BIR uncovers new modus to evade cigarette excise tax payments

MANILA, Philippines — The head of the Duterte administration’s economic team has asked the Department of Trade and Industry (DTI) to join in the fight against illicit cigarette trade after the Bureau of Internal Revenue (BIR) uncovered a new modus operandi among traders.

In a statement Monday, the Department of Finance (DOF) quoted BIR officials as recently reporting to Finance Secretary Carlos G. Dominguez III that “some enterprising entities have come up with a promotional scheme in which tax stamps on sold cigarette packs could be exchanged for a can of sardines or a pack of noodles.”

Reusing those cigarette tax stamps will allow the user to avoid paying correct excise taxes for new products, as it would appear that the dues were already paid, although for the previous cigarette packs.

For BIR Deputy Commissioner Ariel Guballa, his suspicion was that “illicit tobacco traders could be using this promotional scheme to gather used tax stamps to put on packs of fake cigarettes,” DOF said.

As such, Dominguez ordered BIR to determine who were purchasing the used cigarette tax stamps and coordinate with DTI in order to stop these transactions.

“You better talk to the DTI and tell them that can’t be allowed,” Dominguez told Internal Revenue Commissioner Caesar R. Dulay, especially if there was no DTI permit for such a promo, the Finance chief said.

In response, Dulay told Dominguez he will meet with cigarette manufacturers such as PMFTC and Japan Tobacco Inc., as well as the handlers of the Internal Revenue Stamps Integrated System (Irsis) to resolve this issue.

At present, tax stamps were being churned out by state-run printer APO Production Unit Inc., while Irsis Corp. provided their security features.