JTI Asks for 3-month Transition Period on Tax Stamp

Source from:  Manila Bulletin  04/21/2014

Cigarette-maker Japan Tobacco International Philippines (JTI) has expressed support for the government's tax stamp project saying it will curb tax evasion and reduce illegal trade in cigarettes but also pressed for reasonable three- month transition period.

According to JTI, reasonable transition periods would be necessary for imports as well as for products manufactured in the Philippines.

Stamp size is also a key consideration and that the administrative cost must be extremely moderate, according to JTI.

JTI nevertheless said it needs at least three months lead time to prepare and affix the new tax stamps on its cigarette products.

"Under the current scheme, a lead time of at least three months is needed for JTI to import its products," Manousos Koukoiurakis, JTI Philippine president and general manager said in his letter to the Bureau of Internal Revenue (BIR).

"This period includes the placement of product orders with our overseas manufacturer/supplier, the advance requisitioning and pre-payment of tax stamps for sending abroad, stamp affixture on our products as the place of production as well as shipment and arrival of the products in the country," he added.

The official said it hopes that the government would take into account "practical realities, such as the lot size order, total industry production and the printing plant's production capacity."

"We assume that the government designated printer will be able to accommodate the entire industry's demand," Koukourakis said.

JTI, meanwhile, sought clarification if there would be changes to the current location and size of existing stamps on imports, which is 23 mm. x 43 mm.

"We believe that the current size and location of affixture would enable us to comply with the labeling requirements under the Tobacco Regulation Act and the relevant BIR Revenue Regulations," it said.

JTI asked BIR to still allow the import and sale of cigarette products that are in transit when the new regulation comes into force.

"In other words, if the tax stamp regulations be made effective on a certain date, we ask the BIR to take notice that there may be imported products that bear the old tax stamp which, at the time the stamps were ordered, were still valid and the appropriate excise taxes duly paid," it said.

"We believe that a retroactive application of the regulation will not be fair or reasonable. The proper transitory provision should be provided in the regulation," JTI further said.

The tobacco manufacturer nevertheless said penalties should be meted out against those undermining the tax stamp project through non-compliance or counterfeiting the tax stamps.

"We suggest that the regulation reiterates the penalties under existing law for failure to comply with the tax stamp requirement, such as those penal provisions found in the National Internal Revenue Code, tariff and customs code and other relevant regulations," JTI said.

JTI said it understands that tobacco manufacturers and importers would shoulder the cost of the tax stamp but also calls on the BIR "to impose a reasonable administrative fee, if any, in light of the recent significant excise tax increase." Enditem