DOF seizes new batch of illicit cigarettes

The Department of Finance (DOF) reported yesterday that the government seized another batch of illicit cigarettes in Cabanatuan City, Nueva Ecija following the joint operation conducted by the Bureau of Internal Revenue (BIR) and the National Bureau of Investigation (NBI).

In a report submitted to Finance Secretary Carlos G. Dominguez III, the operatives said that they confiscated 480 master cases of illicitly traded cigarettes from a store in Cabanatuan last Thursday, October 19.

After the raid on Collette’s PX Store and its warehouse, the establishment was ordered closed as provided under Section 172 of the National Internal Revenue Code.

The raid which was done by a team of BIR employees and NBI agents, where they uncovered the illicit cigarettes with the brands “Two Moon,” “RGD,” “Black Bat,” “Twin Star,” among others.

“The store and the warehouse were raided following information that the said establishment has been selling cigarettes not affixed with BIR tax stamps,” the report to Dominguez said.

According to the report, “the warehouse raid resulted in the closure of the premises under Section 172 of the Tax Code because there were initially 480 mastercases of various cigarette products without tax stamps.”

Under Section 172 of the Tax Code, the BIR may detain products when it has good reason to believe that the proper excise taxes were not paid.

The BIR is still estimating the total value of the seized products and gathering additional details as of press time.

Earlier, several joint operations by the BIR and Bureau of Customs (BOC) led to a string of charges against Mighty Corp.

Mighty Corp. had faced complaints involving tax liabilities of over R27 billion for the alleged possession and use of fake internal revenue stamps.

The charges prompted Mighty to settle its tax liabilities, which is estimated to earn for the government over R30 billion in additional revenues. The settlement is the largest-ever from a single corporate entity in the country’s history.

Earlier, Dominguez said they expect revenues from the so-called “sin” products would sustain its growth pace next year as the government intensifies its programs against illicit cigarette trade.

Along with higher collections, Dominguez said the government was also expecting cigarette smuggling may increase as prices of tobacco products continue to rise as mandated by the sin tax reform law of 2012.

Dominguez already ordered Customs Commissioner Isidro S. Lapeña to intensify border control against unauthorized entry of imported cigarettes.

“I told them, Lapeña, when he was here, that [cigarette smuggling] is something you have to watch because you know already prices will go up, there are cheap producers in other countries and they will try to smuggle it here,” Dominguez said.

“I think now that the low-end producer is out of the process, prices will rise, you know what will happen when prices rise, people will be incentivized to smuggle,” he added.

The DOF had reported that sin tax collections jumped by 8.7 percent in first seven-months of the year to R73.28 billion from R67.43 billion in the same period last year..

Of the total, revenues from cigarettes reached R41.04 billion, higher by 3.5 percent compared with R39.63 billion in the same period last year.

Excise taxes from alcoholic beverages, on the other hand, amounted to R32.25 billion, up by 16 percent from R27.79 billion in the previous year.

For 2018, the Finance department expects revenues from tobacco and alcohol will rise anew by 4.2 percent to R150.2 billion from R142.5 billion assumption for this year.

Of the total, the DOF expects revenues from tobacco will increase by 4.9 percent to R96.5 billion from R92 billion, while alcohol may jump to R53.7 billion or 4.3 percent from R51.5 billion.