-payment of correct taxes of its illicit tobacco trade. What’s new!!!

  5. geNERAL MCARTHUR on

    Boycott smuggled Mighty cigars. It does not pay the correct taxes while we’re forced to do our civic duty.