Government tightens watch on cigarette tax evasion

MANILA, Philippines – The Duterte administration has tightened its watch on tax evasion activities in the cigarette industry as part of its fight against corruption.

Finance Secretary Carlos Dominguez has ordered the Bureau of Internal Revenue (BIR) to tighten its monitoring and enforcement system to check illicit trade activities by certain cigarette companies such as Mighty Corp.

“This is a matter of serious concern and I’m instructing the BIR to tighten monitoring and enforcement,” Dominguez said.

Dominguez said the Finance department is backing efforts by the BIR to probe counterfeiters that produce fake cigarettes and also fake tax stamps.

Raids by the Bureau of Customs (BOC) late last year showed that counterfeiters are producing fake stamps as well as faking cigarette brands.

Last December, the BIR and BOC teams had seized fake cigarettes worth over P1 billion, fake tax stamps worth approximately P175 million, along with raw materials, machines for cigarette manufacturing and other paraphernalia in separate raids in Pangasinan, Pampanga and Bulacan.

Dominguez said the Duterte administration is serious in its fight against the illicit tobacco trade as he lauded the efforts of the BOC and the BIR for intensifying their unified campaign.

“These sustained efforts show that the Duterte administration’s campaign against corruption and other illegal activities would be pursued with the same zeal as its war against narco traffickers and illegal drugs,” Dominguez said.

In a report to Dominguez last month, the BIR said it had shut down the premises of an unauthorized manufacturer of various cigarette brands in Lubao, Pampanga and confiscated “5.5 million pieces of fake unused cigarette strip stamps worth approximately P175-million in excise taxes and VAT (value added tax).”

“The machines and other materials for tobacco manufacture were put under the custody of the NTA (National Tobacco Administration),” BIR Regional director Jethro Sabarriaga said in his report to Internal Revenue commissioner Caesar Dulay.

He said the machines that were seized are capable of producing 200,000 packs of cigarettes per day.

Likewise, the  supplies and stamps in the warehouse are estimated to be good for one month’s production. The stamps, which appear to be imported, bear Chinese characters, Sabarriaga also said.