Big haul of fake tax stamps

2 March 2017:

Joint operations of the bureaus of Customs and of Internal Revenue on Wednesday yielded a total of 23.2 million packs of cigarettes reportedly manufactured by homegrown manufacturer Mighty Corp. that bore fake tax stamps, depriving the government of some P696 million in unpaid taxes.

The Department of Finance confirmed reports of a massive confiscation of Mighty cigarette packs with counterfeit tax stamps, although it was still awaiting the official reports of the BOC and the BIR as of press time.

On Wednesday morning, the BOC and the BIR raided Mighty’s sales office in General Santos City where initial reports showed 6,400 master cases or 3.2 million packs of the Bulacan-based cigarette manufacturer’s products were found with fake stamps.

At an excise tax of P30 a pack, the government’s foregone revenues from the Mighty and Marvels cigarette packs bearing counterfeit stamps in GenSan would reach P96 million.

A separate raid in San Simon town in Pampanga yielded 40,000 master cases or 20 million packs of Mighty cigarettes that had fake tax stamps in four warehouses reportedly belonging to a sales agent.

Unpaid excise taxes due to the counterfeit tax stamps affixed on Mighty cigarette packs in Pampanga would hit P600 million.

A 14-member BOC team led by Cleo Dongga-as searched and raided the warehouses on the strength of a letter of authority issued by Customs Commissioner Nicanor Faeldon. Copies of the letter were posted on the gates of the warehouses.

Fake tax stamps were pasted on packs of what were supposedly Mighty and Marvel products sealed in large boxes at Block 4 Lot 18, Block 9 Lot 6 and Block 8 Lot 15 of the San Simon facility. No cigarette manufacturing machines and materials were found among the contraband boxes, which bore the same numbers and had no production invoices.

The BOC has not yet determined who leased the warehouses.

Last Tuesday, Internal Revenue Commissioner Caesar R. Dulay told the Inquirer that the BIR would meet with cigarette firms on Friday, March 3, to get to the bottom of the proliferation of fake tax stamps in the market.

Dulay said the meeting with cigarette manufacturers was aimed at finding a solution to the problem on fake stamps. “It’s just a dialogue to get their ideas and see how we can come out with solutions and proposals so that we can address the proliferation of fake stamps,” Dulay said.

Dulay had said the BIR planned to launch new tax stamps with better security features by the second half of the year, as Finance Secretary Carlos G. Dominguez had said separately that counterfeiters had already copied eight features of the current tax stamps being made by government security printer APO Production Unit.

Dominguez had said that the government might have to ask cigarette firms to shoulder the higher costs to produce the new tax stamps.

Dulay said the BIR would first study, in coordination with the DOF, the potential cost of new tax stamps. “Under the agreement, the [current] tax stamps have to be replaced before the end of July. By the start of July, the new stamps should be in place,” Dulay said.

The BIR had already issued letters of authority to investigate Mighty while also expanding its investigation to cover all cigarette companies.

Early in February, the BIR seized products of Mighty that yielded fake cigarette tax stamps during an inspection at a Cebu mall even as the country’s largest tax-collection agency also inspected cigarettes of other domestic and foreign manufacturers.

A report furnished to Dulay showed that the BIR conducted inventory-taking at Metro Mandaue mall in Mandaue City on Feb. 7-8, pursuant to a Feb. 3 mission order issued to check the alleged proliferation of fake stamps in Cebu City earlier discovered by Irsis Corp.