Sicpa confident of reversing P10 billion in revenue losses

MANILA, Philippines - Switzerland-based Sicpa Product Security SA, which produces security inks for bank notes and other government documents, said yesterday that it can reverse the estimated P10 billion in revenue losses yearly from the smuggling of tobacco.

In a statement, Hans Schwad, Sicpa director for institutional relations, said this figure would continue to grow if measures are not undertaken to address the problem.

The firm is seeking the approval of the Bureau of Internal Revenue (BIR) for an unsolicited proposal offered to the agency to provide tamper proof stamps on cigarettes as a deterrent to smuggling.

Under Sicpa’s proposal, stamps shall be affixed on each pack of domestically produced cigars and cigarettes. The project consists of a track and trace system  which combines proprietary security and tracking technologies for a complete and integrated security solution for anti-counterfeiting, production monitoring, distribution control and inventory taking for tax administration purposes.

“We are certain that our revenue-enhancing solutions will enable the Philippine government to generate significant new tax revenues from tobacco sales and dramatically reduce the level of tax evasion as has been the case in other countries where it has been applied. Financial resources generated through the illicit trade of tobacco products are today associated with criminal operations and we are eager to partner with the government of the Philippines in an effort to eliminate those activities and add additional sources of government revenue,” said Schwab.

Sicpa has been in discussions with the government over the past three years to offer its revenue-enhancing solutions to assist the BIR, the Bureau of Customs (BOC) and law enforcement authorities to meet their tax revenue targets while reducing distribution of illicitly traded products.

Schwab claims that the project comes at no cost to the government and that “it would generate over P10 billion in additional tax revenues annually or up to P75 billion in seven years while not interfering with the manufacturing and trade processes.”

The BIR and Sicpa are still in talks over the proposal amid concerns raised by lawmakers that this would mean additional cost to consumers. The agency also has to submit the proposal to a Swiss Challenge by inviting other parties to match or surpass Sicpa’s offer.

According to Schwab, Sicpa expects to soon enter into an open government tender process for the application of secure, technologically enhanced strip stamps to be applied on all nationally manufactured and imported cigarettes in the Philippines.