DoF bares new scheme to evade cigarette taxes
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Mon, 08 Apr 2019 16:20:49 +0000
Recycled tax stamps — gathered by means of a promo where these are exchanged for goods — are reportedly being used by illicit tobacco traders to sell fake cigarettes, the Department of Finance (DoF) said on Monday.
The scheme was detailed by Bureau of Internal Revenue (BIR) officials during a recent DoF Executive Committee meeting, the department said in a statement, prompting Finance Secretary Carlos Dominguez 3rd to order a crackdown.
He called for the involvement of the Department of Trade and Industry (DTI), as it is supposed to give its approval before any promotional scheme is implemented.
“You better talk to the DTI and tell them that can’t be allowed,” Dominguez was quoted as telling BIR Commissioner Caesar Dulay during the meeting, where he also ordered the tax bureau to find out who was behind the scheme.
Sought for comment, Trade Secretary Ramon Lopez said his department had yet to meet with the BIR.
During the Finance department meeting, BIR Deputy Commissioner Arnel Guballa said the promo — where tax stamps from cigarette packs are swapped for a can of sardines or a pack of noodles — was likely being used by illicit tobacco traders to gather used stamps to put on packs of fake cigarettes.
Dulay said he would be meeting with representatives from Philip Morris, Japan Tobacco and other cigarette companies, as well as those handling the Internal Revenue
Stamps Integrated System to find out how to address the new modus operandi.
Contraband cigarettes have been blamed by the DoF as a significant source of lost revenues.
In 2017, it won a case against local manufacturer Mighty Corp., which agreed to pay the government a total of P30 billion in unpaid taxes — the biggest settlement on record for the government.
Mighty, which was accused of using counterfeit tax stamps, has since been sold to Japan Tobacco Inc.
The DoF said that last year, it burned over 230,000 master cases or over 115 million cigarette packs bearing brands made by Mighty. This is on top of over 9,000 master cases that were incinerated in the latter part of 2017.
In January, meanwhile, the DoF and the BIR destroyed machines used to make contraband cigarettes.
These included three filter making machines, two packaging machines, a cigarette making machine, 484 master cases of various brands, and raw materials such as filter rods, tipping papers and packaging foil.
WITH A REPORT FROM TYRONE C. PIAD
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