Fake tax stamps probe widened

The Bureau of Internal Revenue (BIR) is expanding its investigation of the rampant use of fake cigarette stamp taxes to include other tobacco players.

As early as November last year, the BIR has been investigating homegrown cigarette manufacturer Mighty Corp. for its alleged use of fake tax stamps and has issued letters of authority to five firms controlled by the Wongchuking family, documents showed.

BIR Deputy Commissioner Jesus Clint O. Aranas on Tuesday said the country’s biggest tax-collection agency has expanded its investigation to also include other players aside from Bulacan-based Mighty.

Aranas told a forum that he already submitted for Internal Revenue Commissioner Caesar R. Dulay’s signature letters of authority for other cigarette companies.

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.

“Initially, the investigation was initiated against one cigarette manufacturer. [But] if we were to get to the bottom of this… it’s only fair that all players in the industry must be urged to faithfully comply with the tax stamp law,” Aranas said.

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.

Last week, Dulay told the Inquirer that the BIR 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, especially in the provinces.

BIR documents showed that on Nov. 18, 2016, the agency issued letters of authority numbered 2016-000000209 to 2016-000000213 to five Wongchuking family-owned businesses, which besides Mighty also included La Campana Fabrica de Tabacos Inc., Mighty International, Tobacco Industries of the Philippines Inc. and Wongchuking Holdings Inc.

Aranas said he already came up with an initial report on the proliferation of fake cigarette tax stamps, but declined to disclose his findings.

While Dulay already identified Mighty as among those reportedly affixing fake tax stamps on its products, Aranas said “there are other tobacco companies worth looking [into].”

“The industry is very big. We need to look at the bigger picture,” Aranas said.

According to Aranas, foregone revenues from the proliferation of fake cigarette tax stamps were actually more than the industry estimates of about P10 billion yearly. “It’s big enough to make an impact on our economy,” he said.

With sizable foregone revenues due to fake tax stamps, Aranas said the BIR “cannot just let it pass” nor “turn a blind eye on it,” especially as the government was scrambling for additional revenues to fund its planned infrastructure buildup.