The Department of Finance (DOF) started yesterday a review of its present tax ruling on the Pall Mall cigarette brand owned by British American Tobacco (BAT).
Finance Secretary Margarito Teves met with officials of the Bureau of Internal Revenue (BIR) to discuss the issue amid appeals by cigarette firms to raise the tax rate on Pall Mall.
“We will look into the different points. We will see if we had erred and see what we can do or whether it should be up to Congress. We will take everything into account,” Teves told reporters yesterday.
At present, BAT is paying an excise tax rate of P6.74 per pack for its Pall Mall brand, significantly lower than the P26.06 per pack tax rate earlier imposed by the Bureau of Internal Revenue (BIR).
The BIR had slapped the higher tax rate on Pall Mall as the brand was previously sold in duty–free shops.
The DOF, however, last July 24, reclassified Pall Mall as a mid-price brand which is subject to a lower excise tax of P6.74 per pack.
Earlier, Sen. Juan Ponce Enrile, chairman of the Senate finance committee and Sen. Francis Escudero, chairman of the Senate ways and means committee, warned that they would investigate the DOF for its allegedly erroneous tax ruling on Pall Mall.
Four other cigarette companies appealed to the DOF to review Pall Mall’s prevailing tax rate.
Teves said it may take a while before the DOF can decide on what actions it would take regarding the issue.
He said there was a need to study if the DOF can still change the prevailing tax rate.
“The timetable (to come out with a decision) will depend on the discussions,” Teves noted.
In the meantime, Teves said, BAT continues to pay the P6.74 per pack excise tax for its Pall Mall brand.
Fortune Tobacco, American-owned Philip Morris, Associated Anglo-American Tobacco Corp.(Anglo-American) and Japan Tobacco International (JTI) Philippines have appealed for a review of the DOF’s July 24 ruling.
BAT earlier said the July 24 ruling is already final and that only an Act of Congress can change the present classification of Pall Mall.
La Suerte Cigar and Cigarette Co. is the local producer of Pall Mall under a manufacturing licensing agreement with the BAT.