Finance Secretary Carlos Dominguez III is seeking the help and cooperation of China and member-countries of the Association of Southeast Asian Nations to prevent the entry of illicit tobacco products into the country.
Dominguez said the Finance Department increased its vigilance against illicit cigarettes from other countries following the seizure of undeclared loose Chinese-branded tobacco products in Manila last week.
Dominguez said he would direct the Bureau of Customs to alert its counterparts in China and other Southeast Asian nations about the entry of these illegal products.
“We are increasing vigilance against non-tax paid cigarettes from all sources. I will order BOC to alert their counterparts in China and all the Asean countries to the practice of exporting untaxed cigarettes to the Philippines,” Dominguez said in an interview.
The Bureau of Internal Revenue raided a warehouse owned by Jayson DHK Trading in Binondo, Manila and seized around 145 mastercases or 1.45 million sticks of various illicit Chinese-branded cigarettes on Oct. 25.
BIR revenue officer Remedio Advincula Jr., who led the bureau’s strike team, said the emergence of a flourishing black-market industry of Chinese-branded cigarettes in the country was becoming alarming.
Advincula said unscrupulous traders saw an opportunity to illegally import cigarettes from China amid the growing Chinese market in the Philippines.
The confiscated cigarette packs, which were not affixed with Philippine tax stamps and carried no graphic health warnings, had markings of Chinese brands like Double Happiness, Changbaishan, Ligun, Goldenleaf, Septwolves, and YunYan.
“Filipinos don’t patronize these brands, that’s why I suspect they only cater to Chinese smokers who are here,” Advincula said.
Department of Tourism data showed that 1.21 million Chinese tourists visited the Philippines from January to August 2019, while the Labor Department issued alien working permits to 61,878 Chinese nationals as of June this year.
The BOC and the General Administration of Customs of China signed an intergovernmental agreement in August to strengthen the cooperation and mutual assistance on customs matters between the two countries.
Dominguez also directed the BIR and BOC to intensify their joint campaign against the illicit cigarette trade after the Congress approved a new law imposing substantial excise tax increases on tobacco products.
Dominguez asked Customs officials to step up their campaign against cigarette smuggling, which was expected to increase once the new law imposing higher “sin” taxes on tobacco products was implemented.
The tobacco “sin” tax reform law provides for a unitary P45 excise tax increase per pack on tobacco products starting 2020, followed by a series of P5 adjustments until the rate reached P60 by 2023, and a 5-percent annual increase thereafter.