Dominguez to BIR: Tighten monitoring of fake tax stamps

MANILA, Philippines – Finance Secretary Carlos Dominguez III ordered the Bureau of Internal Revenue (BIR) to step up efforts against tax evasion, following the agency’s probe into fake cigarette tax stamps allegedly used by Mighty Corporation and other tobacco manufacturers.

In a statement on Wednesday, January 25, Dominguez said BIR Commissioner Caesar Dulay did the “right thing” in ordering an investigation into the alleged use by certain tobacco manufacturers of fake tax stamps on their cigarette packs. 

“Commissioner Dulay did the right thing in ordering an investigation after receiving field reports from our revenue officials on the illegal practices of certain tobacco companies,” said Dominguez.

“This is a matter of serious concern and I’m instructing the BIR to tighten monitoring and enforcement.” (READ: Duterte to name big tax evaders next)

Mighty said in a statement, however, that it has not been using fake tax stamps. It even asked the BIR to investigate other multinational firms for possible tax evasion.

Last December, teams from the BIR and the Bureau of Customs (BOC) had seized fake cigarettes worth over P1 billion, fake tax stamps worth about P175 million in taxes, raw materials, machines for cigarette manufacturing, and other paraphernalia in separate raids in Pangasinan, Pampanga, and Bulacan. 

Dominguez had lauded the BIR and the BOC for intensifying their campaign against the illicit tobacco trade.

“These sustained efforts show that the Duterte administration’s campaign against corruption and other illegal activities would be pursued with the same zeal as its war against narco traffickers and illegal drugs,” he added.

Illicit tobacco trade

In a report to Dominguez, the BIR said last month that it had shut down the premises of an unauthorized manufacturer of various cigarette brands in Lubao, Pampanga, and confiscated “5.5 million pieces of fake unused cigarette strip stamps worth approximately P175 million in excise taxes and VAT (value added tax).”

“The machines and other materials for tobacco manufacture were put under the custody of the NTA (National Tobacco Administration),” BIR Regional Director Jethro Sabarriaga said in his report to Dulay. (READ: Duterte to corrupt BOC, BIR employees: I’m watching you)

According to Sabarriaga, the owner of the feed mill where the raid was conducted had registered with the BIR as a hog mill feed operator in October 2016. 

“The machines seized are capable of producing 200,000 packs of cigarettes per day and supplies and stamps in warehouse are estimated to be good for one month’s production. The stamps appear to be imported and with Chinese characters,” Sabarriaga said.

In a separate report to Dominguez, the BOC said last month it had raided a facility in Marilao, Bulacan where unlicensed raw materials for cigarette production, including over 500 boxes of cigarette filters, 100 sacks of tobacco leaves, reels of inner liner, cigarette paper, and packing film, were found. 

Customs Commissioner Nicanor Faeldon also said 4 warehouses in Villasis, Pangasinan found to be counterfeiting popular cigarette brands were raided, leading to the arrest of 24 undocumented foreigners and the confiscation of various materials for cigarette manufacturing.

The BOC has also seized counterfeit labels of cigarette brands manufactured by Philip Morris Fortune Tobacco Corporation (PMFTC) and arrested a certain Jayson Enero Li. – Rappler.com