To ensure tax stamp compliance: BIR keeps an eye on cigarette retailers

CEBU, Philippines - The Bureau of Internal Revenue is closely monitoring local retailers of cigarettes following the new regulation requiring tax stamps on all cigarette packs.

BIR issued in July 2014 Revenue Regulation no. 7-2014 that says all cigarette packs should have tax stamps beginning April 1, 2015 and it is illegal to buy cigarette packs without tax stamps from any manufacturer or distributor.

Erring cigarette distributors could face confiscation and forfeiture of unstamped cigarette packs, pay a hefty fine or worst, face jail time.

Cielito Almario, Cebu area supervisor at the Excise Tax Division of BIR-13 in Cebu City, told The FREEMAN yesterday they had been ordered by the BIR national office to do a “discreet” check on the compliance retail stores selling cigarettes.

Local retailers are told to return cigarettes without the required BIR tax stamps to their distributors or manufacturers to comply with the agency’s regulation.

Almario, in a phone interview, said that they had encountered cigarettes being sold in some stores without tax stamps or still bearing the old stamps and reported these cases to the national office.

She said they had sent updates to the national office on the compliance of these retailers.

It’s the national office of BIR that orders the confiscation and forfeiture of unstamped cigarette packs based on the reports it receives from the field, she explained.

But so far, she said, no confiscation of unstamped cigarettes has happened in Cebu since the implementation of the ruling in April 1, 2015.

The recent confiscations done by the BIR were in Nueva Ecija and Batangas where it discovered untaxed locally made and imported cigarette packs. The raids happened last June.

Almario added that for now they cannot look into warehouses of cigarette distributors here unless they are given a mission order from the national office.

The Excise Tax Division said several retailers in Cebu City -- mostly supermarkets -- were already visited. Almario said they hoped to go outside the city to check other retailers' compliance to the BIR mandate.

She added they are also looking into alleged fake stamps by using a mobile verification device.

In an advisory it recently released, the BIR said that cigarettes without tax stamps shall be confiscated and forfeited and “the appropriate criminal action shall be filed without prejudice to the assessment and collection of proper excise taxes.

“Therefore, as of this date, all cigarettes in the production and storage facilities as well as in the domestic market must bear the required internal revenue stamps,” the BIR noted.

Earlier, tobacco manufacturer Philip Morris Fortune Tobacco Corp. (PMFTC) warned cigarette wholesalers and retailers of untaxed cigarettes.

PMFTC announce the new revenue regulation in a paid advertisement published in The FREEMAN recently. In July last year, the BIR issued RR 7-2014 which details the rules for the implementation of the agency's Internal Revenue Stamps Integrated System (IRSIS) project.

IRSIS is a requirement under the Sin Tax Law or Republic Act 10351 which orders the placement of internal revenue stamps that have adequate security features on each pack of cigars and cigarettes.

The BIR said it would check cigarette products in production and storage facilities and in the local market to ensure compliance.

The revenue agency also reminded all cigarette manufacturers, importers and distributors to comply with the putting of tax stamps on their products. Wholesalers and retailers are likewise told to buy only cigarette packs with authorized tax stamps.

“The public is advised that any cigarette pack in the market at this time without the requisite tax stamps are presumed to be untaxed and are considered as illegal products,” said the BIR.

Tax code offenders face jail time of up to eight years. People not using tax stamps could be fined P50,000.

Tax stamps on the products indicate that obligations such as excise taxes have been paid by the manufacturer.

Excise tax is imposed on the production, sale or consumption of commodities such as alcohol, tobacco, petroleum, miscellaneous articles and mineral products.

BIR-13 which covers Cebu and Bohol collected around P4.98 million in excise taxes in the first half of 2015, official data showed. (FREEMAN)