La Suerte told to pay higher tax for Pall Mall

La Suerte Cigar & Cigarette Co. can only withdraw its cigarettes from their factory if it pays an excise tax rate of P26.06 per pack, the Bureau of Internal Revenue (BIR) said yesterday.

La Suerte earlier asked the BIR to allow the company to withdraw Pall Mall cigarettes from its factory at a lower tax rate to replenish its inventory in the market.

La Suerte, the local partner of United Kingdom-based British American Tobacco, wants the BIR to allow the withdrawal of Pall Mall at an excise tax rate of P6.74 per pack instead of the P26.06 per pack previously ruled by the agency.

However, BIR Commissioner Lilian Hefti said La Suerte can only withdraw the cigarettes from the factory provided it pays the P26.06 per pack excise tax slapped by the bureau. The BIR had slapped the higher tax rate on Pall Mall as the brand was previously sold in duty–free shops.

“La Suerte may freely effect removal of Pall Mall brand cigarettes after payment of the excise tax rate of P26.06 per pack, as provided in the aforementioned BIR ruling. In the event that the BIR ruling is reversed with finality and a lower excise tax classification is made to apply then any excess taxes paid by La Suerte may be claimed for refund or credit,” Hefti said.

The Department of Finance (DOF), last July 24, reversed the BIR’s February 22 ruling and instead slapped an excise tax rate of P6.74 per pack on Pall Mall cigarettes.

The DOF is now reviewing its July 24 ruling after four cigarette companies appealed to the department.

Fortune Tobacco, American-owned Philip Morris, Associated Anglo-American Tobacco Corp. (Anglo-American) and Japan Tobacco International (JTI) Philippines argued that Pall Mall should be paying higher taxes as this was previously sold in duty-free shops.

La Suerte, for its part is not willing to pay a higher excise tax just to be able to replenish the supply of Pall Mall cigarettes in the market.

A company source earlier said it would be difficult to file a refund before the BIR.

Finance Secretary Margarito Teves has said that the department may be able to decide on the Pall Mall controversy by the end of the month or on the first week of November.