The Department of Finance (DOF) has ordered its attached revenue-generating agencies, the Bureau of Customs (BOC) and Bureau of Internal Revenue (BIR), to tighten their watch on smugglers of major commodities such as rice, fuel, and cigarettes by forming a joint task force.
Finance Secretary Carlos Dominguez III specifically ordered the heads of the two agencies to “focus on rice, fuel, steel, cigarettes and food and agricultural products such as chicken, onion and garlic in beefing up the government’s efforts to combat smuggling.”
DOF stated that this is Dominguez’s response to Customs Commissioner Isidro Lapeña’s proposal to form a joint BOC-BIR task force, a move meant to revitalize the customs bureau’s anti-smuggling drive.
“Make sure that you’re working together there. I’m sure smuggling of cigarettes into the country will go up,” Dominguez said.
The finance chief said he has been receiving reports of cigarette smuggling ever since local tobacco manufacturer Mighty Corporation shut down its operations in a deal to settle its tax liabilities with the government. He said illegal cigarette traders have been rushing to fill the void left by Mighty.
BOC and BIR found in Bulacan last month fake cigarettes bearing the “Two Moon” brand and allegedly imported from Thailand, but the report is yet to be confirmed.
Dominguez pointed out that it was the joint operation of BOC and BIR that uncovered early this year Mighty’s use of fake cigarette tax stamps to avoid paying excise tax.
Dominguez is optimistic that with BOC and BIR working together under the planned joint task force, they “could replicate their effort in exposing the tax liabilities of corporations as large as Mighty’s,” which is deemed the biggest tax case so far in the country’s history.
And to combat oil smuggling, BOC will be implementing next year a fuel marking system as part of the government’s proposed tax reform package.
DOF estimates that under the Senate version of the proposed first tax reform package, fuel marking would generate P20 billion in additional revenue. Estimated forgone revenue from oil smuggling is estimated at P25 billion to P40 billion yearly.
Citing reports from the Washington-based watchdog Global Financial Integrity and from the International Monetary Fund, BOC said it has been unable to collect taxes amounting to P22.5 billion from oil, P21 billion from vehicles, and P16 billion from cigarettes yearly due to smuggling.
Image courtesy of Ben Schonewille at FreeDigitalPhotos.net
