Citing an alarming incidence of illicit tobacco trade among ecozone locators, the government plans to impose mandatory Bureau of Internal Revenue (BIR) registration before cigarette manufacturers can set up shop.
“The alleged illicit activities in special economic zones of certain locators registered with the Philippine Economic Zone Authority (Peza) is alarming because on top of enjoying tax breaks granted by the investment promotion agency, these errant firms have been depriving the government of unpaid income taxes, excise taxes, value-added tax (VAT) and customs duties whenever their illicit products are sold in the local market,” Finance Secretary Carlos Dominguez III said in a statement Tuesday.
Dominguez, who heads President Duterte’s economic team, recently wrote Trade Secretary and Peza chair Ramon Lopez to express concern about “lackadaisical monitoring and weak enforcement of laws” in the country’s economic zones that led to illicit trade.
At present, Peza does not require locators applying to manufacture regulated goods like cigarettes, alcohol, medicines and oil to first register with the BIR.
“As a result of this loophole, two enterprises which are both Peza-registered locators were able to allegedly manufacture unregistered cigarettes inside a special economic zone and supply these illicitly to the domestic market,” the Department of Finance said.
“Keeping a close watch on those engaged in manufacturing regulated goods from the moment the raw materials enter the zones up to the removal from warehouses is consistent with best practices employed to monitor excisable products and goods,” Dominguez said. —Ben O. de Vera