PH, Thailand talks on cigarette taxes collapse

THE PHILIPPINES formally asked the World Trade Organization (WTO) to look into inconsistencies in the customs valuations that Thailand continued to impose on imported cigarettes.

This request came after the two nations failed to resolve their dispute during bilateral consultations held in Bangkok on June 2.

In a filing with the WTO dated July 6, the Philippines said the Thai public prosecutors’ move to file tax evasion raps against officials of Philip Morris (Thailand) Ltd. undermined a decision issued by the multilateral body back in 2011. According to the public prosecutors, the cigarette firm allegedly under-declared 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).

If found guilty, Philip Morris Thailand would have to face a fine four times the estimated cost of the imported goods, including taxes.

Local trade officials expressed fear the results of the tax evasion case would affect some two million Filipinos directly and indirectly dependent on the operations of Philip Morris, which is the Philippines’ biggest manufacturer of cigarettes. Thailand is the main export destination of the product.

Citing the WTO ruling, the Philippines said Thailand must impose a fair valuation of tariffs on imported cigarettes.

“Thailand has failed to explain its basis for considering that the purchase prices paid by a Thai duty-free operator for duty-free cigarettes can be used as the customs values for Philip Morris Thailand’s imported cigarettes,” the Philippines said in its filing before the WTO.

The Philippines said the actions taken by Thailand violated provisions under the WTO Customs Valuation Agreement (CVA), also known as the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade (GATT) 1994.