Palace backs drive vs fake tax stamps

BIR says excise tax collections on cigarettes declined in 2016 despite higher tax rate
By: - Reporter / @bendeveraINQ
/ 12:13 AM February 01, 2017

A Palace official said the Duterte administration was backing the Bureau of Internal Revenue’s investigation of the alleged use of fake cigarette tax stamps as latest data from the country’s biggest tax-collection agency showed a decline in excise tax collections from cigarettes last year.

A statement on Tuesday quoted Presidential Communications Operations Office (PCOO) Secretary Martin Andanar as saying that he had already instructed security printer APO Production Unit “to help the BIR in its investigation” of homegrown manufacturer Mighty Corp. and other cigarette firms.


“PCOO, through APO’s chair Mike Dalumpines, has been working closely with the BIR to get to the bottom of the alleged cigarette tax stamp scam,” Andanar was quoted as saying. APO is a PCOO-attached agency.

Last week, Commissioner Caesar R. Dulay told the Inquirer that the BIR already issued some letters of authority to Mighty and other companies upon receiving reports on the proliferation of fake tax stamps in cigarettes being sold in the market. A letter of authority is an official document that empowers revenue officers to examine and scrutinize taxpayers’ books in order to determine their correct tax liabilities.


For his part, Finance Secretary Carlos G. Dominguez III also last week said that the proliferation of fake cigarette tax stamps was “a matter of serious concern,” hence ordered the BIR to further tighten enforcement.

Since late 2014, the BIR has been implementing the Internal Revenue Stamps Integrated System on tobacco products. These stamps ensure that the correct excise taxes had been paid.

Federation of Philippine Industries estimates showed that foregone revenues from fake tax stamps reached as much as P10 billion annually.

According to Dulay, the proliferation of counterfeit tax stamps “definitely impact” on the collection of excise taxes, although he could not say by how much. Excise taxes account for a tenth of the BIR’s annual tax take.

During the Senate ways and means committee hearing on tax reform on Tuesday, Internal Revenue Deputy Commissioner Nestor S. Valeroso said tentative data showed that total excise tax collections last year rose to P163.5 billion from P158.3 billion in 2015.

But despite the increase in the total excise tax take, collections from tobacco products declined to P91.6 billion in 2016 from P99.5 billion in the previous year. This was despite higher rates implemented last year than in 2015 under Republic Act No. 10351, or the Sin Tax Reform Law.

Valeroso later told reporters that the lower excise tax collections from cigarettes last year were due to the impact of the graphic health warning on cigarette packs; lower removals or sales as a result of higher excise taxes, and the proliferation of fake tax stamps as well as smuggled cigarettes.


Valeroso said the BIR was currently conducting undercover surveillance of traders engaged in illicit cigarette trade.

The BIR official said smuggled cigarettes mostly came from Zamboanga and then distributed nationwide, while counterfeit tax stamps were mostly used in the provinces.

He said the volume of smuggled cigarettes as well as fake stamps in the market were quite sizable, but did not provide figures.

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