FINANCE Secretary Carlos Dominguez III warned that cigarette firms found to be violating the stamp tax law will pay the government large sums of money as they deprive the government of millions of pesos in unpaid taxes.
Dominguez issued the warning after the Bureau of Customs and Bureau of Internal Revenue agents recently seized P2 billion worth of fake cigarettes in warehouses in Pampanga, General Santos and Zamboanga.
The raid resulted in the confiscation of 23.2 million packs of cigarettes allegedly manufactured by local cigarette maker Mighty Corp. with fake tax stamps. Authorities said unpaid excise taxes due to the use of counterfeit tax stamps affixed on Mighty cigarette packs would reach around P600 million.
“Of course, they have to pay if proven their tax stamps are fake. Or else, we will confiscate all the cigarettes because they are illegal,” Dominguez said at the sidelines of a briefing at Bangko Sentral ng Pilipinas Friday.
“So far we have caught one company, but we are also looking at other companies that have violated the stamp tax law,” Dominguez said.
He said charges might be filed against those involved in the illegal activities.
“First, they have to put the documents together and everything. We also want to thank [Customs commissioner] [Nicanor] Faeldon for taking the initiative here,” Dominguez said.
The Bureau of Internal Revenue earlier said it was considering new designs of cigarette tax stamps with improved security features to prevent the proliferation of fake ones that affect the government’s tax collection on tobacco products.
Deputy Commissioner Jesus Clint Aranas of the BIR’s legal and inspection group said in an earlier interview the stamps’ security features were something that the agency would have to improve on.
“We are looking into new designs right now. But of course the security features is something that we have to improve on. We cannot be doing the same thing that we did the last time because the counterfeiters will just adopt. And then again repeat the process and then we’ll have to change again,” Aranas said.
Aranas said the proliferation of fake stamps indicated security had been breached and the enforcement was lacking. Aranas, however, ruled out the possibility of changing regularly the security features of tax stamps because it could mean additional costs.
Data from the agency showed that total excise tax collections last year increased to P163.5 billion from P158.3 billion a year ago. But despite the increase in the total excise tax, collections from tobacco products declined to P91.6 billion in 2016 from P99.5 billion a year ago, which experts partly attributed to the use of fake cigarette tax stamps.