BIR to closely monitor cigarette retailers

MANILA, Philippines - Almost all cigarette manufacturers are already complying with the government tax stamp system meant to ensure revenues are being collected from the sector, but the Bureau of Internal Revenue (BIR) is not resting.

Six months into its implementation, BIR’s cigarette stamp taxes could now be found on “95 percent” of cigarettes in the market, BIR Commissioner Kim Jacinto-Henares said.

“Manufacturers have been complying. We have a World Bank study that says 95 percent of cigarettes in the market have stamps.  We are working to improve this further,” Henares said.

Under the BIR’s tax stamp system, all cigarette packs, whether locally manufactured or imported, must bear tax stamps to indicate that the required excise tax has been settled by the manufacturers. 

“In all our laws, we can’t have 100 percent compliance. Realistically, there’s no such thing as perfection, but there’s always room for improvement and we should always be on guard,” Henares explained.

The BIR recently strengthened its monitoring of cigarette stamp tax through with the issuance of Revenue Regulations 9-015 that required more documentation and proof from tobacco exporters that their products will be sold abroad.

 Cigarette packs without the necessary tax stamps are presumed to be illicit and expose the possessors of such packages to criminal prosecution for attempting to evade taxes.

“By special provision of the law, they are illegal, but to say they did not pay taxes is inaccurate,” Henares clarified.

Despite the imposition of stamp taxes, a study by UK-based Oxford Economics released recently showed that illicit cigarette consumption remains rampant in the country.

A total of 19 billion cigarettes coming from illegal channels in 2014, the study said, depriving the government of P22.5 billion in revenues.

But the BIR chief debunked the findings, noting that the study was funded by tobacco giant Philip Morris International. 

“If they [Oxford Economics] can stand by their data, there’s no problem,” the BIR chief said. 

However, Oliver Salmon, Oxford Economics senior economist for Asia, pointed out the group has been transparent in its operations and dealings despite being contracted by Philip Morris to study the illegal cigarette market in 14 Asia Pacific region countries.