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China agrees to probe shipping of cigarette making equipment

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The Bureau of Customs destroys seized and forfeited cigarette-making machines on Feb. 6. -- PHILIPPINE STAR/JOVEN CAGANDE

CHINA’S CUSTOMS AGENCY said it will look into the issue of cigarette-making machines being shipped to the Philippines, in order to help the Bureau of Customs (BoC) deal with domestically-manufactured cigarettes that avoid excise tax, the Department of Finance (DoF) said Monday.

In a statement, the DoF quoted Customs Commissioner Rey Leonardo B. Guerrero as saying that Chinese customs officials agreed “to look into the matter.”

“I asked them if they could stop such exports on their part because this is creating problems as far as we’re concerned,” Mr. Guerrero told Finance Secretary Carlos G. Dominguez III in the statement.

Mr. Dominguez has directed the BoC and the Bureau of Internal Revenue (BIR) to work with their counterparts in China to stop the entry of unregistered cigarette-making machines, which are typically used to make cigarette products that evade taxation.

According to Mr. Dominguez, the increase in the tobacco excise tax has led traders to resort to smuggling such machinery.

The DoF noted that Mighty Corp. offered the largest tax settlement in history of P30 billion after it was found to have used counterfeit excise tax stamps, which pushed the company to exit the business.




Last week, the government raided a facility in Malabon which produced fake labels and stamps, used by underground cigarette manufacturers to pass their products off as tax-compliant.

In May, the Bureau of Internal Revenue charged a Tacloban-based businessman with evading P212 million worth of tax after he was found in possession of cigarettes with fake excise stamps.

According to the BIR, a total of 1,215 master cases containing various cigarettes with fake stamps were seized from the respondent by the National Bureau of Investigation.

In April, a Pangasinan-based manufacturer of tax stamps was charged with P3.4 billion in tax evasion charges, after he was caught with seven reams of non-compliant cigarettes and fake stamps. — Reicelene Joy N. Ignacio