BIR seizes illicit cigarettes with P8 billion tax deficiencies

October 8, 2024 | 12:00am

MANILA, Philippines — The sale of illicit cigarettes continues to be a government problem with the Bureau of Internal Revenue (BIR) finding P8 billion in tax liabilities from its latest operation.

The BIR recently raided four large scale manufacturers in Clark, Pampanga where it discovered illicit cigarettes and unregistered machines.

For the latest raid, BIR said total deficiency in taxes reached P8.06 billion.

BIR commissioner Romeo Lumagui Jr. said this was the largest illicit cigarette operation conducted since he assumed the top post at the revenue agency.

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

“This raid shows that the BIR targets even large-scale manufacturers of illicit cigarettes, not just small-scale dealers or smugglers. We support the call of President Marcos to eradicate illicit tobacco trade,” Lumagui said.

The manufacturers associated with the warehouses will face criminal and civil cases for several violations of the Tax Code including unlawful possession of cigarette papers, 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 sticks 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. revealed 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 seen 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.