Bir seizes P5.4 B worth of illicit cigarettes

The trade of illicit cigarettes remains a problem with the Bureau of Internal Revenue (BIR) unearthing P5.4-billion in tax liabilities from its latest operation.

BIR recently raided three warehouses and factories in Cavite where it confiscated master cases of cigarettes, machines, sacks of raw tobacco and fake internal revenue stamps.

For the latest raid, BIR said total deficiency in taxes reached P5.4 billion.

BIR commissioner Romeo Lumagui said this was one of the largest raids of the revenue agency against illicit cigarettes.

This developed as the BIR continues to target large-scale cigarette traders amid the government losing billions in taxes from the illicit trade of the commodity.

“We advise everyone to register their cigarette operations with the BIR and to pay proper excise taxes on those products,” Lumagui said.

“If you register and pay correct taxes, your businesses will be compliant. We want a level playing field so we protect registered businesses and raid illicit trade,” he said.

Individuals associated with the warehouses and factories will face criminal and civil cases for several violations of the Tax Code including payment of excise tax on domestic and imported products, detention of packages containing taxable articles and offenses relating to stamps, among others.

For comparison, illicit cigarettes can be bought for as low as P350 per ream while the legitimate ones are sold at P1,750.

It is estimated that illicit trade is now at 2.026 billion stick with revenue losses likely to be at least P60.6 billion.

Similarly, a previous study by the University of Asia and the Pacific and the Federation of Philippine Industries Inc. showed that illicit trade in cigarettes has reduced the country’s gross domestic product by an average of 0.39 percent over the past five years.

It also showed a decrease in the cigarette sales in the formal market but illicit trade volume has been on an uptrend.

This was specifically noted upon the enactment of the Sin Tax Law in 2012 and the Tax Reform for Acceleration and Inclusion Law in 2018 where illicit trade grew by 83 percent and 21 percent, respectively.