China’s help sought to stop cigarette-making machines’ entry

The Department of Finance (DOF) has ordered the country’s two biggest tax-collection agencies to coordinate with their Chinese counterparts after machines churning out fake cigarettes locally were traced to have been smuggled from China.

In a statement on Sunday, the DOF said Bureau of Internal Revenue (BIR) Commissioner Caesar Dulay earlier confirmed with Finance Secretary Carlos Dominguez III that “the illegal tobacco trade has shifted from smuggling cigarettes to producing counterfeit brands here using undocumented cigarette-making machines acquired from China.”

‘New illicit scheme’

Dominguez has thus ordered Dulay and Bureau of Customs (BOC) Commissioner Rey Leonardo Guerrero “to coordinate with Chinese officials to inform them about this new illicit scheme and to request them not to allow the export of cigarette-making machines from China to the Philippines without the proper documentation.”

Citing a BIR report, the DOF said counterfeiters were already using “smaller, more portable” cigarette-producing machines.

“They have graduated from fake stamps to fake cigarettes,” Dulay was quoted by the DOF as saying.

Last year, the government caught homegrown cigarette manufacturer Mighty Corp. using fake tax stamps to avoid paying the correct excise on cigarettes.

As the BIR and the BOC intensified their crackdown on illegal cigarettes, “erring traders have apparently switched to manufacturing their own counterfeit cigarettes in lieu of smuggling legitimate products,” the DOF said.

“In the raids conducted by the BIR on several warehouses in Luzon and Mindanao, unlicensed cigarette-making machines, packing machines and filter-making machines were seized along with fake cigarettes and fake tax stamps,” the DOF added.

Dominguez and BIR officials earlier said there was a proliferation of counterfeit cigarettes as a result of the higher taxes slapped on the “sin” product, which also jacked up their retail prices.

The unitary cigarette excise further rose to P35 per pack since July under the Tax Reform for Acceleration and Inclusion Act.