BIR partners with BOC vs. cigarette smugglers

CIGARETTES (representational image)

MANILA — The Bureau of Internal Revenue (BIR) has teamed-up with the Bureau of Customs (BOC) to jointly run after tobacco smugglers.

BIR Commissioner Caesar Dulay said they have partnered with the BOC on this bid because of the latter’s expertise in running after illegal importers of cigarettes, among others.

He said tobacco smuggling is a huge business but declined to give any estimates as to how much government loses in uncollected taxes as a result of this illegal activity. Dulay revealed that legitimate cigarette manufacturers have asked government to run after the underground tobacco industry at the same time indicating their willingness to work with the state to address the problem.

“It’s substantial that’s why the legitimate tobacco companies are appealing,” he told reporters at the sidelines of the last day for the filing of Income Tax Return (ITR) for the Revenue Region No. 7 in Quezon City alone Monday.

Meantime, the Department of Finance (DOF) has strengthened its drive against erring taxpayers and one of the companies that the agency has trained its eyes on is Mighty Corporation, which has been proven to have tax liabilities amounting to Php25 billion.

Earlier, Finance Secretary Carlos Dominguez III said including value added tax (VAT) and other fees, Mighty Corporation, which has been bought by Japan-based Japan Tobacco Inc. (JTI), needs to settle some Php30 billion in accumulated tax obligations from the past.

The finance chief also said that setting aside past obligations, JTI is also expected to pay nearly Php40 billion for this year alone. This amount, he said, is based on computations of the DOF and the BIR.

A joint BOC-BIR operations earlier resulted to the confiscation of 23.2 million packs of cigarettes allegedly manufactured by Mighty Corporation that have fake tax stamps, with a tax due worth about PHP696 million. DOF is also awaiting reports from its two attached agencies regarding another operation at Mighty’s sales office in General Santos City wherein some 3.2 million packs of cigarettes were also found bearing fake stamps.

With the more stringent program against erring cigarette manufacturers and the implementation of the higher sin taxes, Dulay said illegal manufacturers are becoming more bold as smokers snap up their much cheaper products. He said legal cigarettes manufacturers have to pay the additional Php32 stamp per pack, which in-turn is added to their retail price.

He said a task force headed by Sonny Advincula, chief regional investigation division of BIR Quezon City, has been formed specifically to run after illegal cigarette traders. “We call it the strike team and he created his own team to go into that. And he is coordinating closely with Deputy Commissioner Dy Buco of Customs,” he added.