PH raises concerns over latest tax rap vs Philip Morris in Thailand

Trade officials here were studying the latest tax evasion charge slapped against Philip Morris Thailand Ltd. (PMTL) to determine whether it would undermine a ruling issued by the World Trade Organization (WTO) that favored the Philippines five years ago.

The result of this latest tax evasion case is feared to have a bearing on some 2 million Filipino tobacco farmers dependent on the operations of Philip Morris, the country’s biggest cigarette manufacturer. Thailand is the product’s biggest export destination.

The DTI’s interest on this matter was meant to safeguard what the Philippines has won against Thailand back in 2011. Ruling in favor of the Philippines, which filed the case in favor of Philip Morris Philippines Manufacturing, Inc. (now Philip Morris Fortune Tobacco Corp.) in 2008, the WTO said Thailand granted less favorable treatment to imported cigarettes from 2002 to 2003 by exempting domestic cigarettes from administrative requirements like filing tax returns, filing revenue and expense reports, and related sanctions for failure to report.

The Trade agency said it wanted to know if the current tax evasion case involved import entries covered by the WTO ruling. Trade officials declined to comment further pending results of their own inquiry into the case.

Recent news reports stated that Thai prosecutors charged PMTL with tax evasion for allegedly under-declaring the value of 272 batches of cigarettes imported from the Philippines. The total cost of the imported goods and duties was estimated to be more than 20 billion baht ($557 million).

A hearing was reportedly set for April this year. If it loses the case, PMTL will have to face a fine four times the estimated cost of the imported goods, including taxes.  Amy R. Remo