THE Bureau of Internal Revenue (BIR) said it will withdraw the tax-stamp exemption of export cigarettes, after a legislator cited the potential for these products to enter the market as tax-free smuggled goods.

At the House Ways and Means Committee hearing Monday, the chairman, Representative Jose Ma. Clemente S. Salceda, said the BIR should revoke Revenue Regulations (RR) No. 9-2015, which grants the exemption. He called unstamped export cigarettes “the mother lode of smuggling.”

BIR Commissioner Caesar R. Dulay said the agency will reverse its rules in response to Mr. Salceda’s proposal.

“My word of honor is we will reverse it as suggested by the Chair,” he said at the hearing.

RR No. 9-2015 allows cigarette exporters to omit the tax stamp, instead linking the shipments with unique identification codes.

Investigations by legislators have found that raids conducted on the facilities of GB-BEM Cigarette Company, Inc., GB Global Exprez, Inc., and Movers Box Printing turned up export cigarettes that were being distributed in Central Luzon.

In a statement, Mr. Salceda estimated the revenue lost to cigarette smuggling annually at P30 billion at least due to “the laxity of enforcement” against the illegal cigarette trade.

Legislators also cited the Philippine Economic Zone Authority’s (PEZA) laxity in admitting locators without the necessary BIR permits. GB-BEM is registered with PEZA but had no permit to manufacture the cigarettes for export.

“If you think a permit to manufacture from BIR is needed, why did you approve GB-BEM as PEZA locator without that permit?… If you did not allow them to operate, then they would not have brought in (smuggled goods),” Nueva Ecija 1st District Rep. Estrellita B. Suansing said at the hearing.

PEZA Director-General Charito B. Plaza said that there was a misunderstanding regarding the company’s application to locate in an economic zone.

Mr. Salceda said he is looking into creating a “licensed area” in economic zones for highly regulated products to prevent them from being mixed in with less-regulated items. He added the PEZA police should strengthen enforcement in economic zones. — Gillian M. Cortez