Tobacco giant ‘evaded 68bn (THB) import tax’

3/09/2009 The Office of the Attorney-General will decide on Oct 2 whether to charge the local arm of US tobacco giant Philip Morris over claims it evaded billions of baht in import taxes on its cigarettes.

The Department of Special Investigation yesterday gave the OAG the results of its investigation into allegations Philip Morris (Thailand) United Co Ltd under-reported the value of its tobacco imports and underpaid import taxes between 2003 and 2007. The DSI has also sought arrest warrants for four foreigners who are among 14 people sought for questioning. They are Paul Richard Dillman Jr, Ann Marie Kaczorowski, Hermann Waldermer and Matteo Lorenzo Pellegrini.

Thawatchai Suansida, the DSI special case investigation expert who led the inquiry, said the company had evaded taxes estimated at 68 billion baht.

Philip Morris allegedly declared a cost insurance freight (CIF) rate for L&M cigarettes imported from the Philippines of only 5.88 baht a packet. This compares with 16.81 baht a packet reported by other cigarette importers.

The company also declared the CIF rate on Marlboro cigarettes imported from the Philippines during the same period as only 7.76 baht a packet, compared with 27.46 baht a packet reported by other importers, the DSI said.

The DSI was also investigating an allegation that Philip Morris had falsely declared the value of its cigarettes imported from Indonesia between 2000 and 2002, resulting in a 60 billion baht loss in tax revenues to the government, Mr Thawatchai said. The second investigation would be complete soon.

Philip Morris (Thailand) Ltd yesterday said it was confident it had declared the correct customs values.

It had received a letter from the DSI concerning the indictment, but insisted the declared customs values were consistent with Thai law, the World Trade Organisation Valuation Agreement and valuation methodologies agreed with the Customs Department.

“In fact, since March 2008, customs has accepted our declared customs values, having thoroughly reviewed the relevant documentation over a period of almost two years,” it said. “The DSI’s allegations concerning our declared customs values are no different than those first reported in the press in 2006 and we believe they have no merit.”