Warrants out vs big vape seller in P1.2-B tax case

The Court of Appeals and the Metropolitan Trial Court have ordered the issuance of warrants of arrests against individuals involved with vape seller Tap Fog for tax evasion.

On Dec. 13, 2022, five were charged in a criminal complaint filed by the Bureau of Internal Revenue (BIR) at the Department of Justice for allegedly selling smuggled and untaxed vape products in Binondo, Manila.

Named respondents were Wei Feng Bao (also known as Sofi Chua) and Jimy Go of Tap Fog Philippines, Christina Poa of Rocket Bull Race Marketing, Sandoval Severino Briones of SBS Motorcycle Parts and Accessories, and Bibiano Lesaca.

Including fines and penalties, the BIR said in a statement on Monday that Tap Fog’s liabilities amounted to P1.2 billion.

The case stemmed from a raid in November 2022 that was headed by BIR Commissioner Romeo Lumagui Jr., who was then the bureau’s deputy commissioner of the operations group.

The operation led to the seizure of about 100,000 units of vapes, 899 boxes of untaxed excisable articles and 61,400 pieces of bottled flavored juice with an estimated value of as much as P30 million, according to the BIR.

The BIR said Tap Fog and its conspirators were charged for “unlawful possession or removal” of products subject to excise tax without payment of the imposts, as well as for selling heated tobacco products and vapor products at a price lower than the combined excise and value-added taxes.

READ: BIR files tax evasion raps vs illegal vape sellers

The tax bureau also sued Tap Fog for selling products with packages containing “false, spurious or counterfeit stamps or labels.”

The company also faced charges for willful attempt to evade tax and deliberate failure to pay taxes.

P1.4B lost to smuggling

“This is a testament to our promise that after the execution of raids, cases will be filed. In the case of Tap Fog, a big-fish vape seller, the courts have already ordered the issuance of warrants of arrests,” Lumagui said.

“The BIR is closely monitoring the vape industry. [It] is already a regulated industry, the BIR has already established a system for the proper registration and payment for this purpose,” he added.

According to Lumagui, the government loses around P1.4 billion in revenue due to smuggled vapes alone.

After the filing of the case in December 2022, the BIR warned all distributors and sellers of vape products in the country to comply fully with the business registration requirements and other tax obligations of the government to avoid penalties.

Lumagui called on all vape traders to follow BIR Revenue Regulations No. 14-2022 and Department of Trade and Industry (DTI) Administrative Order No. 22-16, which were issued to implement pertinent provisions of Republic Act (RA) No. 11900, or the Vaporized Nicotine and Non-Nicotine Products Regulation Act.

The provision states that the sale or distribution of vape products through internet websites or via e-commerce and similar selling platforms can be made only by online sellers or distributors registered with the BIR and the DTI or the Securities and Exchange Commission and the Cooperative Development Authority.

Online selling rules

Lumagui reminded duly registered distributors, merchants, or retailers of vape products to post the required government certificates and approvals of the products conspicuously on the landing page of their website or selling platform.

In case of any violations of the BIR and DTI requirements by the online distributors and sellers, the online selling platform providers should immediately suspend the sale of the vape products in their e-commerce platform.

Last month, Philippine E-cigarette Industry Association (Pecia) president Joey Dulay said the industry group was fully committed to comply with government regulations, including the laws covering the so-called “sin” products.

In particular, Dulay said Pecia members follow both RA 11900 and RA 11467, which further raised “sin tax” rates yearly starting 2020.

Pecia also urged legitimate players in the e-cigarette industry to pay the right amount of taxes in order to contribute to the economy. INQ