Philippines: BIR to Implement Tobacco Tax Stamp Plan

Source from:  Business World  07/15/2014

The Bureau of Internal Revenue (BIR) will finally start implementing its security tax stamp project -- an initiative over two years in the making -- next month to monitor the supply and sale of tobacco products in the domestic market.

"There will be a pilot run which will start in August," BIR Commissioner Kim S. Jacinto-Henares said in a phone interview yesterday when asked about the implementation of the Internal Revenue Stamps Integrated System (IRSIS) project.

"We should be able to issue the regulations this July," Ms. Jacinto-Henares added.

The Philippines, as a signatory to the World Health Organization's Framework Convention on Tobacco Control, committed to adopt an industry-independent track-and-trace system to monitor the movement of tobacco products in the local market.

In 2012, the BIR said it would bid out a secure tobacco tax stamp scheme to help minimize smuggling and plug revenue leaks. The target procurement date was moved several times as the agency finalized plans.

Official tax stamps on products signify that all tax obligations -- such as excise tax -- of the product's manufacturer have been paid.

"It's a way to monitor the supply and sale of these products. For example, if a company says a certain volume was withdrawn, we want to see if this is really what was withdrawn and if they're declaring that correctly," Ms. Jacinto-Henares said.

Products subject to excise taxes are taxed upon withdrawal from a Customs facility, if imported, or upon removal from the place of manufacturing if locally produced.

The BIR last year tapped the APO Production Unit -- a state-run printing services firm under the Presidential Communication Operations Office -- to run the IRSIS project as security stamps are considered "accountable forms".

Under Republic Act 9184 or the procurement law, agencies requiring printing of accountable forms must avail of the services of the Bangko Sentral ng Pilipinas, National Printing Office or the APO Production Unit.

In August last year, the government, through the APO, opened the bidding process for a contract to supply the security technology for the tax stamp project at an approved budget of P1.75 billion.

Last November, the APO awarded the project to IRSIS Corp., a joint venture of four information technology firms -- CAI-STA Philippines, Inc., Philcox Philippines, Inc., Latent Image Technology Ltd., and Comclark Network and Technology Corp.

Ms. Jacinto-Henares said that upon the scheme's rollout, cigarette manufacturers will need get certification from the BIR that they have paid the taxes due before the APO can give them the security stamp.

"They will need to put the stamp on every pack of cigarettes they will release to the market," she explained. Enditem