BIR shutters illegal cigarette factory in Pampanga, seizes 1.6M packs

The Bureau of Internal Revenue (BIR) has shuttered in Pampanga an illegal manufacturer of cigarettes supposed to be exported to Malaysia, the Department of Finance (DOF) said.

In a statement on Monday (April 6), the DOF said the BIR’s “strike team” against illegal cigarettes last February shuttered the warehouse of GB-BEM Cigarette Co. Inc. It was inside the Clark Special Economic Zone as it operated as a factory despite lacking the permit to operate.

“The company claims that it has a tolling agreement with a Malaysian-based client and that the cigarettes are 100-percent exported,” said the DOF statement, citing Deputy Internal Revenue Commissioner Arnel S.D. Guballa in a report to Finance Secretary Carlos G. Dominguez III>

The BIR seized a total of 1,656,888 cigarette packs from the illegal factory.

Guballa said the BIR has been monitoring the factory since 2019 following reports that it was producing cigarettes bearing tax stamps similiar to those issued by the Malaysian government.

The BIR, Guballa added, also confirmed that the cigarettes produced by GB-BEM were being loaded into containers and received by Malaysian clients without tax markings.

Dominguez ordered the BIR and the Bureau of Customs (BOC) to report these irregularities to their Malaysian counterparts.

Officials of both the DOF and the BIR had said they expect illicit trade to shoot up alongside higher cigarette taxes.

The Tobacco Tax law of 2019 raised cigarette excise to P45 per pack effective Jan. 1, 2020.

The levy slapped on cigarettes will further increase to P50 a pack in 2021; P55 in 2022; and P60 in 2023, to be followed by 5-percent yearly increases starting in 2024.

Edited by TSB