THE government is imposing a new stamp tax system on cigarettes effective October 1 as part of efforts to curb smuggling and improve revenue collection from this commodity sector.
In a statement on Monday, the Department of Finance said the issuance of the Revenue Memorandum Circular 72-2014 is central to the government’s anti-smuggling strategy because the stamps will serve as effective tracking and audit measures ensuring due excise taxes have been paid for each product.
According to the circular, all locally manufactured packs of cigarettes should have the new tax stamp by October 1. The regulation also prescribes the use of the Internal Revenue Stamp System (IRSIS) for the ordering, distribution, and monitoring of cigarettes.
The finance agency said cigarette stamping regulation will be boosted by a provision allowing the Bureau of Internal Revenue (BIR) to conduct a study and cause the installation of closed-circuit television (CCTV) monitoring systems on all production and withdrawal points in the premises of cigarette excise taxpayers for more effective monitoring purposes.
In approving the regulation, Finance Secretary Cesar Purisima said simple governance measures like the stamp tax would help improve revenue collection performance.
“In 2013, revenues from the Sin Tax Law were 51 percent higher than projected. We are consistently looking at ways to enhance the government’s ability to raise revenues at a critical time requiring much investment for our infrastructure, services, and people,” Purisima stated.
For her part, BIR Commissioner Kim Henares said the measure will strengthen the government’s capacity to curb cigarette smuggling.
“We believe in implementing regulations with enough teeth to bite down on smugglers who are intent on depriving the nation of critical resources for greed and private gain,” Henares said.
Meanwhile, Philip Morris Fortune Tobacco Corp. (PMFTC), manufacturer of premium brand Marlboro, said it fully supports the BIR in its implementation and rigorous enforcement of the new tax stamp system.
Amid reports of growing domestic illicit trade in cigarettes, PMFTC is hopeful that the tax stamps, where tax-paid evidence will be applied to every pack manufactured for the Philippine market, will go a long way in addressing the issue of large-scale leakages.
The tobacco company was referring to a study released by Oxford Economics, in partnership with the International Tax and Investment Center (ITIC), which said illicit cigarette consumption in the Philippines almost tripled last year, making thee country one of the top illicit cigarette markets in the Association of Southeast Asian Nations.
At the same time, PMFTC also expressed confidence that the BIR will ensure rigorous checks at all manufacturing sites to ensure full compliance.
“The requirement of the BIR to install closed-circuit television monitoring systems on all production and withdrawal points of all manufacturers is also a welcome imposition to ensure full transparency, equitable application of the rules and to maximize revenue collection,” it stated.