Philippines: FCTC Willing to Assist BIR in Cigarette Monitoring

Source from:  Manila Bulletin 06/30/2014

FCTC Alliance of the Philippines, a principal advocate of excise tax reform, is willing to assist the Bureau of Internal Revenue (BIR) in monitoring tax compliance of local cigarette firms.

Maricar Limpin, FCTC Alliance president, told reporters in an interview that her group, a non-government organization, is willing to be the BIR's third-party auditor of cigarette factories to ensure revenue collection and prevent tax evasion.

However, Limpin said government should ensure that cigarette companies have no hand in the third-party audit group. "If we [FCTC] would be the monitoring group, I think that would be better," she stressed.

Third party monitoring is seen to ensure strict implementation and protect the gains of Republic Act 10351, or the excise tax reform law of 2013.

BIR figures show that excise tax collection on tobacco and alcoholic beverages reached P23.02 billion in the first four months of 2014 or 5.8 percent above the agency's P21.74-billion goal.

The amount was also 11.83 percent higher than the P20.58 billion reported in the same period last year. Taxes from cigarettes alone amounted to P11.34 billion, up 14.22 percent from P9.93 billion.

Admitting that there are untaxed cigarettes available in the local market, FCTC stressed that strict monitoring of cigarette removals from local factories is important.

A recent study by an international research group showed that the Philippines lost an estimated P15.6 billion in revenues due to non-payment of correct taxes by local cigarette manufacturers, while consumption of domestic illegal tobacco nearly tripled from 6.1 billion in 2012 to 17.1 billion last year.

To show that her agency is strictly enforcing the excise tax law, BIR Commissioner Kim S. Jacinto-Henares ordered a 24/7 monitoring of local cigarette firms, particularly Bulacan-based Mighty Corp. following allegations of smuggling, underpricing and volume underdeclaration.

As this developed, Limpin expressed full support to BIR's planned implementation of the Internal Revenue Stamps Integrated Systems.

The BIR is set to require tax measure on tobacco products starting next month, which aims to curb proliferation of untaxed cigarettes in the domestic market. "If you have a stamp tax system, you will have a way by which you can mark illicit products," Limpin said.

Tobacco giant PMFTC Inc. earlier said it supports tax stamps on cigarettes but the company also urged government to impose additional measures to safeguard the industry against illicit trade.

Illicit trade is believed to be one of the reasons why prices of some cigarettes brands in the domestic market have remained abnormally low despite two consecutive-years of excise tax rates increases.

Jacinto-Henares said earlier the BIR is conducting an audit on the tax payments made by Mighty after several discrepancies were discovered on the cigarette manufacturer's imports and exports transactions. Enditem