DOF chief order filing of tax evasion raps

Finance Secretary Carlos G. Dominguez III (INQUIRER FILE PHOTO)

Finance Secretary Carlos Dominguez III on Sunday ordered the country’s two biggest tax agencies to charge tax evaders in court following last week’s raids that yielded fake tax stamps affixed to products of homegrown cigarette manufacturer Mighty Corp.

In a statement issued by the Department of Finance (DOF), Dominguez urged the Bureau of Customs and the Bureau of Internal Revenue “to file at the soonest the appropriate charges against persons and companies proven to be the owners of P2.2 billion worth of smuggled and counterfeit tobacco products, shoes and clothes that government agents seized in a series of raids since last week.”

“If the evidence warrants, I urge the BIR (Bureau of Internal Revenue) and BOC (Bureau of Customs) to file the appropriate charges in court as soon as possible,” Dominguez said.

In a report to Dominguez, Customs Commissioner Nicanor Faeldon said the BOC confiscated P2 billion worth of smuggled and fake cigarettes, “including cigarette brands manufactured by Mighty that contained fake tax stamps,” the DOF said.

Mighty cigarettes

On Wednesday, the BOC and the BIR seized 11,044 master cases of Mighty cigarettes worth P215 million in General Santos City, in addition to the 62,200 master cases worth P1.98 billion that were confiscated in San Simon, Pampanga.

In Pampanga, “the security team conducted random sampling/checking of each master case at least eight times per warehouse and results confirmed the presence of counterfeit/smuggled cigarettes and fake tax stamps,” Faeldon said in his report to Dominguez.

“BIR representatives from Pampanga checked the tax stamps attached to cigarette packs and validated that fake stamps were used on [the] packs,” Faeldon added.

In General Santos City, “operating teams validated the fake tax stamps and counterfeit cigarettes after official scanning and tagging of said cigarette packs/master cases,” Faeldon said.

In all, the 73,244 master cases contained 36.622 million packs, which at an excise tax of P30 a pack would result in P1.099 billion in foregone revenues for the government.

Zamboanga raid

In a raid in Zamboanga City last month, the BOC also seized 391 master cases of “smuggled and/or counterfeit cigarettes bearing the cigarette brands Mighty, Astro and Union with an estimated value of P13.5 million,” the DOF said.

In a separate report to Dominguez, Internal Revenue Commissioner Caesar Dulay said that “verification done using the mobile verification devices revealed that the stamps affixed [to the seized items from the Zamboanga raid] were indeed spurious.”

“Similar verification conducted in surrounding retail stores revealed that cigarettes sold thereat also had fake internal revenues stamps,” the DOF quoted the BIR report as saying.

Refused entry

Dulay also said that “in an earlier tax compliance verification campaign done by the BIR in Zamboanga City, the members of the agency’s team were refused entry into one warehouse leased by Mighty.”

“When a team, armed with a mission order, conducted a follow-up tax compliance verification drive in one of the warehouses leased by Mighty in Barangay Lunzuran, it was refused entry by the personnel inside the building, ‘upon the instructions of their higher management from the main office in Luzon,’” the DOF added, citing the BIR report.

“The warehouse personnel were reportedly told by higher management that their company is on the list of registered large taxpayers and that in the absence of a written directive from the BIR national office, the BIR raiding team couldn’t use their mobile verification devices to enter the building and verify the stamps attached to the cigarettes,” the DOF said.

“This development prompted the BIR regional office in Zamboanga City to recommend a nationwide verification drive in all regions, with mission orders emanating from the national office in Manila to ensure proper verification of the authenticity of internal revenue stamps affixed to various cigarette brands and whether the concerned cigarette manufacturers have duly paid the required excise taxes on the articles being distributed to their various sales outlets,” the DOF said.

The DOF said Dominguez also wanted government officials in cahoots with the erring entities included in the charge sheets. —BEN O. DE VERA