Philippines to Remove Tax Stamp Exemption on Exports

The Philippines Bureau of Internal Revenue (BIR) has announced it will reverse the rules exempting export cigarettes from carrying tax stamps, after a legislator raised concerns that exports were entering the market as tax-free smuggled goods.

The Chairman of the Philippines House Committee on Ways and Means, Jose Salceda, referred to unstamped export cigarettes as ‘the motherlode of smuggling’. He estimated the annual revenue lost to cigarette smuggling to be at least PHP 30 billion ($618 million), and said the BIR should revoke the regulation which allows cigarette exporters to omit the tax stamp and instead link export shipments with machine-readable unique identification codes.

Mr Salceda further proposed that the BIR should create a ‘less visible’ or ‘virtual’ form of security labelling, along with material labelling features. ‘I’m asking the BIR to upscale and to come up with a virtual stamp which can be read only in the Philippines,’ he said.

BIR Deputy Commissioner Arnel Guballa replied: ‘we will discuss (the technical details) with our IT,’ adding that the tax stamps currently used on cigarettes for domestic sale carry many security features which make it easy for the agency to spot fake stamps. The domestic stamps also carry a unique identifier in the form of a QR code.

Mr Guballa said while the BIR supports the proposal requiring the affixture of stamps on export cigarettes, manufacturers have expressed concerns that this could be detrimental to foreign markets since most other countries prefer the products to be shipped without stamps. ‘The international market demand is for cigarettes to have no stamps,’ he said.